The Protect Ontario by Securing Affordable Energy for Generations Act, 2025 amends three core statutes—Electricity Act, 1998; Municipal Franchises Act; and Ontario Energy Board Act, 1998—to put economic growth and a nascent hydrogen market explicitly into provincial energy objectives, and to give the government detailed tools to manage large electricity users and related financing.
Key operational changes: the Act adds a new enforceable rule (section 28.1) that prevents transmitters or distributors from connecting or reconnecting prescribed “specified load facilities” unless regulatory connection requirements are met; it removes the long-standing requirement that municipal elector assent is needed for municipal utility franchise by‑laws; and it authorizes the Minister to make payments to transmitters out of public funds that the OEB must account for when setting rates. Those changes reallocate decision-making power from neutral procedural processes toward regulatory and executive determinations, with practical effects for data centre projects, large industrial loads, utilities, municipalities and procurement policies tied to other legislation.
At a Glance
What It Does
The Act adds economic-growth and hydrogen-market objectives to Ontario’s electricity statutes; creates section 28.1 barring connection or reconnection of defined large loads (including data centres) unless regulations and approvals are satisfied; removes municipal-elector assent from franchise by‑laws; and gives the Minister authority to pay transmitters from appropriated funds, which the OEB must reflect when setting rates.
Who It Affects
Data-centre developers and other very large electricity users; transmitters and distribution utilities; the Ontario Energy Board and its staff; municipalities that grant franchises; and suppliers subject to origin-based procurement rules (where linked legislation takes effect).
Why It Matters
The bill shifts practical control over grid access and infrastructure approvals toward government-set regulations and OEB processes that must consider economic-growth objectives. That changes project risk for large-load investors, alters local democratic checks on utility franchises, and creates a mechanism to finance transmission outside conventional rate-setting.
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What This Bill Actually Does
The Act rewrites policy priorities: economic growth and developing a hydrogen market become explicit purposes of the Electricity Act and an objective of the Ontario Energy Board. That reframes how the province expects the electricity system to be regulated — the OEB and the Independent Electricity System Operator (IESO) must now weigh growth alongside consumer interests.
Section 28.1 is the operational core. It creates a class of “specified load facilities” (explicitly including data centres and facilities exceeding a demand threshold to be set in regulation) and prevents a transmitter or distributor from connecting or reconnecting such facilities unless specified connection requirements and approvals in regulation are met.
The regulations can define what a “data centre” is, set demand thresholds, specify documentation and approval processes, and impose economic-development or job-creation criteria. If a facility is found to have breached those requirements after connection, the transmitter/distributor must follow prescribed processes that can include notice, remediation windows and disconnection.Municipal franchise rules change: municipalities no longer need municipal-elector assent for by‑laws granting rights to use highways for utilities or to construct/operate public utilities; instead, a municipality must pass a by‑law.
The Act also expands the OEB’s authority to grant or extend rights to construct, extend or add to gas distribution works, removing an elector-assent step from several historical processes.On the regulatory and finance side, the Act makes section 28.1 enforceable under the Ontario Energy Board Act, subjects non‑discriminatory access licence conditions to the restrictions in section 28.1, authorizes the OEB CEO to issue internal procedural policies (timelines, documentary requirements), and adds section 78.3 permitting the Minister to pay transmitters out of appropriated money; the OEB must reduce approved transmitter rates to reflect any such payments. The Act also includes provisions that interact with procurement-origin restrictions and deferral/variance accounts if companion Bill 5 receives assent.
Together, these measures give the executive and cabinet significant levers over who connects to the grid, how large projects are assessed, and how some transmission costs may be funded.
The Five Things You Need to Know
Section 28.1 forbids a transmitter or distributor from connecting or reconnecting a "specified load facility" (including data centres and any facility above demand thresholds set in regulation) unless specified regulatory connection requirements and approvals are satisfied.
Subsection 114 additions give the Lieutenant Governor in Council power to define "data centre", set numeric demand/volume thresholds and prescribe the detailed approval, notice and remediation processes for connections (clauses f.0.1–f.0.4).
The Municipal Franchises Act no longer requires municipal-elector assent for by‑laws granting utility franchises; municipalities must simply pass a by‑law setting the terms and period.
Section 78.3 allows the Minister to make payments to transmitters from money appropriated by the Legislature, and requires the OEB to reduce transmitter rates to reflect any such payments.
Section 28.1 does not apply to any connection request submitted under the Transmission System Code or Distribution System Code before June 3, 2025 (a transitional carve-out).
Section-by-Section Breakdown
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Embed economic growth and hydrogen development in statutory purposes
The Schedule amends section 1 to add support for economic growth and to facilitate development of a hydrogen market as stated purposes of the Electricity Act; subsection 6(1) adds economic growth as an object of the IESO. Practically, those inclusions require that future regulatory design, system planning and OEB decisions explicitly consider growth and hydrogen-related uses of electricity alongside traditional objectives like reliability and consumer protection. That change is broad: it will influence how the province drafts regulations and how adjudicators weigh competing policy goals.
