The Department of Public Service (DPS), the New York State Energy Research and Development Authority (NYSERDA) and the New York State Division of Homeland Security and Emergency Services (DHSES) responded to Governor Kathy Hochul’s recent directive to review the federal energy tariffs and Canadian retaliation that have caused instability in capital markets and threatens to destabilize New York’s energy markets and drive up electricity and heating costs.
A letter last week from Governor Hochul and Senator Charles Schumer directed a review of President Donald Trump’s tariffs and the retaliatory measures being threatened by Ontario Premier Doug Ford “to provide a transparent accounting of their effects on energy prices and supply reliability.”
The agencies reviewed available data and consulted with personnel from affected industries, including electric and natural gas utilities, fuel suppliers, and the New York Independent System Operator, to develop an initial report.
The report examines the impact that the 10 percent energy tariff may have on natural gas, heating oil, propane, diesel and gasoline imports. It also examines a range of impacts that a 10 to 25 percent tariff could have on electricity imports.
According to the agencies’ response, the fluidity and uncertainty surrounding President Trump’s trade policy makes it difficult to accurately forecast the precise impacts of the tariffs.
It is still unclear whether the tariffs are meant to include electricity sales. While the 10 percent energy tariff has been in place since March 4, and energy imports have continued unchanged since they took effect, the tariffs have not yet appeared on invoices from suppliers.
“According to the agencies, cost increases will not be material in the near-term due to New York’s rigorous policing of energy reliability and significant investment into clean energy and transmission projects,” an announcement from the Governor’s office said. “However, the cost increases will be borne by households and businesses across New York and, over time, with added influence from tariffs on other sectors, New Yorkers could experience compounding cost impacts.
New York’s Energy Affordability Program has established a goal to cap household energy expenses at no more than six percent of household income. Under this policy, New York utilities provide utility bill discounts to eligible low-income households.
The program is funded by all of New York’s utility ratepayers and supplemented by the federal Low-Income Home Energy Assistance Program (LIHEAP).
As these discounts are adjusted annually to reflect actual energy costs, any energy cost increases caused by the tariffs will require increasing the budget for the Energy Affordability Program.
“Continued federal assistance from LIHEAP is essential to help vulnerable New York households pay for their utility service,” the Governor’s office said.
On February 28th, the New York Independent System Operator (NYISO, who runs NY’s Grid) issued a statement saying:
“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.”
Duties on Canadian electricity would likely amount to tens of millions of dollars per year, the NYISO’s statement said.
Photo: NY Electric Grid Operator in the New York Independent System Operator Control Center (courtesy (NYISO).
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