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Ontario Premier Doug Ford has applied a 25 per cent tax on all electricity exported to Michigan, Minnesota and New York in response to U.S. President Donald Trump’s tariffs on Canadian goods.
Ontario sells about $700 million in electricity to the U.S. a year — enough to power 1.5 million homes. Ford estimates the surcharge will cost each American state up to $400,000 “each and every single day.” He says it will remain in effect until the U.S. removes tariffs from all Canadian products. While Trump has offered a one-month reprieve on the tariffs for most goods, Ford said the delays mean more uncertainty, and the goal should be to “end the chaos.”
“We will apply maximum pressure to maximize our leverage,” Ford told reporters Monday. “Let me be clear: I will not hesitate to increase this charge if necessary. If the United States escalates, I will not hesitate to shut the electricity off completely.”
“Believe me when I say I do not want to do this. I feel terrible for the American people who didn’t start this trade war. It’s one person who is responsible; it’s President Trump.”
Ford also committed to broad plans to increase Ontario-made energy. In the short term, that will mean an increase in natural gas. In the long-term, that will mean accelerating the government’s already-announced plans for big energy projects, to include a new nuclear facility, multiple energy storage projects and refurbishments and expansions of existing hydro and nuclear facilities.
“I want to sell the U.S. more energy, more electricity, more critical minerals,” Ford said. “We’ll make sure we have enough energy for ourselves. That’s number one priority.”
This is the first threat to the deeply integrated grid both countries have long shared and collaborated on.
Here’s what you need to know.
Energy Minister Stephen Lecce has issued a directive to the Independent Electricity System Operator, the Crown agency in charge of power supply and demand, to require all Ontario generators to add a 25 per cent “tariff response charge” to monthly electricity bills sent to Michigan, Minnesota and New York as of Monday.
The government says the charge amounts to about $10 per megawatt of electricity and will result in $300,000 to $400,000 in additional revenue for the province every day. Lecce said this money “will accrue in an account, which the government is committed to putting back into the pockets of ratepayers to reduce bills for families and businesses.” This account will be held by the system operator.
Notably, in this new regulation, the energy minister has maintained the ability to increase the surcharge at any time in response to the actions of the U.S. government.
The Ford government won their third consecutive majority on Feb. 27 and will be sworn in officially on March 19, with Queen’s Park expected to return in mid-April. Lecce had previously said the surcharge would require legislation and therefore the legislature to be in session, but Ford said he asked public officials to come up with a way to do it before then.
The government has used powers granted to the cabinet to enact a new regulation under the Electricity Act that allows for an “urgent amendment to the market rules administered by its Independent Electricity System Operator.”
Per Ford and Lecce’s statements, the impact will be significant.
At the moment, the government says Ontario exports 30 times more power south of the border than it imports. “[The U.S.] needs our power,” Lecce said repeatedly in his remarks. He suggested the surcharge could be passed down to the monthly electricity bills for residents and businesses in affected American states.
The surcharge will also have a trickle-down effect, Lecce said. “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 reverberate right across America,” particularly along the I-95 corridor down the eastern seaboard.
It won’t impact our electricity bills. But in the event the U.S. retaliates with energy-related moves of its own, Ontarians energy supply could take a hit, though the government assures this won’t happen.
“We have the supply-demand systems in place by our systems operator. We’ll be okay in Ontario,” Lecce said. “This is about maximizing the pressure on America and minimizing the impacts on Ontario.”
Lecce says they have “a very, very strong plan” that takes “an all-of-the-above approach, leveraging every resource available to the government.” These plans include investments in large projects, including nuclear, storage and hydropower, that will take many years to build and be operational.
In the short term, Lecce said the province will reduce its dependency on American power by relying on its agreements with neighbouring Quebec for energy exchanges and also increasing power generation from the fossil fuel natural gas, which will result in more emissions. These measures may be required, for example, in instances of extreme heat this upcoming summer, when power demand spikes.
We have the capacity, including with natural gas and other levers, to dial on if we ever need more power,” he said. “Some have argued to get rid of our backup generators like natural gas. If we did that, we wouldn’t be [able] to fire up that insurance policy to keep the lights on for all of our businesses and people.”
“We’re well positioned to do this,” he said. “We’ve thought ahead.”
Just before his Monday press conference, Ford said he had spoken to Quebec Premier François Legault on the phone, who is considering halting certain kinds of electricity exports to U.S. customers. Ford gave kudos to Manitoba Premier Wab Kinew, whose government has issued a directive to Manitoba Hydro to require cabinet approval before signing new or expanding existing agreements with American customers.
Ford also thanked B.C. Premier David Eby, whose province is taking a more cautious approach due to its increasing reliance on American energy. “There’s a whole bunch of us that ship energy down to the U.S. and we have to maximize it,” Ford said.
But Ford took a harsher tone with one provincial partner whose actions he felt were lacking a “Team Canada” approach. Ford called out Alberta Premier Danielle Smith, whose province exports some 4.3 million barrels of oil to the U.S., for touting that she had a “trump card” and failing to use it.
“Message to Premier Smith: one day you might have to use that trump card and give approval for an export tax,” Ford said. “Because if you want to talk about a trump card, that will instantly change the game. Instantly.”
Ironically, since 2009, Ontario has switched from importing natural gas from Alberta to cheaper gas from the midwestern United States. Approximately 70 per cent of the natural gas Ontario imports today is from Ohio and Pennsylvania.
Neither Ford nor Lecce responded directly to questions asking if they would consider stemming this flow, which would be extremely disruptive to Ontario’s energy supply. In response to questions about it, Ford blamed elected officials going back 20 years for failing to build out pipelines across Canada.
“They need to look in the mirror and ask, why didn’t we build Energy East pipelines? Why didn’t we put another pipeline west? Why aren’t we going north?” he said. “This is where the federal government, no matter who gets elected, needs to look at national infrastructure projects so that we will never have to rely on anyone again in the world.”
Though many critics, as well as advisors hired by the Ford government, have recommended the province move away from reliance on fossil fuels altogether — a call the current government has not heeded.
Ontario is also relying on American companies to build out small modular nuclear reactors in Darlington, with others bidding for contracts at Bruce Power — ending the long-exclusive relationship with made-in-Canada CANDU technology. Lecce didn’t answer questions about whether he would review these contracts, noting instead that these projects will “leverage and maximize the Canadian and Ontario supply chain.” Though renewable energy projects were not brought up, technology for wind and solar would also likely require crossborder sales.
Ford says he can. Though he did not commit to a date for when he might flip the switch, he said the government has done its due diligence.
“Let’s just see how this rolls out. [Trump] changes his mind literally every single day so I wouldn’t want to give you an exact date,” Ford said.
“It is possible,” he continued, vaguely stating the government can slow down the amount of hydroelectric power that flows to America. “Yes, we can do it.”
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