Trump's tariffs against Canada could increase US electricity bills
According to grid operators and energy experts, the rising U.S. electricity prices could rise even more in certain parts of the nation if the 10% tariffs on energy imposed this week by the Trump Administration hit Canadian supplies and triggered retaliation.
According to government statistics, the U.S. imports only 1% of all its power, but New York State and other regions, such as New England, rely on Canadian electricity much more. This could mean that utility bills will soon increase for customers.
Ontario Premier Doug Ford told media outlets that he would be willing to stop the transmission of electricity to the U.S., which could cause a shortage and drive prices higher.
Timothy Fox, analyst at ClearView Energy Partners, said that there are "gross price implications" and reliability implications. According to grid operator filings, and energy experts, the tariff war between Canada and the U.S., who are each other's biggest electricity trading partners threatens to upset a supply and demand balancing act which prevents blackouts, and keeps power costs in check.
According to EIA, the U.S. imports more Canadian power than it sells to Canada. Last year, they bought 2,700 gigawatt-hours, which is about 50% of what Canada sold.
Fox warned that the effects of higher electricity prices or curtailed supply could be more severe in the Northeast of the United States, where the dependence on Canadian electricity is greater than the rest of the country.
In a filing to the Federal Energy Regulatory Commission, New York's grid operator stated that it was concerned about export tariffs on electricity having a negative impact on wholesale markets and reliability.
Grid operators in New York State and New England asked federal regulators on Friday for the power to set rules that would allow the imposing of duties on Canadian imports, if the U.S. Government so ordered.
ISO New England, which includes six states, from Maine to Connecticut (including Maine), told FERC that a 10% tariff on electricity would increase annual costs for customers by $66 millions.
According to its website, New England Grid operator imported 11% of its electricity from Canada in the past five years.
New England's average household electricity cost is 29% more than the national average. This is due to the fact that there are already power supply shortages and high demand.
Multiple grid operators who oversee wholesale power markets said it is unclear if the tariffs will be applied to electricity as there are no precedents for them, and the White House has not explicitly stated that power would target.
Randy Burlingame is ISO New England's spokesperson.
The White House didn't immediately respond to an inquiry for comment.
The California Independent System Operator, which operates the grid in California, and the Midcontinent Independent System Operator, which runs the grid in the Midwest, have said that they are assessing tariffs but they were unsure if or how they would be applied to the power markets.
MISO spokesperson Brandon Morris stated that the situation is fluid and unclear. It is not known whether or when it will be resolved. (Reporting and editing by Laila KEARNEY; Paul Simao, Editor)
(source: Reuters)
