New York’s electric grid operator questions authority to collect tariffs on Canadian energy amid Trump’s proposed 25% surcharge
By Larry Rulison, Times Union Staff Writer
While Ontario was threatening to impose a 25 percent surcharge on electric exports to New York earlier this week, officials with the state’s electric grid operator were uncertain the entity has the power to collect any of the new tariffs President Donald Trump has threatened to slap on energy from across the border.
On Feb. 28, the New York Independent System Operator, the North Greenbush nonprofit that oversees the state’s wholesale electrical market, told the Federal Energy Regulatory Authority that it does not believe it has the authority to collect tariffs on Canadian electricity.
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Trump signed an executive order on Feb. 1 that would impose 25 percent tariffs on Canadian goods. The executive order said that Canadian energy imports would have 10 percent tariffs.
Trump argues the tariffs are needed to get Canada to “secure our borders against illegal migration and combat the scourge of fentanyl” coming into the U.S. Similar tariffs were proposed for imports from Mexico and China.
As part of its filing, the NYISO asked FERC for more clarity on how it should collect the electricity tariffs should FERC rule that it does indeed have the authority to collect the tariffs, which are essentially a tax on imported goods designed to protect U.S. markets.
The buying and selling of power between the U.S. and Canada happen daily to ensure regions on both sides of the border meet their electricity needs.
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“The United States and Canada have one of the most integrated international electric grids in the world, allowing system operators in both countries to pool resources for improved reliability and economic efficiency,” the NYISO states.
It described the electricity traded between the two countries as “robust.”
The NYISO added that last year, New York state imported 7.7 terawatt hours of electricity from Canada, more than any other state. One terawatt hour is equal to one trillion watt hours and can power 70,000 New York homes for a whole year.
“That electricity was valued at hundreds of millions of dollars,” the NYISO said.
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NYISO spokesman Andrew Gregory said the case is still before FERC to be decided.
“We’ll provide additional updates as the process continues,” the NYISO filing states.
Power that is sold into the New York market is priced using reverse auctions, a system used to keep electric rates as low as possible.
NYISO said it could be disastrous if it were to collect tariffs on Canadian power at this point without any clarity from FERC.
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“If the NYISO does not have the authority to recover duty-related costs from its customers, it could be exposed to tens of millions of dollars in charges that it would have no ability to pay,” the FERC filing states. “In that scenario, the NYISO would face adverse consequences, including possible bankruptcy and financial restrictions on its ability to import Canadian electrical energy needed for reliability.”
Top photo: NYISO keeps an eye on the production and transmission of electricity across the state on a real-time basis. Times Union article photo.
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