Ontario’s 25 per cent surcharge on electricity exports south of the border has been suspended -- for now -- amid U.S. President Donald Trump’s trade war.
Premier Doug Ford walked back the surcharge that went into effect on Monday after Trump threatened to double the previously announced tariffs on Canadian steel and aluminum, which came online on Wednesday, to 50 per cent.
“They understand how serious we are about the electricity and the tariffs, and rather than going back and forth and having threats to each other, we have both agreed that cooler heads prevail, we need to sit down and move this forward,” Ford said Tuesday following a conversation with U.S. Commerce Secretary Howard Lutnick.
Speaking to reporters a day later, Ford made clear that the surcharge is still very much on the table, as a well as a threat to turn off the power completely, noting that the tax has only been “suspended” for the time being.
Meanwhile, speaking from the Oval Office, Trump accused Ford of “playing with electricity,” noting that his administration “had a problem” with Ontario before the tax was dropped.
But how much Ontario electricity does the U.S. actually use? What would it cost American households that rely on Ontario electricity if the surcharge returns? And how quickly could the U.S. scale up its own electricity supply at a regional level to become self-sufficient?
CTV News Toronto spoke with RJ Johnston, the senior director of research at Columbia University’s Center on Global Energy Policy, to get some answers.
How much electricity does Ontario send south of the border?
At a national level, Johnston said although Ontario and Canada’s energy exports contribute to U.S. national electricity consumption overall, the share is “really quite limited” at less than one per cent.
“It is more significant regionally,” he said. “The U.S. is a huge electricity market, and Canada’s electric exports are important, I think, to balance markets in and provide some base load to places like New York, Michigan, Minnesota.”
Ontario has electricity transmission connections in three states, including seven in New York, four in Michigan, and one in Minnesota and Ford had said that the surcharge would have been felt by at least 1.5 million homes and businesses in those areas.
To that end, Ford said he had spoken to the Michigan Governor Gretchen Whitmer on Tuesday and apologized for imposing the short-lived surcharge, as Minnesota Governor Tim Walz and New York Governor Kathy Hochul decried the tax on social media before it was removed.
The province sells surplus electricity to those states when its grid produces more power than Ontarians need. That happens most often at night and on weekends when the demand for electricity is lower.
According to the province, it exported 14.6, 14.2 and 12.0 terawatt hours of electricity to the United States between 2021 and 2023, respectively.
If Ford decides to follow through on this threat to cut off energy to those states completely, the province would need to reduce the output generated by its hydroelectric stations.
Before the tax was removed, Ford and Energy Minister Stephen Lecce maintained that the action wouldn’t backfire during the summer months, if Ontario needed extra power from the U.S. amid a heat wave, as it only brings in 374 megawatt hours from energy producers south of the border on average.
Johnston added that while Ontario-made electricity is “pretty important” at a regional level, it is not as strategic to the U.S. market as Canada’s oil and gas exports, which represent a much larger share of American energy consumption. Last year alone, Canada shipped US$98 billion worth of crude to the U.S., making it the county’s biggest supplier.
What would a 25 per cent surcharge cost American households?
Officials have said the suspended tax, valued at $10 per megawatt-hour, would generate between $300,000 and $400,000 in revenue per day, which would then be reinvested in the province.
That works out to an additional CAD$100 per month for the average utility bill in New York, Michigan, and Minnesota, according to Ford.
Johnston said, currently, the average household in those states spends about US$100 to $200 per month on electricity, and that any additional cost would be “pretty significant.”
“Effectively, Premier Ford, if his math is right, is saying it would double those bills. That’s pretty consequential at a time when U.S. consumers and households are still focused on affordability and inflation,” Johnston explained.
Before Monday, Ford had long said that he didn’t “want” to impose the tax, while underlining his sympathy for the American citizens caught in the middle. However, he has also said that he wouldn’t hesitate to cut off their energy completely “with a smile” on his face if the tariff war ratchets up.
Could the U.S. eventually do away with Ontario power?
In a post to Truth Social, Trump questioned why the U.S. had “allowed” another country to supply it with electricity.
“Who made these decisions, and why? And can you imagine Canada stooping so low as to use ELECTRICITY, that so affects the life of innocent people, as a bargaining chip and threat?,” he wrote, warning that Canada would pay a financial price “so big” it would be “read about in History Books for many years to come,” before the surcharge was walked back.
Initially, Trump dismissed the surcharge, saying the U.S. doesn’t “need” Ontario-made energy.
Johnston said that while Canadian electricity would “not be easy to replace” south of the border, the longer a surcharge stays in place, the more likely an alternative supply will come onto the grid.
“In the short term, that could mean power plants that are less efficient and have higher costs would come on in response to the higher prices. And then the medium to long term, you know, new generation, new wind, new solar, under Trump, new coal and new gas, nuclear could start to come online,” he said.
However, that would likely take “several years” to complete and come at the expense of the integrated electricity grids the two countries share.
Johnston pointed to the interconnectivity of the two systems, noting that, currently, Canada can easily import hydroelectricity from the U.S. when its supply is low, and the U.S. can do the same if it has extraordinarily cold weather or an outage.
“So it would certainly be unfortunate if this highly stable, kind of seamless interconnect, was disrupted by these, you know, geopolitical considerations,” Johnston said.
