p44 s1 bill 40 b040rep e.pdf

Ontario — Bills

1ST SESSION, 44TH LEGISLATURE, ONTARIO 4 CHARLES III, 2025 Bill 40

An Act to amend various statutes with respect to energy, the electrical sector and public utilities The Hon. S. Lecce Minister of Energy and Mines Government Bill 1st Reading June 3, 2025 2nd Reading November 17, 2025 3rd Reading Royal Assent (Reprinted as amended by the Standing Committee on the Interior and as reported to the Legislative Assembly December 3, 2025) (The provisions in this bill will be renumbered after 3rd Reading)

This reprint of the Bill is marked to indicate the changes that were made in Committee. The changes are indicated by underlines for new text and a strikethrough for deleted text. ______________ EXPLANATORY NOTE

SCHEDULE 1 ELECTRICITY ACT, 1998 The

Schedule amends the Electricity Act, 1998. The major elements are described below: 1. The purposes of the Act in

section 1 are amended to add new purposes related to economic growth and the development of a hydrogen market and economy in Ontario. 2. The objects of the Independent Electri city System Operator in subsection 6 (1) of the Act are amended to add provisions relating to supporting economic growth. 3.

Sections 25.33 and 25.34 of the Act are amended to provide that regulations made under the Act may specify amounts paid to generators, the Financial Corporation and distributors that would not be taken into account when adjustments are made to ensure that payments of those amounts be made by specified classes of market participants and consumers. Instead, those amounts would be paid out of money appropriated by the Legislature, if any. Complementary amendments are made to the regulation-making authority in

section 114. 4. New

section 28.1 is added to the Act. It provides that transmitters or distributors shall not connect or reconnect certain load facilities from its transmission system or distribution system unless connection requirements that are specified in the regulations are met. Complementary amendments are made to the regulation-making authority in

section 114. A related amendment is made to the Fixing the Hydro Mess Act, 2019.

SCHEDULE 2 MUNICIPAL FRANCHISES ACT The

Schedule amends the Municipal Franchises Act. Currently, subsection 3 (1) of the Act provides that, before a mu nicipality can grant the right to use or occupy any of the highways of the municipality for a public utility or to constr uct or operate a public utility in the municipality, the municipa l electors of that municipality must assent to a by-law setting out the terms and conditions upon which and the period for which such right is to be granted or acquired.

Section 3 is re-enacted to remove the requirement for the municipal electors to assent to such a by-law and instead to require that a municipality pass a by-law setting out the terms and conditions. Various amendments are made to other provisions of the Act to reflect that change. Currently, subsection 10 (1) of the Act provides that a municipality or a party having a right to operate works for the distribution of gas may apply to the Ontario Energy Board for an order to re new or extend the term of the right if it has expired or will expire within one year.

This subsection is amended to expand the authority of the Ontario Energy Board so that a municipality or party may apply to the Board for an order to renew or extend the term of a right not only to operate, but also to construct, extend or add to works for the distribution of gas. A transitional amendment is made to provide that applications that are made to the Ontario En ergy Board for an order under

section 9 or 10 of the Act before the

Schedule comes into force shall be continued and disposed of in accordance with the Act, as amended by the Schedule. A consequential amendment is made to the Public Utilities Act.

SCHEDULE 3 ONTARIO ENERGY BOARD ACT, 1998 The

Schedule amends the Ontario Energy Board Act, 1998. The major elements are described below: 1. Subsection 1 (1) of the Act is amended to add a new objective of the Ontario Energy Board respecting economic growth in relation to the regulation of the electricity sector. 2. A new

section 13.1 of the Act authorizes the Board’s chief executive officer to issue internal policies respecting various procedural matters in relation to hearings and determinations. 3. Amendments are made to reflect the addition of

section 28.1 to the Electricity Act,

Section 28.1 of the Electricity Act, 1998 is made an enforceable provision under the Ontario Energy Board Act, 1998 . Conditions requiring non- discriminatory access in the licence of a transmitter or distributor are made subject to the restrictions in

section 28.1 of the Electricity Act,

Section 28.1 of the Electricity Act, 1998 and any regulation made under that Act prevails over an order, code or licence issued by the Board.

ii

Section 78.3 is added to the Act. It provides that the Minister may make payments to a transmitter out of money appropriated by the Legislature, if any. If those payments are made to the transmitter, the Ontario Energy Board must take those payments into account when setting rates for the transmitter under

section 78 of the Act.

