Grid Operators Cannot Recover Canadian Electricity Import Tariffs From Consumers
By Tyson Slocum
Today in Federal Energy Regulatory Commission dockets ER25-1445, ER25-1462 and EL25-62, we protest the efforts by NYISO and ISO New England to force American households to pay the cost of any import tariffs imposed on Canadian electricity.
On February 28, ISONE and NYISO moved to expedite recovery from New England and New York consumers 100% of the cost of any tariffs imposed on Canadian electricity exports. NYISO, for reasons it fails to justify by citation of law or regulation, claims that it must amend its filed rate in order to obtain “recovery and allocation of potential duty related costs” of expected electricity tariffs, with a similar request by ISONE “to permit the ISO[NE] to recover any duties, tariffs, or taxes”.
Neither ISONE nor NYISO appear to understand how import tariffs work, and because their request would expedite and facilitate the unjust and unreasonable recovery of the tariff from American families, these rate filings must be rejected.
NYISO and ISONE are not importers of record and therefore cannot collect import tariffs for direct distribution to American consumers for payment. NYISO and ISONE are market administrators that facilitate wholesale electricity transactions but do not take title to the commodity. Their function is analogous to natural gas and crude oil pipeline operators, which do not pay import duties themselves because they are common carriers providing open-access transportation services, and are not responsible for tariff collection, as this obligation falls on shippers—the actual owners of the commodity moving through the pipeline.
By misclassifying NYISO and ISO-NE as tariff collection agents, the ISOs fundamentally misapply core trade law principles and impose an unsustainable regulatory burden on entities that merely administer competitive market transactions.
The responsibility of administrating and collecting tariffs rests with the U.S. Customs and Border Protection, which will collect them not from ISOs but from the market-based rate (MBR) sellers that import Canadian electricity into the United States. As an example, the Commission’s Electric Quarterly Reports database reveals that the MBR seller H.Q. Energy Services (U.S.) Inc. (based in Hartford, CT)—affiliated with Hydro-Québec and owned by the Government of Québec—sells electricity from Canada to both ISONE and NYISO at a variety of point of delivery import hubs. H.Q. Energy Services (U.S.) Inc. and similarly-situated MBR importers would the entities responsible for assuming liability for any imposed tariffs.
The ISOs play no role whatsoever in collecting proposed import tariffs, and most certainly they must not be involved in seeking to expedite the recovery of import tariffs from American electricity consumers. But should the Commission somehow determine it should proactively authorize ISOs to expedite the collection of Canadian import tariffs, such action is unjust and unreasonable because absent clear classification and enforcement guidance by U.S. Customs Border Protection, any tariff collection is legally indefensible.
Read the full 6 page filing here CanadaTrump