New mandatory connection conditions for large loads (data centres, big industrial users)
Section 28.1 creates the legal bar: transmitters and distributors must not connect or reconnect 'specified load facilities' unless they are satisfied the facility meets prescribed connection requirements. The provision defines the scope (data centres by regulation; or facilities exceeding demand thresholds) and gives the government latitude to require approvals, conditions and remedial processes. For project proponents, this converts a technical grid connection into a regulatory approval process that can incorporate economic-development criteria and written reasons for approvals or refusals.
Extensive delegated rulemaking authority to define facilities, approval processes and remedies
The amendments to section 114 add multiple new regulation-making powers (f.0.1–f.0.4) allowing the Lieutenant Governor in Council to define 'data centre', prescribe numeric thresholds, set the approval processes and specify the remedies (including disconnection) where obligations are breached. That delegation means many operational details will be set in regulation rather than statute — speeding policy changes but increasing implementation uncertainty until the regulations are published.
Removes municipal-elector assent and expands municipal by‑law authority
The Schedule repeals the old requirement that municipal electors assent to by‑laws granting rights to use highways for public utilities. Municipalities must now pass by‑laws setting terms and periods for franchises without holding a vote of electors. The Act also allows municipalities or other parties to apply to the OEB to construct, extend or add to gas distribution works. The practical effect shortens one democratic step in franchise grants and concentrates decision-making at municipal council level and at the OEB for specific orders.
Strengthens executive levers within the OEB and creates a public-payments mechanism
This Schedule adds: (1) an OEB objective to 'support economic growth'; (2) section 13.1 authorizing the OEB chief executive officer to issue internal procedural policies (timelines, information requirements) for hearings and delegated decisions; (3) section 78.3 permitting Ministerial payments to transmitters from appropriated funds, with the OEB required to reduce rates to reflect those payments; and (4) a requirement that the OEB consider economic growth and any regulations-specified reports when deciding leave-to-construct applications under section 92. These changes embed growth as a statutory consideration, create more executive administrative control over process, and establish a statutory channel for public funding to affect transmitter cost recovery.
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Explore this topic in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Provincial government — gains discretionary tools (regulations, approval criteria, public payments) to steer where large loads locate and to promote hydrogen and industrial policy goals without new primary‑law amendments.
- Hydrogen project developers and other growth-focused industries — benefit from an explicit statutory priority for hydrogen and economic growth that can be invoked in planning and leave-to-construct decisions.
- Transmitters (and potentially affected municipalities) — may receive direct payments under section 78.3, which can reduce their rate base exposure and help finance transmission needed for large loads.
- Municipal councils and proponents of utility projects — have a simpler franchise path because municipal-elector assent is removed, speeding local approvals for infrastructure by-law enactment.
Who Bears the Cost
- Data-centre operators and other very large electricity customers — face new regulatory gatekeeping, approval conditions, and possible disconnection remedies tied to economic-development or other regulatory criteria.
- Transmitters and distributors — must implement new administrative processes, conduct compliance checks after connection, and may be put in the position of disconnecting customers; they also must integrate any public-payment adjustments into rate filings.
- Ratepayers and taxpayers — the Ministerial payment mechanism shifts some transmission financing choices into the public budget; taxpayers bear the fiscal cost of any appropriations while ratepayers bear residual funding mechanics that the OEB will evaluate.
- Suppliers and contractors covered by origin-based procurement rules (if Bill 5 is proclaimed) — may face limits on sourcing and recordkeeping obligations, and bear compliance and reporting costs.
Key Issues
The Core Tension
The bill's central dilemma is straightforward: it privileges rapid industrial and infrastructure growth (data centres, hydrogen, large loads) and gives the executive new levers to enable that growth, but doing so risks diluting protected consumer and access principles, concentrating discretionary power in regulations and the executive, and shifting costs or market distortions onto ratepayers and taxpayers—a trade-off between economic development and predictable, neutral governance of the electricity system.
Two implementation fault lines stand out. First, the government delegates very broad discretion to regulations to define which facilities are covered, what numeric thresholds apply, and what criteria approvals must meet — including the possibility of economic-development or job-creation tests.
That makes outcomes heavily dependent on subordinate instruments and cabinet decisions; project risk will hinge on as-yet-unpublished regulations and the standards regulators apply in practice.
Second, the Act rebalances power among multiple actors in ways that create legal and operational friction. Section 28.1 prevails over OEB orders, codes and licences where they conflict, and the OEB CEO gains policy control over hearing timelines and document requirements.
At the same time, the Minister may inject public funds into transmission with a statutory mandate that the OEB reduce rates to reflect those payments. Those mechanisms improve executive flexibility but raise questions about regulatory independence, predictable adjudication and the criteria the OEB will use when it must factor Ministerial payments into rate-setting.
Additional practical tensions: the removal of municipal-elector assent accelerates franchise decisions but narrows public input; the transitional carve-out (connection requests submitted before June 3, 2025) protects existing pipelines but creates a two-track universe of project rules; and procurement-origin provisions (tied to Bill 5) and the permitted deferral accounts create complex cost-allocation issues across ratepayers, suppliers and government budgets.
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