Section 96 of the Act is amended in respect of applications under

section 92 of the Act (leave to construct, etc., electricity transmission or distribution line). Economic growth is adde d to the list of matters the Board is permitted to consider when deciding whether granting leave is in the public interest. As well, the Board is required to consider reports, documents or other information that may be specified by the regulations made under the Act in considering an application under

section 92. 6. Various spent transitional provisions are repealed. 7. The

Schedule amends sections 43.1 and 73 of the Act respecting deferral and varian ce accounts connected to costs arising from compliance with those sections and specified interest costs, which establish procurement restrictions based on country, region or territory of origin . Sections 43.1 and 73 are added to the Act by Bill 5 ( Protect Ontario by Unleashing our Economy Act, 2025), introduced on April 17, 2025, and so the amendments to those sections apply only if Bill 5 receives Royal Assent.

Bill 40 2025

An Act to amend various statutes with respect to energy, the electrical sector and public utilities CONTENTS

Preamble 1. Contents of this Act 2. Commencement 3.

Short title

Schedule 1 Electricit y Act, 1998

Schedule 2 Munici pal Franchises Act

Schedule 3 Ontario Ener gy Board Act, 1998

Preamble The Government of Ontario is committed to: Building an affordable, secure, reliable and clean energy system to power the strongest economy in the G7. Prioritizing economic growth, job creation and strong governance as objectives of Ontario’s energy system. Supporting the responsible growth of energy-intensive industries like data centres that align with Ontario’s economic priorities and benefit local communities. Keeping our energy supply secure by supporting the sector with the implementation of limitations on foreign participation in Ontario’s energy sector.

Delivering affordable and clean energy for generations to power our economy and peoples’ lives. Therefore, His Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows: Contents of this Act 1 This Act consists of this section, sections 2 and 3 and the Schedules to this Act. Commencement 2

(1) Except as otherwise provided in this section, this Act comes into force on the day it receives Royal Assent.

(2) The Schedules to this Act come into force as provided in each Schedule.

(3) If a

Schedule to this Act provides that any of its provisions are to come into force on a day to be named by order of the Lieutenant Governor in Council, an order may apply to one or more of those provisions, and orders may be issued at different times with respect to any of those provisions.

Short title 3 The

short title of this Act is the Protect Ontario by Securing Affordable Energy for Generations Act, 2025.

SCHEDULE 1 ELECTRICITY ACT, 1998 1

(1) Section 1 of the Electricity Act, 1998 is amended by adding the following clause: (a.1.1) to support economic growth in a manner consistent with the policies of the Government of Ontario;

(2) Section 1 of the Act is amended by adding the following clause: (d.1) to facilitate the development of a hydrogen market an d economy in Ontario in order to support potential uses and applications of low-carbon hydrogen, including for purposes directly or indirectly connected to the electricity system or electricity sector, in a manner consistent with the policies of the Government of Ontario;

(3) Clause 1 (

e) of the Act is amended by adding “subject to

section 28.1” at the beginning. 2 Subsection 6 (1) of the Act is amended by adding the following clause: (l.1) to support economic growth in a manner that protects the interests of consumers; 3

(1) Clause 25.33 (1) (

a) of the Act is amended by adding “other than amounts funded under

section 25.34” at the end.

(2) Clause 25.33 (2) (

a) of the Act is amended by adding “other than amounts funded under

section 25.34” at the end. 4 Subsection 25.34 (2) of the Act is amended by adding the following paragraph: 0.1 Such amounts described in clause 25.33 (1) (

a) or (2) (

a) as may be prescribed by the regulations. 5 Subsection 26 (1) of the Act is amended by adding “Subject to

section 28.1” at the beginning. 6

Section 28 of the Act is amended by adding “Subject to

section 28.1” at the beginning. 7 The Act is amended by adding the following section: Exceptions for specified load facilities 28.1

