In a move to avoid a potential trade showdown with the United States, the Ontario government has eliminated its surcharge on electricity exports, a policy reversal that comes after warnings from Washington and American energy companies.

The surcharge, initially implemented in early 2024, added a fee to electricity sold to out-of-province customers — primarily affecting buyers in the northeastern U.S. The intention was to level the playing field for Ontario ratepayers, who subsidize the province’s clean energy system. However, the policy quickly sparked complaints from U.S. officials and power companies who saw it as discriminatory and contrary to international trade agreements.

Facing mounting pressure, including threats of retaliation and a potential challenge under the United States–Mexico–Canada Agreement (USMCA), Ontario Premier Doug Ford’s administration decided to roll back the fee. Energy Minister Todd Smith confirmed the decision, stating that while the government remains committed to protecting Ontario ratepayers, it will do so in a way that avoids broader economic conflict.

The U.S. reaction has been swift and positive. Several American utilities welcomed the move, saying it helps preserve a reliable and affordable supply of clean electricity across the border.

The policy shift underscores how interconnected North America’s power grid is — and how energy trade, particularly with regard to clean electricity, is becoming an increasingly complex and political issue. Ontario’s hydroelectric and nuclear power exports are a key component of the region’s decarbonization strategy, especially as U.S. states move to phase out coal and gas.

While Ontario backs off from its surcharge, Canadian officials have reiterated the importance of continuing conversations around fair contributions to clean energy infrastructure. However, for now, the rollback is seen as a win for cross-border energy cooperation — and a reminder of how economic diplomacy continues to shape energy policy in the age of climate transition.