Minister Lecce Tables the Protect Ontario by Securing Affordable Energy for Generations Act, 2025
The Ontario government is taking decisive action to build a more competitive, resilient and self-reliant economy by introducing the Protect Ontario by Securing Affordable Energy for Generations Act, 2025. If passed, this legislation will support major growth in the province’s energy system to meet rising demand, while keeping energy affordable, secure, reliable and clean for generations to come.
Schedule 1 Electricity Act, 1998
The first schedule of Bill 40 amends the Electricity Act, 1998 by expanding its purposes to include promoting economic growth and fostering the development of a hydrogen market and economy in Ontario. It also updates the mandate of the Independent Electricity System Operator (IESO), adding a new objective to support economic development. Additionally, the bill changes how certain payments to generators, the Financial Corporation, and distributors are handled—allowing these costs to be covered by government appropriations rather than being passed on to consumers. A significant new provision, Section 28.1, is introduced, which prohibits transmitters and distributors from connecting or reconnecting certain large energy users, such as data centres, unless they meet specific requirements set out in future regulations.
Analysis:
- Enterprise Data Centres – Hosted on-prem by SSC.
- Multiple Public Clouds – Hosted by Cloud Service Providers.
- Private Cloud – Hosted within EDCs.
- EDGE Computing – Locally Hosted by SSC of CSPs.
- Emerging Hosting Opportunities – (e.g., GC PaaS)
A new Hosting Procurement system will be developed to replace the current Cloud Framework Agreement which will be put into ‘life support mode.’
This procurement system will include:
Under Section 28.1 of the amended Electricity Act, transmitters and distributors cannot connect or reconnect certain high-energy facilities—including data centres—to the electricity grid unless they meet new regulatory criteria.
This means that:
- Data centres are specifically named in the legislation.
- They will need to comply with new, yet-to-be-defined regulations before being granted access to Ontario’s power grid.
This could impact how and where data centres are built in Ontario, potentially delaying projects or requiring new energy efficiency or sustainability standards. More broadly, the new grid connection restrictions introduced in the bill may unintentionally discourage companies from building data centres in Ontario. With future regulations expected to impose stricter energy efficiency or eligibility requirements, some developers may look to provinces like Alberta, where energy policies are currently more flexible and less restrictive. This shift could lead to a competitive disadvantage for Ontario, as companies seek jurisdictions that offer more predictable and accessible infrastructure for high-demand digital operations.
As Ontario moves forward with Bill 40, it’s crucial that upcoming regulations strike the right balance.
While the bill introduces new conditions for connecting data centres to the electricity grid, the goal shouldn’t be to discourage investment. Instead, the regulations should:
- Encourage innovation in energy efficiency
- Support the use of clean and renewable power
- Provide clear, predictable pathways for compliance
Ontario has the opportunity to become a global leader in sustainable digital infrastructure—not by limiting growth, but by guiding it responsibly.
Schedule 2 – Amendments to the Municipal Franchises Act
Schedule 2 revises the Municipal Franchises Act by removing the requirement for municipal elector approval before a municipality can grant utility access to public highways. Instead, municipalities will now only need to pass a by-law outlining the terms and conditions of such agreements. The schedule also expands the Ontario Energy Board’s (OEB) authority, allowing it to approve not just renewals but also the construction, extension, or addition of gas distribution infrastructure. Transitional provisions ensure that any applications made to the OEB before these changes take effect will continue under the amended rules. Additionally, a consequential amendment is made to the Public Utilities Act to align with these updates.
Schedule 3 – Amendments to the Ontario Energy Board Act, 1998
The final schedule amends the Ontario Energy Board Act, 1998 by adding economic growth as a new objective in the regulation of the electricity sector. It authorizes the OEB’s chief executive officer to issue internal policies on procedural matters related to hearings and decisions. The schedule also enforces Section 28.1 of the Electricity Act under the OEB Act, giving it precedence over any conflicting orders, codes, or licences issued by the Board. A new provision allows the Minister to make payments to transmitters from government funds, which the OEB must consider when setting transmission rates. Furthermore, the OEB is now required to consider economic growth and any specified documents or reports when evaluating applications for new transmission or distribution lines. The schedule repeals outdated transitional provisions and updates sections related to deferral and variance accounts, contingent on the passage of Bill 5.