(1) In this section, “specified connection requirements” means, in relation to a specified load facility, (

a) any conditions, requirements or limitations that the regulations specify must be met for the specified load facility to be connected or reconnected to a transmission system or distribution system, as applicable, (

b) any approvals that the regulations specify must be obtained for the specified load facility to be connected or reconnected to a transmission system or distribution system, as applicable, and (

c) any conditions, requirements or limitati ons of an approval described in clause (b); (“exigences précisées en matière de raccordement”) “specified load facility” means a facility or class of facilities, (

a) that is a data centre and that meets any criteria that may be set out in the regulations, or (

b) that, (

i) withdraws or would, if it were conn ected to a transmission system or distribution system, be expected to withdraw electricity from the IESO-controlled grid or from the distribution system of a distributor who is licensed under

Part V of the Ontario Energy Board Act, 1998, (ii) has or would, if it were connected to a transmission system or distribution system, be expected to have a demand for electricity at the point of connec tion to the transmission system or distribution system, as applicable, that exceeds the amount prescribed by the regulations, and (iii) meets any other criteria that may be set out in the regulations. (“installation de charge précisée”) Connection or reconnection of specified load facilities

(2) Unless a transmitter or distributor is satisfied that the specified connection requirements have been complied with, the transmitter or distributor shall not, (

a) connect a specified load facility to its transmissi on system or distribution system, as applicable; or (

b) reconnect a specified load facility to the transmission or distribution system after the specified load facility was disconnected, in accordance with the re gulations, as a result of the nonfulfillm ent or breach of any of the specified connection requirements. If conditions, requirements or limitations not fulfilled or breached

(3) If, after a specified load facility is connected or reconn ected to a transmission or distribution system, the transmitter or distributor to whose system the specified load facility is co nnected becomes aware that any of the applicable specified

3 connection or reconnection requirements have not been fulfilled or have been breached , the transmitter or distributor shall follow the processes, and take the actions, that are prescribed by the regulations. Does not affect other right to impose requirements

(4) For greater certainty, nothing in this

section affects an y right that a transmitter or distributor may have to impose requirements in respect of the connection, disconnection or reconnection of a specified load facility to the transmission system or distribution system, as applicable, as lo ng as there is no conflict between those requirements and the requirements of this section. Specified connection requirements may include any necessary or advisable criteria

(5) The regulations specifying conditions, requirements, limita tions or approvals for the specified connection requirements may include criteria respecting economic development, job creation, anything provided for in this Act or any other matter the Lieutenant Governor in Council considers necessary or advisable. Transition

(6) This

section does not apply to a specified load facility in respect of which a connection re quest made in accordance with the Transmission System Code or the Distribution System Code issued under the Ontario Energy Board Act, 1998 was submitted to a transmitter or distributor, as applicable, before June 3, 2025. 8 (1) Subsection 114 (1) of the Act is amended by adding the following clauses: (f.0.1) defining “data centre” for the purposes of

section 28.1; (f.0.2) prescribing criteria for the purposes of the definition of “specified load facility” in

section 28.1, which may include, but are not limited to, criteria related to, (

i) the geographic area in which the specified load facility is or may be located, (ii) the maximum volume of electricity that the specified lo ad facility may withdraw at the point of connection to the transmission system or have distributed to it at the point of connection to the distribution system, as applicable, or (iii) the maximum demand for electricity that the specified load facility may have at the point of connection to the transmission system or distribution system, as applicable; (f.0.3) prescribing specified connection requirements that must be complied with for a specified load facility to be connected or reconnected to a transmission system or distribution system, as applicable, which may include but are not limited to, (

i) conditions, requirements or limitations that must be met for the specified load facility to be connected or reconnected to a transmission system or distribution system, (ii) approvals that must be obtained for the specified load facility to be connected or reconnected to a transmission system or distribution system, (iii) the processes that must be followed to seek any appr ovals, to satisfy any conditions or requirements or to comply with any limitations in the specified connection requirements, (iv) the persons or classes of persons who may apply for an y such approvals on behalf of the specified load facility, (

v) any documents or information that must be submitted as part of any such approvals process, (vi) the persons or classes of persons who are authorized to give or withhold any such approvals, and the criteria that such persons or classes of persons must or may consider when determining whether to give or withhold approvals, (vii) any conditions or requirements or limitations that must or may be included as part of any approvals that are given, (viii) any obligations that the persons or classes of pe rsons referred to in subclause (iv) have in relation to, (

