Ontario Imposes 25% Tariff on Electricity Exports to the United States

Ontario’s recently re-elected premier, Doug Ford, has introduced a 25% tariff on all electricity exported from Ontario to the northern border states of New York, Michigan and Minnesota, effective March 10, 2025. The electricity tariff comes in response to U.S. President Trump’s tariffs on Canadian goods.

The $10/MWh electricity tariff has been implemented by way of a new regulation to the Ontario Electricity Act, 1998 and a letter of direction issued by the Ontario Ministry of Energy to the Independent Electricity System Operator (IESO).

The letter of direction states the tariff, or “new surcharge” may be adjusted “at any time and to any level” by the Ontario government. The tariff is to be applied exclusively to the United States and is not to have any direct or indirect impacts on electricity exports from Ontario to other Canadian provinces, including the neighbouring provinces of Manitoba and Quebec.

In addition to implementing “a surcharge on the transmission of electricity to the United States of America,” the regulation introduces the following new legislative objects for the IESO:

• to engage in activities in response to unjustified tariffs imposed on Ontario goods by the United States of America, including implementing measures to discourage the transmission of electricity to the United States of America and to prioritize the efficient and sustainable use of Ontario’s electricity resources for Ontarians;
• to engage in activities to protect Ontarians, Ontario’s economy, and the essential energy and economic security of Ontario from negative impacts arising from unjustified tariffs imposed on Ontario goods by the United States of America; and
• to pursue the above objects in furtherance of the policies of the Government of Ontario.

The provincial government’s projections indicate the $10/MWh tariff will generate an additional C$300,000 to C$400,000 per day for the benefit of Ontarians. Questions remain, however, as to how these estimates will be impacted by surplus baseload conditions when Ontario has more electricity than it can consume and export to neighbouring provinces.

Our team is closely monitoring developments in this area, and we will provide updates when more details are available.

For further details, please contact Reena Goyal or any other member of our Power group.