The electricity tariff will be paid by utility providers in the three impacted states of New York, Michigan, and Minnesota.
Ontario Premier Doug Ford has followed through on his pledge to impose a 25 percent tariff on electricity exported to the United States in response to the tariffs enacted on Canadian products by President Donald Trump.
The export tax on the energy Ontario sends to New York, Michigan, and Minnesota comes into force today, bumping up the cost of electricity for 1.5 million households and businesses in those states, Doug Ford said during a March 10 press conference in Toronto.
The electricity tariff will be paid by utility providers in the three states, netting the province an estimated $300,000 to $400,000 per day, Ford said, noting that the tariff will add roughly $100 per month to the Americans’ bills.
“I feel terrible for the American people, because it’s not the American people who started this trade war,” Ford said.
Ontario’s electricity tariff comes at a time of economic uncertainty for Canada in the face of the U.S. president’s ever-changing tariffs.
Trump slapped 25 percent tariffs on items imported from Canada on March 4 with a lower rate of 10 percent on Canadian energy products. He announced the following day, March 5, the auto sector would receive a reprieve until April 2.
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Then, on March 6, Trump signed another executive order to allow goods covered by the United States-Mexico-Canada Agreement (USMCA) to be exempt from the 25 percent tariffs until April 2. That impacts roughly 38 percent of the goods the U.S. imports from Canada.
Canada has responded by placing $30 billion worth of tariffs on American goods last week, while Ontario has pulled all American alcohol from its provincially run liquor stores and put an end to procurement opportunities for U.S. companies.
Ford said he is hopeful federal and provincial responses to U.S. tariffs will have a large enough impact to make Trump reconsider current and future tariffs on Canada.
Ford said the province can increase or decrease the 25 percent surcharge, valued at $10 per megawatt-hour, as needed in reaction to measures implemented by the Trump administration.
“Let me be clear, I will not hesitate to increase this charge if necessary,” he said. “If the United States escalates, I will not hesitate to shut the electricity off completely.”
Ford said decisions to decrease, increase, or even shut off the power to the United States will depend on what actions Trump takes in the coming weeks.
Ford said Canada needs to keep up the pressure on the United States and suggested Alberta Premier Danielle Smith play her “trump card” by taxing her province’s oil imports to the United States. Smith has repeatedly said she would not support an export tariff on Alberta oil.
Ontario Electricity Needs
While the impact of Ontario’s electricity surcharge may not have a nationwide impact like an oil tariff would, its effects will be reach beyond the three states, Energy Minister Stephen Lecce said.
If one of the states that buys power from Ontario has a surplus of energy on any given day, it can sell the power it doesn’t need to another state, such as Ohio, he said.
“The impact of the surcharge is going to reverberate right across America, not just in Michigan or New York or Minnesota, but now in all the states they sell to,” Lecce said, noting that any monies Ontario earns from the energy tax will be earmarked for ratepayers “to reduce bills for families and businesses.”
Lecce was adamant that Ontario is capable of providing all of the power that its residents need even during extremely cold or hot weather, saying the province doesn’t rely on the United States to provide power during such times.
Ontario’s Independent Electricity System Operator (IESO) is “fully confident” in its ability to “keep the lights on for Ontarians,” Lecce said.
“We’re going to keep selling and keep producing the power for Ontario first,” he said.
The province launched a project last summer to increase its electricity grid by up to 5,000 megawatts— enough to power five million homes. The energy will be a mix of natural gas, hydroelectric, renewables, nuclear, and biomass.
The province has also allocated $2 billion for expanded hydroelectric fleets in northern and eastern Ontario to generate new power.
Ontario currently transmits electricity via 12 cross-border connections, which includes seven connections to New York, four to Michigan, and one to Minnesota.