A) giving written notice of the determination, and (

B) setting out in any such notice the reasons for the determination and any conditions, requirements or limitations that form a part of the approval; (f.0.4) prescribing the processes that a transmitter or distributor referred to in subsection 28.1 (3) must or may follow and t he actions it must or may take if an applicable specified connection requirement has not been fulfilled or has been breached, which may include but are not limited to requirements related to, (

i) the giving of notice in respect of the nonfulfillment or breach of the specified connection requirement, including the persons or classes of persons to whom the notice must be given, (ii) the form and content of any such notice, (iii) opportunities for the specified load facility to remedy the breach of the specified connection requirement and to demonstrate that the breach has been remedied,

4 (iv) the disconnection of the specifie d load facility from the tr ansmission or distribution sy stem of the transmitter or distributor, as applicable; (2) Clause 114 (1.3) (

h) of the Act is amended by adding the following subclause: (0.

i) setting out amounts paid to generators, distributors or the Financial Corporation, as specified by the regulations, for the purposes of paragraph 0.1 of that subsection, or methods of determining those amounts,

(3) Subclause 114 (1.3) (h) (ii) of the Act is repealed. Fixing the Hydro Mess Act, 2019 9 Subsection 5 (2) of

Schedule 1 to the Fixing the Hydro Mess Act, 2019 is repealed. Commencement 10

(1) Except as otherwise provided in this sectio n, this

Schedule comes into force on the day the Protect Ontario by Securing Affordable Energy for Generations Act, 2025 receives Royal Assent. (2) Subsection 8 (3) comes into force on a day to be named by order of the Lieutenant Governor in Council.

SCHEDULE 2 MUNICIPAL FRANCHISES ACT 1

Section 3 of the Municipal Franchises Act is repealed and the following substituted: Restriction 3 A municipality shall not grant to any person nor shall any person acquire the right to use or occupy any of the highways of the municipality for a public utility or to construct or operate any part of a public utility in the municipality unless the municipality has passed a by-law setting out the terms and conditions upon which and the period for which such right is to be granted or acquired. 2 Subsection 4 (1) of the Act is amended by striking ou t “with the assent of the municipal electors of the local municipality”. 3 (1) Subsection 5 (1) of the Act is repealed and the following substituted: Extension of certain existing works not to be made without by-law

(1) If a by-law granting a franchise or right in respect of a public utility under

section 3 was passed before April 16, 1912, no extension of or addition to the works or services constructed, established or operated under the authority of such by-law as they existed and were in operation at that date shall be made except under the authority of a by-law passed after that date under

section 3, but that by-law is expressly limited in its operation to a period not exceeding one year. (2) Subsection 5 (2) of the Act is ame nded by striking out “by a municipal corp oration except by by-law passed with the assent of the municipal electors as provided in

section 3” at the end and substituting “by a municipality except by by-law passed under

section 3”. 4 Subsection 7 (1) of the Act is amended by striking out “and no such subsequent by-law has any force or effect unless it is assented to by the municipal electors as provided by subsection 3 (1)” at the end. 5 (1) Subsection 9 (1) of the Act is amended by striking out “shall be submitted to the municipal electors for their assent” in the portion after clause (

d) and substituting “shall be passed by a municipality”. (2) Subsection 9 (4) of the Act is repealed. 6 (1) Subsection 10 (1) of the Act is amended by striking out “to operate works” and substituting “to construct, operate, extend or add to works”. (2) Subsection 10 (5) of the Act is amended by striking out “assented to by the municipal electors”. 7 The Act is amended by adding the following section: Transition, application for order under s. 9 or 10 11 Any application to the Ontario Energy Board for an order under

section 9 or 10 that is made before the day

Schedule 2 to the Protect Ontario by Securing Affordable Energy for Generations Act, 2025 comes into force shall be continued and disposed of in accordance with this Act, as amended by that Schedule. Consequential amendment 8 Subsection 58 (1) of the Public Utilities Act is amended by striking out “with the assent of the municipal electors where such assent is required” and substituting “as required”. Commencement 9 This

Schedule comes into force on the day the Protect Ontario by Securing Affordable Energy for Generations Act, 2025 receives Royal Assent.

