Beatrice Lang
The cost of electricity varies across the world, with countries like Iran, Qatar, and Russia enjoying some of the cheapest electricity prices due to their abundant natural resources. In 2023, the average residential cost of electricity in Canada was $0.192 per kWh, with rates varying across provinces. In the US, certain states like New York and Massachusetts have benefited from access to cheap Canadian electricity, often generated through hydroelectric power. However, trade disputes and surcharges on electricity exports have threatened to increase prices for American consumers. With complex rate structures and reliance on energy imports, comparing electricity costs between the US and Canada is intricate, and further analysis is needed to determine which country has cheaper electricity overall.
| Characteristics | Values |
|---|---|
| Average residential cost of electricity in Canada | $0.192 per kWh |
| Average electricity cost in Canada excluding territories | $0.155 per kWh |
| Average electricity cost in Canada in 2020 | $0.174 per kWh |
| Average electricity cost in Canada in 2020 excluding territories | $0.135 per kWh |
| Average electricity cost in the US | $0.10 per kWh |
| US reliance on imported Canadian power | Electricity shared across the border accounts for less than 1% of the total power generated by both countries |
| US capacity to replace Canadian power | US electricity operators likely have enough short-term capacity to replace Canadian power |
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What You'll Learn
- Québec has the cheapest electricity prices in Canada
- US electricity prices are almost three times cheaper than in Ireland and Italy
- US-Canada trade disputes over electricity sales may lead to higher prices for consumers
- US states like New York and Massachusetts have reduced carbon emissions by buying Canadian electricity
- Electricity costs in Canada have increased since 2020
Québec has the cheapest electricity prices in Canada
The average residential cost of electricity in Canada is $0.192 per kWh. However, Quebec has the cheapest electricity prices in all of Canada, with an average cost of $0.078 per kWh, or $78 per month, assuming an average monthly usage of 1,000 kWh. This is a significant difference from the national average and makes Quebec's electricity rates among the lowest in North America.
The low electricity rates in Quebec can be attributed to its extensive hydroelectric infrastructure, which is operated by Hydro-Québec. The widespread use of hydroelectricity in the province has contributed to its ability to offer low electricity prices. Quebec's electricity rates are also influenced by the tiered residential rates published by Hydro-Québec, which are designed to allow customers to save money when they save energy.
In contrast, other provinces in Canada, such as Ontario, Alberta, and Nova Scotia, typically have higher electricity rates. This is due to their diverse energy mix, which includes natural gas, coal, and renewables, making them more susceptible to market fluctuations. Additionally, the remote location of certain provinces and territories, such as the Northwest Territories, contributes to higher electricity prices, as they rely on hydropower and petroleum for electricity generation.
It is worth noting that electricity rates can vary within provinces, and additional fees may apply. However, Quebec's abundant hydroelectric resources and efficient energy infrastructure have positioned it as the province with the cheapest electricity prices in Canada.
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US electricity prices are almost three times cheaper than in Ireland and Italy
As of March 2024, Italian households were charged around $0.43 per kilowatt-hour, while in Ireland, the price stood at $0.41 per kilowatt-hour. In comparison, US residents paid almost three times less. The price of electricity varies across the world due to factors such as infrastructure, geography, and taxes and levies. For example, taxes constitute a significant portion of residential electricity prices in Denmark, Belgium, and Sweden. On the other hand, countries with high crude oil and natural gas production, such as Iran, Qatar, and Russia, have some of the cheapest electricity prices globally, with an average household cost of less than $0.10.
Within Canada, the average residential cost of electricity is $0.192 per kWh, including fixed and variable costs, based on a monthly consumption of 1,000 kWh. However, this rate varies across provinces. For instance, Québec has the lowest electricity prices in Canada ($0.078/kWh), while the Northwest Territories have the highest ($0.41/kWh). Similarly, within the EU, electricity prices differ; in the second half of 2020, Germany had the highest electricity prices for household consumers at €0.3006 per kWh, while Bulgaria had the lowest at €0.0982.
Electricity prices for non-household consumers also vary within the EU. In the second half of 2020, Germany and Italy had the highest prices at €0.1818 and €0.1514 per kWh, respectively, while Sweden and Denmark had the lowest at €0.0588 and €0.0686. Additionally, Germany and Italy had the highest share of non-recoverable taxes and levies in the overall electricity price for non-household consumers, at 51.3% and 42%, respectively.
While US electricity prices are significantly lower than those in Ireland and Italy, it's important to consider other factors influencing electricity rates, such as infrastructure, geography, and taxes. These factors can contribute to the wide variation in electricity prices observed globally and even within specific countries. Understanding these factors can provide valuable insights into the complexities of electricity pricing and the potential for cost savings through efficient rate designs.
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US-Canada trade disputes over electricity sales may lead to higher prices for consumers
In 2025, a trade dispute between the US and Canada emerged, threatening to disrupt the electricity trade between the two countries and potentially leading to higher prices for consumers. This dispute arose when the Trump administration imposed tariffs on Canadian goods, including a 10% tariff on energy products. In response, the premier of Ontario, Canada's most populous province, imposed a 25% tariff on electricity exports to the US, affecting 1.5 million American homes and businesses in states like New York, Michigan, and Minnesota.
