On March 4, Premier Doug Ford sent a letter to senators, congressmen and women and the governors of New York, Michigan and Minnesota, informing them that, as a result of President Trump’s tariffs on Canada, the Government of Ontario was imposing a surcharge on electricity exports to the United States.
UPDATE: Ontario is temporarily pausing the 25% surcharge. Ford says U.S. secretary of commerce has extended ‘olive branch’. “We have both agreed that cooler heads prevail,” said Ford after talking with US Commerce Secretary Howard Lutnick.
“As you know, there’s a very strong man in Canada who said he was going to charge a surcharge or tariff on electricity coming into our country. He has called and said he’s not going to do that. And it would have been a very bad thing if he did. And he’s not going to do that. So I respect that,” Trump said.
Ford and Finance Minister, Domenic Leblanc will meet Lutnik in Washington on Thursday. Meanwhile the US is still going ahead with 25% tariffs on steel and aluminum.
Original story:
On March 10, in response to these continued and unjustified U.S. tariffs on Canadian goods, the province applied a 25 per cent surcharge on all electricity exports to the 1.5 million homes and businesses in New York, Michigan and Minnesota that receive power from Ontario.
Introduction of Electricity Surcharge
The Ontario government has filed Ontario Regulation 25/25 under the Electricity Act, 1998, that enables the application of a surcharge on electricity exports to United States jurisdictions through an urgent amendment to the Independent Electricity System Operator’s (IESO) Market Rules.
Minister of Energy and Electrification Stephen Lecce also issued a letter of direction to the IESO outlining the details of the surcharge to be implemented through the market rule change.
Subsequently, the IESO is implementing an urgent amendment to the market rules that will require any generator selling electricity to the United States to add a surcharge of $10/megwatt hour (MWh) on top of the cost of the exported electricity, which is approximately 25 per cent of the average cost of power. Under the IESO’s Market Rules, this charge is known as the Tariff Response Charge. The IESO is informing all market participants of this change today.
Implementation of the Electricity Surcharge
U.S. entities importing electricity from Ontario will pay the full cost of the exported electricity, including the Tariff Response Charge, to the electricity market participant (generator or storage facility) that exported the electricity. The IESO will then collect from that market participant the Tariff Response Charge on behalf of the Ontario government.
Ontario’s electricity market is settled on a monthly basis, including the revenues from the Tariff Response Charge accrued throughout each month. Revenue generated by the Tariff Response Charge for the month of March will be collected by the middle of April. During initial implementation, the funds collected by the surcharge will be held by the IESO, the province will use these revenues to support Ontario workers, families and businesses.
Changes to Electricity Surcharge
The regulatory authority provided to the IESO to apply the surcharge does not limit the surcharge to 25 per cent. The Ontario government, through the Minister of Energy and Electrification, retains the ability to increase or decrease the surcharge at any time in response to the actions of the U.S. administration. The government has also indicated its willingness to shut off electricity exports to the United States entirely in response to U.S. escalation. Future changes to the level of the surcharge would be implemented at the written request of the Minister of Energy and Electrification.
Photo by Andrey Metelev on Unsplash
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