SCHEDULE 3 ONTARIO ENERGY BOARD ACT, 1998 1 Subsection 1 (1) of the Ontario Energy Board Act, 1998 is amended by adding the following paragraph: 2.1 To regulate the electricity sector in a manner that supports economic growth, consistent with the policies of the Government of Ontario. 2 The definition of “enforceable provision” in subsection 3 (1) of the Act is amended by adding the following clause: (c.2.1)

section 28.1 of the Electricity Act, 1998 or a provision of a regulation made under that section, 3 Subsection 4.1 (22) of the Act is repealed. 4 Subsections 4.2 (8) and (9) of the Act are repealed. 5 Subsections 4.3 (14) to (18) of the Act are repealed. 6 The Act is amended by adding the following section: Policies re certain Board processes 13.1

(1) The chief executive officer may issue policies to commissioners and employees of the Board respecting any of the following matters: 1. Timelines for conducting a hearing. 2. Timelines for making a determination, if it is being made by an employee exercising a power or performing a duty delegated to the employee under

section 6. 3. Requirements respecting information or documents to be co nsidered in conducting a hearing or making a determination. 4. Any other matter prescribed by the regulations. Limitation

(2) Nothing in subsection (1) authorizes the chief executive officer to issue a policy that conflicts with this Act, the regulations or any other instrument made under this Act, any other Act or regulation, or the rules made by the Board under

section 25.1 of the Statutory Powers Procedure Act. Effect of non-compliance

(3) The failure of a person to comply with a policy issued under subsection (1) does not affect the validity of any action taken by the person. 7

Section 70 of the Act is amended by adding the following subsections: Exceptions to non-discriminatory access

(12.1) Any condition in the licence of a transmitter or distributor under this Part requiring the provision of non-discriminatory access is subject to the restrictions on connecting and reco nnecting specified load facil ities in

section 28.1 of the Electricity Act, 1998 and in the regulations made under that Act. Conflict

(12.2) In the event of a conflict between

section 28.1 of the Electricity Act, 1998 or any regulation made under that Act in relation to a matter specified in that section, as applicable, an d an order, code or licence issu ed by the Board,

section 28.1 or the regulation, as applicable, prevails. 8 The Act is amended by adding the following section: Payments to transmitters from public funds 78.3

(1) The Minister may make payments to a transmitter out of money appropriated for the purposes of this

section by the Legislature, if any. Rate reduction

(2) The Board shall, in approving or fixing just and reasonable rates under

section 78 for a transmitter, reduce the rates to reflect amounts paid to the transmitter under subsection (1). 9 (1) Subsection 96 (2) of the Act is amended by adding the following paragraph: 2. Supporting economic growth in a manner consistent with the policies of the Government of Ontario.

(2) Section 96 of the Act is amended by adding the following subsection:

7 Same

(3) In an application under

section 92, the Board shall consid er such reports, documents or other information as may be prescribed by the regulations. 10 Subsection 97.1 (2) of the Act is repealed. 11 Subsection 97.2 (4) of the Act is repealed. Bill 5 (Protect Ontario by Unleashing our Economy Act, 2025) 12

(1) This

section applies only if Bill 5 (Protect Ontario by Unleashing our Economy Act, 2025), introduced on April 17, 2025, receives Royal Assent.

(2) References in this

section to provisions of Bill 5 are references to those provisions as they were numbered in the first reading version of the Bill.

