Published August 24, 2026 by Adel
Ontario's 25% Electricity Surcharge to the US: What It Means for Your Hydro Bill
Ontario Premier Doug Ford imposed a 25% surcharge on electricity exports to the United States, affecting approximately 1.5 million American homes and businesses in Michigan, Minnesota, and New York. Ford also threatened to shut off electricity exports entirely if the US escalates the trade war further.
The move was framed as retaliation for US tariffs on Canadian goods. But what does it actually mean for Ontario residents and your hydro bill?
How Ontario Electricity Exports Work
Ontario generates more electricity than it consumes in most hours. The surplus is exported to neighbouring US states through interconnected transmission lines. These exports generate revenue for Ontario's electricity system, which offsets costs that would otherwise be borne by Ontario ratepayers. In simple terms: selling surplus power to the US has historically helped keep your hydro bill lower than it would be if Ontario consumed all the power it produces or let the surplus go to waste.
The exports are managed by the Independent Electricity System Operator (IESO) through real-time market transactions. The price Ontario receives for exports varies by the hour based on demand in the US markets.
What the 25% Surcharge Does
The surcharge increases the price the US pays for Ontario electricity by 25%. This makes Ontario power more expensive for American utilities that buy it, which they pass on to their customers. From Ontario's perspective, the surcharge increases the revenue generated from exports, at least in the short term.
Whether this actually helps Ontario ratepayers depends on how the US responds. If American utilities find cheaper alternatives (natural gas, other grid connections, conservation), Ontario's export volumes could drop. Lower export volumes mean less revenue flowing back into Ontario's electricity system, which could put upward pressure on domestic rates. If the US has no viable alternative and continues buying Ontario power at the higher price, the surcharge generates additional revenue that could help offset Ontario ratepayer costs.
Will Your Hydro Bill Go Up Because of This?
Not directly. The surcharge is on exports, not on domestic rates. Your hydro bill is set by the Ontario Energy Board based on domestic generation costs, delivery charges, and regulatory costs. The export surcharge does not change any of those components.
Indirectly, if the surcharge triggers reduced exports and the lost revenue needs to be recovered from domestic ratepayers, there could be a modest impact down the line. But this would take months to materialize and would be filtered through the OEB rate-setting process. You would see it as a small adjustment in your delivery or regulatory charges, not as a sudden spike.
The bigger risk to your hydro bill in 2026 is the Global Adjustment (the charge that covers the cost of building and maintaining Ontario's power plants, which makes up about half of your bill) and natural gas prices (which affect gas-fired power plants that provide peaking power). Neither of these is directly related to the trade war.
The Bigger Picture
Ontario's electricity grid is one of the few genuine leverage points Canada has in the trade dispute. The US states that depend on Ontario power cannot easily replace it. Ford's threat to shut off exports entirely is politically dramatic but economically risky for both sides. Ontario would lose export revenue. American households and businesses would face supply shortfalls and price spikes.
For Ontario residents, the practical takeaway is this: the trade war has not changed your hydro bill yet, but the underlying economics are shifting. If you want to lower your electricity costs regardless of what happens with tariffs, the strategies are the same as before: shift heavy usage to off-peak hours (if on Time-of-Use pricing), apply for the Ontario Electricity Support Program if your income qualifies, and check whether switching between TOU and Tiered pricing saves you money.
For a full breakdown of every charge on your hydro bill and how to reduce them, read our electricity bill guide. For all available financial support programs, visit our Coverage for Seniors hub.
Written by Adel. Independently researched. Not affiliated with any electricity provider, the IESO, or the Government of Ontario.