NYISO Statement Regarding Tariffs on Imported Electricity
The President of the United States announced in a February 1, 2025, Executive Order “Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border” that an ad valorem rate of duty would be imposed on “[a]ll articles that are products of Canada.” The Canadian Tariff Order is presently scheduled to take effect on March 4, 2025. It is not yet clear whether imports of electrical energy from Canada are subject to the Canadian Tariff Order or, if they are, whether the NYISO will be required to play any role in collecting or remitting duties. The NYISO believes that there are strong legal and policy arguments that the answer to both of these questions is “no.”
The United States and Canada share one of the most integrated international electric grids in the world, allowing system operators in both countries to pool resources for reliable and economic electric supply. The NYISO is interconnected with two Canadian system operators, Ontario’s Independent Electricity System Operator (IESO) and Hydro-Québec (HQ). The NYISO’s interties with IESO allow for up to 2500 MW of imports from Ontario to New York and the interties with HQ allow for an additional 2100 MW. The reliable, uninterrupted, flow of economic power across the Canadian interties is critical to protect the health, safety and welfare of New York citizens, residents across the Northeast U.S., and the citizens of Canada - especially during stressed system conditions. The NYISO and neighboring system operators have serious concerns that applying export tariffs to electricity may have serious adverse effects on reliability and wholesale electric markets.
Nevertheless, the NYISO is asking the Federal Energy Regulatory Commission (FERC) to approve rules that would address the possibility that the Canadian Tariff Order could on short notice result in the NYISO having a legal obligation to collect and remit duties on Canadian electricity imports. It is essential for the NYISO, and its stakeholders, to have clarity on this issue because duties on Canadian electricity would likely amount to tens of millions of dollars per year.
Today’s filing is being made out of an abundance of caution to ensure that if NYISO is determined to have an obligation under federal law to collect and remit tariffs on electricity imported from Canada it has the cost recovery and allocation mechanism in place to comply with that obligation. The NYISO’s principal and preferred proposal would require any entity that causes Canadian electricity to be imported to New York to bear the cost of the tariffs. The NYISO briefed its market participants on the details and rationale for today’s FERC filing and generally received supportive feedback for its cautious approach to this complex issue.
About the New York ISO
The New York Independent System Operator (NYISO) is a not-for-profit corporation responsible for operating the bulk electricity grid, administering the competitive wholesale electricity markets, conducting comprehensive long-term planning, and advancing the technological infrastructure of the electric system serving the Empire State.