Albireo Energy PLUGGED IN is a news channel for our energy analysis and procurement customers, providing a monthly view into energy markets. We highlight key trends, pricing dynamics, and procurement insights to help you stay informed and make smarter energy decisions.
What Does A US-Canada Trade War Mean for Power?
As the United States and Canada get ready for a trade war, it’s important to understand the current state of the relationship
for the US power grid and potential impact to reliability and pricing. The United States has been gradually importing less
power from Canada over the past decade. The two largest importers of Canadian power are ISO New England which
imported 3.4% of its generation needs in 2025 and the New York ISO at 2% in 2025. A new Champlain Hudson Power
Express (CHPE) transmission line came online in June 2026. The new line connects NYC to Canadian hydro power and looks
to reverse the trend. The expectation is for NYC to receive 20% of its power needs from this line as it serves as the primary
replacement to the Indian Point nuclear plant. As a demonstration of its capabilities, a record 9% of the NYISO power needs
were imported from Canada on July 3rd which came during the early summer heat wave that hit the northeast.
Source | Canada Energy Regulator Market Snapshot: Overview of 2025 Canada-U.S. Energy Trade
In that context, what does a trade war between the US and Canada mean to US power consumers? On the average day, likely very little. The percentage of power supplied by Canada is small. The power that is imported comes from cheap hydroelectric plants which serve as base load and therefore would rarely set the market price. Depending on how the tariff would be applied, it would be simple calculation to factor in the tariff when the ISOs select generators to fill demand.
The challenge would come on high demand days in the summer and winter. The US power grid has enough generation to meet its demand without importing Canadian power. The impact would be financial only, with the brunt of the impact being felt during times of peak demand. Using the above example for the day NYISO imported 9% of its power, if the NYISO was unable to import that power or needed to pay a tariff on top, the result would be to make high prices even higher. The absence would not affect reliability. Unfortunately, this factor would add to a number of other factors that are currently pushing energy prices higher in much of the US. Canadians could also feel the impact because Canada has been importing more power from the US mostly because of persistent drought conditions that have limited its hydroelectric generation.
NOAA Issues Winter Forecast Impacted by Super El Niño
So far, the early El Niño forecasts have been accurate. NOAA called for a quiet hurricane year because of the effect and so far it has been a very quiet year. There have only been five named storms and no hurricanes. Typically, there would have been three by this time with one being a major hurricane. Those are important data points as we enter fall and approach winter. NOAA places the likelihood of a very strong event at over 90 percent. The World Meteorological Organization forecasts that there is nearly a 100% likelihood that El Niño will remain in effect through February 2027. Previously, NOAA predicted that surface water temperatures would climb above 2°C. Temps in fact climbed into the 2.2°C to 2.6°C range, while subsurface temps climbed more than 8°C above normal.
Source | NOAA Seasonal Temperature Outlook
As the graph above depicts, most of the country is forecasted to have above average temperatures with the highest likelihood covering what are normally the coldest parts of the country. A warmer than normal winter would provide welcome price relief after Winter Storm Fern doubled the price of natural gas in February 2026 from February 2025. The storm contributed to electric prices climbing over 30% this past winter over the previous winter for much of the country.
Governor Abbott Presses Pause On New Data Center Grid Connections
On August 3rd Texas Governor Greg Abbott paused all new data center connections until the impact they are having on the power grid and water consumption could be assessed. The growth of data centers has received pushback from residents for a variety of reasons, so the timing of the move by Abbott is likely just as much about scoring political points before the midterm elections as it is over genuine resource concerns.
The letter to the PUCT and ERCOT directed the organizations to gather the following info from each project:
- The amount of financial assistance coming from state and local programs including tax incentives, grants, and abatements.
- The amount of power the project will draw from the grid compared to providing their own power. Details to include progress to construct or procure on-site generation and other measures proposed to reduce demand from the grid.
- The project’s approach to water. What kind of cooling system will be used? Will the project bring their own water or reuse its own water.
- What type of other measures is the project taking to limit the impact on the surrounding community? For example, how will the project approach, noise mitigation, light controls, and setbacks?
- What is the ownership and controlling interests in the project?
This request runs in conjunction with the ERCOT Batch Zero study process, but could also delay that process. Batch Zero is the process by ERCOT to perform impact reviews of an initial 300 data centers with demand greater than 25 MW seeking to connect to the grid. ERCOT announced in late August that it expects to have the governor’s audit completed by December 10th. ERCOT is still evaluating if it will need to extend the timeline on the Batch Zero process.
Market Update
Natural gas looks like it is starting to bottom out for 2027. Storage numbers are strong as they are nearing 5-year highs. Cal 2028 and 2029 are trading higher, but flat to each other. Conversely, electric prices remain mostly elevated as a potential trade war with Canada adds additional upward pressure for the near term to a market already concerned about tightening supply.
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Reminder, it is budget season and with winter pricing looming it is important for early review of budgets for 2027. Please reach out to your contact or customer service at [email protected] to request your 2027 budget.
