‘Whatever it takes to maximize the pain:’ Export tax on electricity Ontario sends to U.S. now in effect

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A 25 per cent surcharge on all Ontario electricity exports to the United States is now in effect and Premier Doug Ford is warning that he will “not hesitate” to increase the charge or even shut off energy exports entirely should the trade war persist.

The surcharge is among a suite of countermeasures being taken by the Ontario government in response to U.S. President Donald Trump’s tariffs on Canadian and Mexican goods.

In a news release issued on Monday morning, the province confirmed that “new market rules” are now in effect, which will require any generator selling electricity to the U.S. to add a 25 per cent surcharge, valued at $10 per megawatt-hour, to the cost of power.

The measure, officials say, is likely to bring in $300,000 to $400,000 in revenue a day and add about CAD $100 a month to some utility bills being paid by Americans in three states.

Ontario currently supplies electricity to about 1.5 million homes and businesses in New York, Michigan and Minnesota.

“Until these tariffs are off the table, until the threat of tariffs is gone for good Ontario will not relent. We will not back down. Pausing some tariffs and making last-minute exemptions won’t cut it. We need to end the chaos once and for all,” Ford said during a news conference at Queen’s Park. “Until then Ontario will keep up the fight. We will apply maximum pressure to maximize our leverage.”

Ontario says it is implementing the new surcharge through an “urgent amendment” to the market rules that apply to the Independent Electricity System Operator (IESO), which is the arms-length Crown corporation responsible for the province’s electrical grid.

Government officials say the regulatory authority provided to the IESO does not limit the surcharge to 25 per cent and would allow for it to be increased by any amount with little notice.

“Let’s just see how this rolls out. He (Trump) changes his mind literally every single day so I wouldn’t want to give you an exact date,” Ford said when asked whether the province would look to hike the tax should the U.S. follow through on threats of new “reciprocal tariffs” on April 2. “But make no mistake about it. If he (Trump) continues to attack our province and our country, taking jobs and families paycheques, taking food off their tables, I will do whatever it takes to maximize the pain against President Trump.”

Tax could ‘reverberate’ across America: Lecce

Ontario sells surplus electricity to New York, Michigan and Minnesota when its grid is producing more than Ontarians require.

The IESO says that this happens most often at night and on weekends when the demand for electricity is lower.

Energy Minister Stephen Lecce told reporters on Monday that Ontario is a net exporter of electricity by a factor of approximately 30. He said that the province typically 12,000 megawatt hours of electricity to the United States every year.

In some cases, he said that electricity is then resold to other U.S. states, meaning that the impact of the export tax could have wider implications for Americans.

“If a state like Michigan flows our power through (their grid) and say sells it to Ohio or another state that means the surcharge is going to be reverberated right across America,” he said.

Trump implemented a sweeping 25 per cent tariff on most Canadian goods last week but, days later, agreed to exempt goods that fall under an existing North American free trade pact until April 2.

Ontario’s countermeasures, however, have remained in effect with a spokesperson for Ford’s office previously telling CP24 that they would not be rolled back until Trump drops the tariffs “entirely.”

Elsewhere, British Columbia Premier David Eby has expressed a willingness to at least consider taxing electricity exports.

Eby told CTV’s Question Period host Vassy Kapelos in an interview over the weekend that his province is “all in” on a united Team Canada approach to countering the tariffs,

including blocking or taxing electricity from his province headed south.

“We are passing a law that will allow us to take measures that could impose export charges or restrict energy exports to the United States but that is a very significant step and we recognize that,” he said.