SAUGERTIES, N.Y. — Tariff wars initiated by President Donald Trump are getting in the way of a long-term electricity purchase agreement for town and village property owners.
The volatility in prices due to Canada’s response to U.S. import fees charged to consumers was discussed Wednesday during a Town Board meeting.
“The province of Ontario has done the same on exports to the United States on electricity…(with) a 25% additional tariff and New York state does in fact get some of our electricity…from Ontario as well as Quebec,” Joule Assets Vice President Glenn Weinberg said.
Last week, Ontario’s premier, the leader of Canada’s most populous province, announced it would charge 25% more for electricity to 1.5 million Americans in response to U.S. President Donald Trump’s trade war. Ontario provides electricity to Minnesota, New York and Michigan. The next day, Trump said that he would double his planned tariffs on steel and aluminum from 25% to 50% for Canada. That retaliation prompted the provincial government of Ontario to back down.
“It’s all pointing toward higher electricity prices and we think that trend is likely to continue in the short term,” he said. “Of course, you know, at any moment cooler heads could prevail and these tariffs could be withdrawn and we could have a re-settled market.”
The current contract through Direct Energy allows consumers to choose electricity at either 12.24 cents per kilowatt hour from renewable sources entirely within the state, 11.24 cents per kilowatt hour from 50% state-based renewable resources, or 9.87 cents per kilowatt hour for standard market electricity.
Joule, which is administering the Hudson Valley Community Power electricity purchasing group, did get bids that were below the 12-month target rates sought for renewable energy sources. Both of the lowest rates were from Direct Energy, which for the 50% state-generated sources bid 0.41 cents less than the 11.89 cents per kilowatt hour target and for 100% state-generated bid 0.32 cents less than the 12.49 cents per kilowatt hour target.
The rate for electricity produced through non-renewable sources came in at 10.4 cents per kilowatt hour, which Weinberg said earlier this month was disqualified from consideration because it was higher than Central Hudson’s rate when bids were received.
“New York state regulation says that if the conventional price is above the trailing 12-month average for Central Hudson plus 5%…you’re not allowed to offer it all,” he said.
Under an extension of the current contract, which was endorsed this week by both the Town Board and Village Board, there will time for Joule to seek another set of bids that can provide long-term confidence. Weinberg said on Wednesday that the length of the extension has yet to be determined.
“We’re really talking to contemplate a three- to six-month range and I think it’s really going to be four or five months,” he said. “The reason why that makes sense is it pushes out our decision-making about three months, so we’d be coming back early in mid-summer.”
Weinstein expects factors that determine the demand for electricity supply will have a better focus by the time decisions need to be made on a long-term contract.
“When you get to early and mid-summer, that is another opportunity for the market to really settle down, especially if it’s forecasted to be a milder-than-expected summer,” he said. “If it’s not going to be a super hot summer, the market will really calm down and…that will work in our favor.”
The Associated Press contributed to this report for background on the tariffs.
