Low-Energy Fridays: Electricity Trade Is More Important Than the Numbers Suggest

The federal government has spent much of the past year warning that America needs more electricity. Yet a new rule by the Department of Energy (DOE) makes electricity easier to export. At first glance, the government seems to be arguing with itself. It isn’t. The ability to trade electricity is valuable because trade is a two-way street. Buying power helps Americans in an emergency, while selling excess power brings in revenue.

The electricity trade might look small and insignificant against the overall scale of America’s power industry. After all, the United States generated about 4,430 terawatt-hours (TWh) of electricity in 2025 while exporting near 18 TWh (less than half of 1 percent of domestic power, according to the U.S. Energy Information Administration). Imports totaled about 30 TWh, which is still less than 1 percent. As a result, there are those who see electricity exports as no big deal. Yet some find exports troubling because they seem to be taking away from an already limited amount of power that American consumers need. However, both views miss the key to electricity’s value—which varies dramatically across time and place—and the value of trading opportunities.

Consider New York, where electricity demand reached near record highs during a heat wave this summer. The New York Independent System Operator imported over 9 percent of the power it used from Canada on July 3, and a new power line—the Champlain Hudson Power Express—began running at full capacity. Electricity produced 100 miles or more to the north helped New Yorkers keep cool through the hottest days and nights. (And when the line went out of service for several days later in the month, the state had to rely on dirtier, more expensive power plants while repairs were made.)

Sometimes valuable trade runs in the other direction.

The New England Clean Energy Connect line began operations in January, primarily to bring Québec hydropower south. When Winter Storm Fern swept into New England and eastern Canada in late January, Québec had to curtail exports to meet its own needs. New England increased its power output, selling more power into Canada than it brought in for more than 24 hours. The new line was barely open before circumstances showed the usefulness of trading in both directions.

The West Coast has a longer-running version of the same story. British Columbia traditionally exported power south into Washington and Oregon during much of the year, often flowing all the way to California, and imported more often in winters. Because a drought has reduced water supplies and hydropower output in western Canada since early 2023, the United States now sells power north. Hydropower-heavy regions depend on snowpack and rainfall for their power supply; when precipitation isn’t enough, electricity trade across long-distance power lines can help relieve the regional power shortfall.

This is ordinary electricity economics. One megawatt-hour of available energy may be worth relatively little on a mild spring afternoon, while the same quantity during a heat wave or winter storm (or after a large generator trips offline) can be worth much more. Location matters, too. Electricity can be abundant and cheap in one area but scarce and expensive if the transmission lines are already full. 

Transmission creates value by enabling power to travel long distances when the price difference is large enough to cover the cost of moving the power and the barriers to trade are low enough. The principle is the same even when the transmission line crosses the border. 

That brings us back to the DOE. The new rule modernizes export-permitting applications last updated substantially in 1981, long before regional power markets and extensive electricity trading reshaped the industry. The DOE says the rule change mostly just cuts paperwork and streamlines the application process. Critics say the change deprives citizens of the opportunity to intervene when necessary and to protest against objectionable export applications.

Critics also point to possible power shortages and emergencies in the United States as a reason to slow rather than streamline export applications, but grid operators already have authority to curtail exports in emergencies. The truth is that the rules affect export application procedures only, not grid reliability standards or emergency authority. Removing unnecessary barriers to trade should not harm reliability; in fact, it can boost reliability in the longer run, since the lines that carry exports in good times can carry imports when we’re the ones short.

In politics, barriers can pop up faster than well-meaning officials can remove them. As the latest U.S.-Canada tariff dispute escalated in late August, Ontario Premier Doug Ford raised the possibility of restricting electricity exports to the United States (and not for the first time). 

The threat might seem to demonstrate the danger of relying on foreign electricity, but the real lesson is a little deeper. Electricity trade partners and transmission lines create options, and those options have real value even when not exercised. Taking them away will mean fewer options to help New Yorkers through the next heat wave or for the Western states to sell power into British Columbia during a drought. 

There is political risk in trading with neighbors, but the economic risk in having fewer opportunities to trade with neighbors is bigger. A more secure North American power system keeps transmission options available and lets electricity flow toward where it is most valuable, relieving shortages when Americans most need power.