Northeast US electricity markets grapple with uncertainty from US tariffs

Experts, industry participants and grid operators in the US Northeast are searching for clarity as to whether and how President Donald Trump's newly instated tariffs will apply to US imports of Canadian electricity.

Trump on March 3 moved to impose tariffs on imports from Canada and Mexico, likely setting up higher power and natural gas prices for certain border regions. A 10% tariff on imported energy products from Canada took effect March 4.

ISO New England and the New York ISO asserted in recent filings with the Federal Energy Regulatory Commission that the proposed tariffs do not apply to electricity. If the tariffs do apply to imports of Canadian electricity, the grid operators said they do not believe it is their role to implement or collect the tariffs.

"The ISO is solely a market administrator, and not the purchaser or seller for market transactions in electricity; thus, it is not the appropriate entity for imposition of an Import Duty," ISO New England said in a Feb. 28 filing with FERC (ER25-1445).

In its Feb. 28 filing, the New York ISO said it has not received any "precedent or instruction from the federal government" as to whether the tariffs will apply to Canadian electricity imports (ER25-1462).

Both grid operators said in their filings that if they are determined to be the entities to pay duties on electricity imports, their tariffs would have to be modified so they could properly allocate and recover the related costs.

Several experts told Platts, part of S&P Global Commodity Insights, that guidance remains unclear on whether or how tariffs will apply to electricity.

Although electricity is listed on the US harmonized schedule of tariffs, it has historically not been subject to tariffs, according to Jeffrey Jakubiak, an attorney at Vinson & Elkins who focuses on energy markets.

"Among other things, it is extraordinarily difficult to really determine what electricity is crossing the border and who really has title to it," Jakubiak said. "Electricity is very much considered a service, not a good in many legal aspects."

Francis Bradley, CEO Of Electricity Canada, the national trade group for Canadian power suppliers, said Feb. 27 at the North American Electric Reliability Corp. summit that there really is no mechanism for the imposition of tariffs on electricity and acknowledged uncertainty as to whether solely hydropower, as defined in Trump's initial executive order, or electricity produced by any source would be subject to the tariff.

Potential volumes, cost impact

Hydropower makes up most of Canada's electricity generation and exports to the US. In 2024, Canada exported about 36 million MWh of electricity, worth about C$3.1 billion, averaging C$91.95/MWh, to 27 states, according to the Canada Energy Regulator.

Ontario was the biggest exporter, sending 12.6 million MWh to 11 states, including 6.75 million MWh to New York and 4.59 million MWh to Michigan.

New York State received the largest volume of power from Canada in 2024, at 8.76 million MWh, followed by Minnesota and North Dakota with 6.01 million MWh. Minnesota and North Dakota paid the most for their imported power, more than C$657 million, or C$147.83/MWh.

States in the ISO New England market also rely on Canadian power imports, with Vermont importing 4.61 million MWh and Maine importing 2.56 million MWh in 2024. ISO New England said that, over the past five years, Canadian imports have served about 11% of its load.

ISO New England said in its FERC filing that a 10% tariff on Canadian electricity imports could amount to import duties of at least $66 million annually.

Maine Public Advocate William Harwood warned state lawmakers in January that potential tariffs could raise bills for customers within the territory of the Northern Maine Independent System Administrator, a region not part of the ISO New England system, that is indirectly tied into the rest of the US grid through transmission interconnections with the Canadian province of New Brunswick.

Effects on smaller utilities

Smaller utilities in the Northeast that rely heavily on Canadian power have warned customers that tariffs could lead to higher bills. Vermont Electric Cooperative, which serves 33,000 customers and imports 42% of its power from Hydro-Québec, said a 10% tariff could cost the company $2 million in 2025.

In recent years, New York and New England states have advanced large transmission projects to import hydropower from Hydro-Québec, an entity owned by the Quebec provincial government and one of the continent's largest power generators.

Through its US entity, Hydro-Québec owns the transmission capacity rights to the Champlain Hudson Power Express, a 339-mile transmission line designed to carry the utility's power to New York City.

Avangrid is developing the New England Clean Energy Connect, a 145-mile transmission line that would transport Hydro-Québec's power to the New England grid through Northern Maine.