(2.1) Subsections 43.1 (1) and (2) of the Ontario Energy Board Act, 1998 are repealed and the following substituted: Procurement restrictions

(1) No gas transmitter, gas distributor or storage company that is prescribed by the regulations shall procure a good or service that meets the conditions prescribed by the regulations respecting, (

a) its country, region or territory of or igin, as determined in the regulations; or (

b) the country, region or territory of origin of the person or entity that is, or that beneficially owns or controls, a suppl ier of the good or service, as determined in the regulations. Same, subsidiaries

(2) No gas transmitter, gas distributor or storage company subsidiary that is prescribed by the regulations shall procure a good or service that meets the conditions prescribed by the regulations respecting, (

a) its country, region or territory of or igin, as determined in the regulations; or (

b) the country, region or territory of origin of the person or entity that is, or that beneficially owns or controls, a suppl ier of the good or service, as determined in the regulations. Origin

(2.1) For the purposes of subsections (1) and (2), (

a) country, region or territory of origin of a person or entity may be determined by reference to any relevant factor including, as applicable, (

i) where a person is ordinarily resident, (ii) where a head office or other office is located, (iii) jurisdiction of incorporation, (iv) the number or proportion of employ ees of the person or entity that are located in a country, region or territory, (

v) the jurisdiction of the laws to which the person or entity is subject, or (vi) where the person or entity’s business activities, as they relate to the provision of the good or service, are carried on; and (

b) a regulation may set out, for its own purposes, how beneficial ownership or control is to be determined.

(3) Section 43.1 of the Act is amended by adding the following subsections: Deferral or variance accounts

(5) A gas distributor, gas transmitter or storage company that is prescribed for the purposes of subsection (1) and for which rates are approved or fixed by the Board under

section 36 may establish a deferral or variance account that records, (

a) the costs incurred by the gas distributor, gas transmitter or storage company as a result of complying with the subsection; and (

b) the interest costs incurred on the principal balance of the account, as the Board may direct. Same

(6) The Board shall, from time to time or as prescribed by the regulations, make an order under

section 36 that determines whether and how amounts recorded in an account referred to in subsection (5) shall be reflected in rates approved or fixed under that section, subject to any requirements prescribed by the regulations. (3.1) Subsections 73 (2) and (3) of the Act are repealed and the following substituted:

8 Same

(2) No licensee that is prescribed by the regulations shall procure a good or service that meets the conditions prescribed by the regulations respecting, (

a) its country, region or territory of or igin, as determined in the regulations; or (

b) the country, region or territory of origin of the person or entity that is, or that beneficially owns or controls, a suppl ier of the good or service, as determined in the regulations. Same, subsidiaries

(3) No licensee subsidiary that is prescribed by the regula tions shall procure a good or service that meets the conditions prescribed by the regulations respecting, (

a) its country, region or territory of or igin, as determined in the regulations; or (

b) the country, region or territory of origin of the person or entity that is, or that beneficially owns or controls, a suppl ier of the good or service, as determined in the regulations. Origin

(3.1) For the purposes of subsections (2) and (3), (

a) country, region or territory of origin of a person or entity may be determined by reference to any relevant factor including, as applicable, (

i) where a person is ordinarily resident, (ii) where a head office or other office is located, (iii) jurisdiction of incorporation, (iv) the number or proportion of employ ees of the person or entity that are located in a country, region or territory, (

v) the jurisdiction of the laws to which the person or entity is subject, or (vi) where the person or entity’s business activities, as they relate to the provision of the good or service, are carried on; and (

b) a regulation may set out, for its own purposes, how beneficial ownership or control is to be determined.

(4) Section 73 of the Act is amended by adding the following subsections: Deferral or variance accounts

(6) A licensee that is prescribed for the purposes of subsec tion (2) and for which rates are approved or fixed by the Board under

section 78 may establish a deferral or variance account that records, (

a) the costs incurred by the licensee as a result of complying with the subsection; and (

b) the interest costs incurred on the principal balance of the account, as the Board may direct. Same

(7) The Board shall, from time to time or as prescribed by the regulations, make an order under

section 78 that determines whether and how amounts recorded in an account referred to in subsection (6) shall be reflected in rates approved or fixed under that section, subject to any requirements prescribed by the regulations. Commencement 13 This

Schedule comes into force on the day the Protect Ontario by Securing Afford able Energy for Generations Act, 2025 receives Royal Assent.

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Collection	Ontario — Bills
Citation	p44 s1 bill 40 b040rep e.pdf
Type	bill
Volume / chapter	p44 s1 bill 40 b040rep e.pdf
Language	en
Format	json
Source	PROVINCIAL
Identifier	a3b156de0dec4b9e28c36c641355fc4abe5e636f

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