On June 3rd, 2025, the Government of Ontario introduced Bill 40, the Protect Ontario by Securing Affordable Energy for Generations Act (the “Bill”). If passed, the Bill will make amendments to the Electricity Act and the Ontario Energy Board Act, which will significantly alter the mandates of the Independent Electricity System Operator(“IESO”) and Ontario Energy Board (“OEB”) in administering and regulating the buildout of Ontario’s electricity system.
An Emphasis on Economic Growth
One of the key aspects of the Bill is the focus on promoting economic growth in Ontario. Specifically, the Bill proposes:
- an amendment to the purposes of the Electricity Act to include supporting economic growth in a manner consistent with the policies of the Government of Ontario;
- an amendment to the objects of the IESO to support economic growth in a manner that protects consumers; and
- an amendment to objectives of the Ontario Energy Board Act to regulate the electricity sector in a manner that supports economic growth, consistent with the policies of the Government of Ontario.
This represents a general policy emphasis on prioritizing economic decision-making and job creation in the Ontario energy and electricity industry. We expect that these amendments may signal a focus on increasing energy development in the Province of Ontario, including through energy generation, transmission and storage.
The Future of Hydrogen
The Bill will broaden purposes of the Electricity Act to include the facilitation of the development of a hydrogen market and economy in Ontario, with a focus on low carbon hydrogen. This change will enable the IESO to fund new hydrogen projects, including through the recently announced $30M Hydrogen Innovation Fund aimed at promoting hydrogen development.
Enabling Data Center Growth
The Ontario government is taking steps to specifically promote and enable the growth of data centers through the addition of the proposed section 28.1 to the Electricity Act. Specifically, this section will require that certain specified load facilities (which include data centers) meet certain specified connection requirements which will be determined by regulations. This will allow the government to require consideration of factors such as economic impact or energy intensity in the course of evaluating interconnection applications, with the aim of prioritizing projects that advance the Ontario economy. This may result in larger, or certain types of projects, receiving interconnection priority.
Facilitating Transmission
For purposes of spurring necessary development and construction of transmission, the Bill proposes to add section 78.3 to the Ontario Energy Board Act, which will authorize payments to be made to transmitters from money appropriated by the legislature. The Bill also proposes to amend section 96 of the Act by including “economic growth” amongst the public interest criteria that the Board may consider in deciding transmission and distribution leave to construct applications.
Establishing Tariff-Driven Restrictions
The Bill also proposes amendments to the Ontario Energy Board Act stemming from the recent passing of Bill 5 (Protect Ontario by Unleashing our Economy Act, 2025), which will allow the establishment of deferral or variance accounts that will record the costs required to comply with procurement restrictions that relate to the country, region or territory of origin. These changes have the effect of allowing Ontario utilities to fund investments to implement new restrictions on foreign participants in Ontario’s energy sector.
Conclusion & Takeaways
If passed, we expect that Bill 40 will promote further development in the energy sector in Ontario, including enabling necessary new transmission and the development of new data centers and hydrogen projects. That being said, much of the detail is left to be prescribed by regulation and articulated through future government policy. The Bill also raises questions as to how the IESO and the OEB will take into account the broad objective of “economic growth” in carrying out their respective statutory mandates. Foreign participants will also need to be mindful of the changes to the Ontario Energy Board Act stemming from Bill 5.
The author would like to acknowledge the support and assistance of Justin Zekorn, student at law.
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