Ontario Premier Doug Ford has indicated that the province may introduce a surcharge on electricity exports to U.S. states, including Michigan, in response to tariffs imposed by the administration of U.S. President Donald Trump. The statement follows the implementation of a 25% tariff on Canadian and Mexican imports, along with a 10% tariff on Canadian energy exports.
In a letter to political leaders in Michigan, New York, and Minnesota, Ford stated that Ontario could apply a 25% surcharge on electricity exports if the tariffs remain in place or if additional measures are introduced. Ontario currently exports electricity to these states, supplying power to approximately 1.5 million homes and businesses annually.
Potential Impact on Electricity Supply and Costs
Michigan Public Service Commission Chair Dan Scripps noted that while Michigan is unlikely to face widespread power outages as a result of Ontario’s potential actions, there could be impacts on electricity pricing and reliability. Michigan utilities, including DTE and Consumers Energy, primarily generate their own electricity or secure power through long-term purchase agreements from wholesale markets such as the Midcontinent Independent System Operator (MISO) and PJM Interconnection.
Ontario’s electricity exports contribute to the stability of the Eastern Interconnection, a power grid that extends across central Canada and much of the eastern United States. A disruption to this flow could impact grid reliability in multiple regions. In 2023, Ontario supplied Michigan with 7,718 gigawatt hours of electricity, while Michigan exported 135 gigawatt hours to Ontario.
Scripps highlighted that any disruption could increase the risk of power instability, referencing the 2003 blackout that affected millions of people in both the U.S. and Canada.
Wider Trade and Energy Implications
Beyond electricity, concerns have been raised about the potential for broader retaliatory actions from Canada in response to the tariffs. Canada is the largest supplier of crude oil to the U.S., with a significant portion directed to refineries in the Midwest, including those in Detroit, Toledo, and Chicago.
While no other Canadian provinces have announced similar measures, Scripps noted that an escalation in trade disputes could extend beyond electricity to include petroleum, natural gas, and other fuel supplies.
Canadian Prime Minister Justin Trudeau has strongly criticized the tariffs, stating that Canada will take necessary actions to protect its economic interests. The situation remains under close observation as both countries navigate ongoing trade discussions.
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