New York state consumers are unlikely to face significantly higher bills in the short term because of President Donald Trump’s tariff on Canadian energy products, according to a preliminary analysis released today by state energy officials.
But the risk of price increases and outages would multiply if Canada retaliated against the tariffs by shutting off energy supplies, according to the report prepared by the Public Service Commission, the New York State Energy Research and Development Authority, and the Division of Homeland Security.
Uncertainty about the tariff impacts still reigns, the agencies said. Gov. Kathy Hochul requested the analysis earlier this month.
Although a 10% tariff on Canadian energy products such as oil and natural gas took effect March 4, utility companies and other suppliers say they have not received invoices yet. New York officials say they still don’t know whether the tariffs apply to electricity.
“The fluidity and uncertainty surrounding President Trump’s trade policy makes it difficult to accurately forecast the precise impacts of the tariffs,’’ said the report.
For now, it appears that “New Yorkers are largely insulated’’ from tariff-related costs in the near term, the report concludes. The longer-term outlook is harder to predict.
“We have concluded that the potential cost impacts will likely not be material in the short-term, but due to extensive variables outside of our control, the tariffs could have significant affordability impacts in the long-term,’’ the report concluded.
State officials tried to predict the effect of tariffs on electricity, natural gas, gasoline, diesel and home heating fuels.
Some North Country residents face the most risk, because they depend on Canadian natural gas.
Liberty/St. Lawrence Gas, which serves more than 16,000 customers in Lewis, St. Lawrence and Franklin counties, buys 90% of its supply from Canada and gets the rest from landfills or other renewable sources. For a typical customer of the utility, state officials predict the tariff will increase natural gas costs by $25 a year, or about 2%.
But if the supply of Canadian natural gas were disrupted, the utility would have no ready alternative to supply customers, officials said.
Similarly, 5,400 customers of New York State Electric & Gas in the city of Plattsburgh get natural gas directly from Canada. NYSEG estimates that its customers statewide may face bill increase of up to $1.27 a month due to the gas tariff. But if a trade war prompts Canada to stop deliveries, NYSEG does not have an alternative supply of natural gas for Plattsburgh.
If the energy tariff applies to electricity – state officials are still waiting for clarity from federal regulators on that point – it could add between $42 million and $105 million to the annual commodity cost statewide. That would be a blip in the $7 billion electricity market and is unlikely to produce significant bill increases, the report said.
However, the tariffs are causing uncertainty that could increase the cost of hedging contracts that utilities use to moderate energy prices. Moreover, tariffs on non-energy products such as aluminum and steel could raise the cost of building transmission lines and power plants, which could increase future energy costs.
The gravest concerns stem from the potential for a trade war to worsen between Canada and the United States, energy officials said.
Earlier this month Doug Ford, the Ontario premier, threatened that Ontario might stop sending electricity to New York and other states in retaliation for U.S. tariffs. Ford quickly withdrew the threat after entering talks with U.S. officials, but the potential for a trade war to disrupt energy supplies remains a concern, New York officials said.
In addition to the risk faced by North Country gas customers, New York’s electric system could become more prone to summer power shortages if Canada did not supply electricity to meet peak air conditioning loads, the report said.
“Losing access to Canadian imports during the peak summer cooling months could create significant reliability challenges,’’ the report said.
Trump delayed imposition of a 25% tariff on some Canadian products until April 2. But the 10% tariff on energy took effect March 4.
State officials said they would continue to monitor the effect of the tariffs.
Staff writer Tim Knauss can be reached at: email | Twitter | 315-470-3023.