The Federal Energy Regulatory Commission on April 14 accepted proposals submitted by New England and New York grid operators to implement potential import duties for Canadian imports of electricity.
Both orders are available on FERC’s website.
The New York Independent System Operator (Docket Nos. ER25-1462-000, EL25-62-000) and the ISO New England (Docket No. ER25-1445-000) on Feb. 28 submitted the filings at FERC.
Background on Tariffs
On February 1, 2025, President Trump issued an Executive Order (Canadian Tariff Executive Order) imposing a 25% import duty on “[a]ll articles that are products of Canada” and a 10% import duty on “energy and energy resources.”
On February 3, 2025, Trump issued an Executive Order pausing the implementation of the Canadian Tariff Executive Order until March 4, 2025. The Canadian Tariff Executive Order took effect on March 4. On March 6, Trump issued an Executive Order amending the tariffs on articles that are products of Canada to exempt articles entered “free of duty” under the terms of Harmonized Tariff Schedule of the United States (Harmonized Tariff Schedule) sections related to the Agreement between the United States of America, United Mexican States, and Canada, which took effect on March 7, 2025.
On March 11, President Trump said he would double the tariffs imposed on steel and aluminum imported from Canada, NBC News reported. NBC reported that Trump said that the tariffs would go from 25% to 50% in response to an Ontario electricity surcharge.
Reflecting the fluid nature of developments tied to the ongoing tariff situation, Ontario Premier Doug Ford and U.S. Secretary of Commerce Howard Lutnick issued a joint statement on the afternoon of March 11 that said that Ontario had agreed to suspend its 25 percent surcharge on exports of electricity to Michigan, New York and Minnesota.
The statement said that Lutnick agreed to officially meet with Ford in Washington on Thursday, March 13 alongside the United States Trade Representative to discuss a renewed United States-Mexico-Canada Agreement ahead of the April 2 reciprocal tariff deadline. In response, Ontario agreed to suspend the surcharge.
Details on NYISO filings
NYISO submitted two filings to FERC on Feb. 28.
In the filings, the grid operator filed, pursuant to section 206 of the Federal Power Act or, in the alternative, section 205 of the FPA, revisions to its Open Access Transmission Tariff (OATT) and Market Administration and Control Area Services Tariff (Services Tariff) to govern NYISO’s collection and allocation of costs related to the potential imposition of duties on imports of electrical energy from Canada and to allow NYISO to adjust customer credit requirements as needed to address ad valorem rate of duty (import duty)-related costs.
NYISO proposes two potential mechanisms to establish NYISO’s ability to collect and allocate potential import duties on Canadian electrical energy.
NYISO asked that the Commission accept its proposed tariff revisions under FPA section 205 if the Commission declines to grant NYISO’s complaint under FPA section 206 because it determines that the Canadian Tariff Executive Order does not render NYISO’s existing tariffs unjust and unreasonable.
NYISO explained that, while it ordinarily must obtain super-majority stakeholder approval before submitting FPA section 205 filings, section 19.01 of the Independent System Operator Agreement allows NYISO to file tariff revisions under FPA section 205 that may remain in effect for up to 120 days without first obtaining stakeholder approval.
FERC Order
FERC accepted NYISO’s proposed OATT and Services Tariff revisions under FPA section 205, to be effective March 1, 2025, as requested, subject to conditions detailed in the order.
FERC also directed NYISO to:
• Submit an informational filing that includes any legal and/or technical guidance and related documentation from the relevant federal authorities establishing NYISO’s good faith belief that it is lawfully obliged to remit import duties on Canadian electricity, triggering NYISO’s collection authority, as soon as practicable after receiving such guidance and,
• If NYISO begins paying import duties on Canadian electricity imports, submit informational filings every six months for three years from the date that payments begin quantifying the costs of the import duties in NYISO.
FERC dismissed as moot NYISO’s complaint under FPA section 206.
Details on ISO-NE Filing
ISO-NE said that “there are significant open questions as to whether, and if so, how, a tariff would be imposed upon imports of electricity into the ISO-administered markets and the basis of any applicable Import Duty.”
ISO-NE said that, as of the date of its filing, there had been no regulatory guidance regarding if and how any Import Duties will be applied to imports of electricity from Canada, and whether ISO-NE would be the responsible party for the collection and allocation of such Import Duties, if they are applied.
Specifically, ISO-NE states that the imposition of an Import Duty requires formal publication of applicable tariff terms and rates within the Harmonized Tariff Schedule and that regulatory guidance is often provided as to how the Import Duty for such tariffs will be calculated and collected.
However, ISO-NE states that, with respect to any Import Duty imposed pursuant to the Canadian Tariff Executive Order on imports of Canadian electricity, neither of these steps has occurred. ISO-NE notes that the Canadian Tariff Executive Order incorporates by reference the definition of “energy and energy resources” provided in Executive Order No. 14,156, issued on January 20, 2025, but that this definition does not explicitly include electricity.
ISO-NE filed proposed revisions to its Transmission, Markets and Services Tariff to permit it to collect and allocate any duties, tariffs, or taxes that a federal governmental agency directs ISO-NE to pay for Canadian imports of products or services sold under the Transmission, Markets and Services Tariff into markets administered by ISO-NE.
FERC Order
“We find that ISO-NE’s proposed Import Duty Cost Recovery Change is just and reasonable, and we accept ISO-NE’s proposed Tariff revisions, effective March 1, 2025, as requested,” FERC said in its April 14 order.
FERC said that ISO-NE’s proposal “is just and reasonable and not unduly discriminatory or preferential because it provides ISO-NE clear authority to collect and allocate any Import Duty costs imposed by relevant federal authorities that it may be required to pay. That is all the statute requires of this Commission and we do no more,” FERC said.
FERC directed ISO-NE to:
• Submit an informational filing that includes any legal and/or technical guidance and related documentation from the relevant federal authorities showing that a federal agency has assessed an Import Duty on Canadian electricity imports on ISO-NE, triggering ISO-NE’s collection authority, as soon as practicable after receiving such assessment and,
• If ISO-NE begins paying Import Duties on Canadian electricity imports, submit informational filings every six months for three years from the date that payments begin quantifying the costs of the Import Duties in ISO-NE.
