Why Ontario’s electricity tariff likely won’t hurt Minnesotans

Ontario’s sharp new tax on electricity exported to the U.S. is expected to have little to no impact on Minnesota or the bills of its electric customers.

It has been widely reported that the large Canadian province provides electricity to Minnesota, along with Michigan and New York.

But Minnesota’s biggest utilities and officials for the regional electric grid operator say they use very little power from Ontario, which imposed the 25% charge on Monday in response to President Donald Trump’s escalating trade war.

Minnesota Gov. Tim Walz on Monday shared a story about the Ontario charge in posts on social media, saying that “Minnesotans struggling to pay their skyrocketing electric bill” would be “the first victims of Trump’s trade war.”

Minnesota’s power companies do not predict major bill impacts from the Ontario tariff, however.

Minnesota’s largest electric utility, Minneapolis-based Xcel Energy, said it does not import electricity or natural gas directly from Ontario. The company does source some electricity from nearby Manitoba and gas from Alberta.

Great River Energy, a nonprofit that supplies electricity to rural electric cooperatives throughout the state, says it has no contracts to buy electricity from Ontario. The same is true for Fergus Falls-based Otter Tail Power.

“Based on what we know today, the tariffs will not have a direct impact on Otter Tail Power’s electric customers,” said spokeswoman Stephanie Hoff.

Duluth-based Minnesota Power is connected to the Ontario grid by a transmission line into Canada, spokeswoman Amy Rutledge said. The utility buys only a sliver of its power from Ontario.

The company purchased about $310,000 worth of electricity from Ontario’s grid in 2024, according to filings with state regulators. By comparison, Minnesota Power spent around $108 million to buy electricity from Manitoba Hydro last year.

What remains unclear — and could have a bigger impact — is how a 10% U.S. tariff imposed by Trump on Canadian energy will affect Minnesota.

It’s unknown if U.S. import tariffs actually apply to electricity, however, said officials with the 15-state regional grid that includes Minnesota, known as the Midcontinent Independent System Operator (MISO). Three oil refineries that provide much of Minnesota’s gasoline get most of their crude from Canada, and the state also imports natural gas from Canada.

“The Ontario thing is a symptom, not the broader disease,” said Pete Wyckoff, a deputy commissioner for Walz’s Department of Commerce who oversees energy issues. “In a broader trade war with Canada that includes energy, Minnesota would be a huge loser because of our dependencies.”

Walz also told reporters on Monday that he was worried about the impact on Minnesota if Manitoba followed suit, but that Ontario tariffs hitting even a small amount of power “was totally unnecessary” and caused by Trump’s trade war.

“It doesn’t impact Donald Trump one bit, it impacts ratepayers in Minnesota,” Walz said. “For what? These are our friends.”

Minnesota Power has a lengthy contract with Manitoba Hydro, which supplies about 11% of the Duluth utility’s electricity. Minnesota Power and Manitoba Hydro built a $700 million, 224-mile power line that was energized in 2020.

“We definitely are monitoring this, we definitely are keeping a close eye on it,” Rutledge said. “But we do want our customers to be assured that we don’t expect this to impact our ability to provide reliable service and, the Ontario surcharge, we expect that to be a negligible impact.”

Less than 1% of MISO’s total energy in 2024 came from Canada. MISO spokesman Brandon Morris said less than half of that came from Ontario, which is not a member of the regional grid but sends power to it.

He compared it to the output of one power plant, and said the grid manages the temporary loss of power plants every day while maintaining a reliable system.

On Monday, Morris said MISO is still reviewing Ontario’s export tax on electricity, but said it would be collected on the Canadian side of the border.

If there are any increases on customer bills as a result of the Ontario action, it would likely take time to sort out in front of state regulators.

Electric rates are complicated and depend on many factors, including the price of fuel. A five-member commission appointed by Walz oversees rates for customers of Minnesota’s three investor-owned utilities: Otter Tail, Minnesota Power and Xcel.

Xcel has asked the Public Utilities Commission to approve a 9.6% increase in 2025 and another 3.6% jump in 2026. The company says average monthly bills for residential customers are below national and state averages.

Kristoffer Tigue of the Minnesota Star Tribune contributed to this story.