Historically, electricity has flowed between the US and Canada without tariffs, and the two countries have integrated their grids over the past century. The US imported 11,381 net gigawatt-hours (GWh) of Canadian electricity in 2024, equivalent to the annual electricity consumption of approximately 1 million residential homes. While imports represent a small portion of the overall power supply in each US market, the cessation of power flow between the two regions could raise serious reliability concerns.
The electricity trade between the US and Canada is driven by market considerations, with electricity flowing both ways across the border via 31 high-voltage international power lines. Certain US states, like New England, rely more heavily on Canadian imports during winter peaks, and the introduction of tariffs and the threat of power flow cuts have introduced geopolitical risk into the cross-border electricity trade.
The exact upward price impact on retail electricity bills in the US may be less than the tariff rate, as imports are only a small portion of the power supply. However, the wholesale price of electricity will be impacted, and factors like transmission and distribution costs also contribute to end-user rates. Additionally, the resulting price increase will take time to reflect on retail bills, as rates are often fixed for longer periods.
In conclusion, the US-Canada trade dispute over electricity sales has the potential to lead to higher prices for consumers, particularly in states that rely on Canadian electricity imports during peak demand periods. The disruption of the electricity trade between the two countries could result in reliability concerns and alter long-term infrastructure investment and decarbonization policies. While the immediate price impact may be mitigated by various factors, the escalation of the trade dispute could have more significant consequences for consumers in the long run.
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US states like New York and Massachusetts have reduced carbon emissions by buying Canadian electricity
While there is no direct evidence that US states like New York and Massachusetts have lowered carbon emissions by purchasing electricity from Canada, there is evidence that the US has a better record of emissions reduction than Canada. This is due in part to the fact that natural gas and wind replaced coal as the largest source of in-state electricity generation in 14 US states between 2001 and 2021. In comparison, Alberta, Canada, was on track to shut down its last coal plants by early 2024, aided by lower natural gas prices and decreasing renewable energy technology costs.
New York has phased out coal power generation through regulatory measures, and Oregon and Washington have implemented legislation mandating emissions reductions from coal-fired power plants. These regulations have been effective in lowering electricity generation from coal-fired power plants. Between 2005 and 2021, coal power generation decreased by 66% in Canada and 55% in the US.
In addition to regulatory measures, economic incentives have also played a role in reducing emissions. For example, the rising carbon price has incentivized a faster transition away from coal. In Canada, the federal government has implemented a carbon pricing system, also known as a carbon tax, which puts a dollar amount on the costs of greenhouse gas emissions. This encourages households, businesses, and industries to shift to cleaner technologies and increase demand for energy-efficient products and investments in green solutions.
While the US has made progress in reducing emissions from coal-fired power plants, the next phase of reducing emissions from gas generation could be more challenging. To complement renewable energy sources, there is a need for sufficient low-carbon baseload generation capacity, such as hydro and nuclear power. Additionally, stronger support for the adoption of electric vehicles is necessary to counteract the impact of higher population growth and driving activity.
Overall, while there is no direct evidence that US states have lowered carbon emissions by purchasing electricity from Canada, the US has made progress in reducing emissions through a combination of regulatory measures, economic incentives, and the expansion of renewable energy sources.
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Electricity costs in Canada have increased since 2020
Electricity costs in Canada have indeed increased since 2020. As of September 2023, the average residential cost of electricity in Canada is $0.192 per kWh, up from $0.174 per kWh in 2020. This includes both fixed and variable costs and is based on an average monthly consumption of 1,000 kWh. The average electricity cost decreases to $0.155 if you exclude the territories.
The increase in electricity costs varies across different provinces in Canada. For example, in Alberta, the average residential cost of electricity is now $0.258 per kWh, up from $0.167 per kWh in 2020. In British Columbia, the average cost is now $0.114 per kWh, up from $0.124 per kWh in 2020. The Yukon Territory has seen a similar increase, with the average cost rising from $0.145 per kWh in 2020 to $0.187 per kWh in 2023.
Several factors contribute to the varying electricity costs across Canada. The remote location and reliance on hydropower and petroleum in the Northwest Territories make it the most expensive region, with prices at $0.41 per kWh. In contrast, Quebec has the cheapest electricity prices in Canada at $0.078 per kWh, thanks to its widespread use of hydroelectric power.
To manage electricity costs, some provinces in Canada have introduced initiatives like the Ontario Electricity Rebate in 2019, which offered a 31.8% reduction on eligible consumers' bills. Additionally, during the COVID-19 situation in 2021, the Ontario government held electricity prices at 8.5 ¢/kWh to support residents staying at home.
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Frequently asked questions
As of 2024, American electricity was almost three times cheaper than Italian and Irish electricity, which were among the highest household electricity prices worldwide. However, I cannot find a direct comparison between American and Canadian electricity prices.
The price of electricity varies across the USA. In 2023, electricity prices for households ranged from $0.09 per kWh in Quebec to $0.42 per kWh in New Hampshire.
The average residential cost of electricity in Canada in 2023 was $0.192 per kWh. This includes both fixed and variable costs and is based on an average monthly consumption of 1,000 kWh. The average electricity cost decreases to $0.155 if you exclude the territories.
