This bill amends the Municipal Act, 2001 and the City of Toronto Act, 2006 to authorize municipalities and local boards to impose fees or charges on gas producers, gas distributors, gas transmitters and gas storage companies for services, activities, costs payable or use of property tied to wires, pipes, poles and related works that are or will be located on a municipal highway and used as part of the company's business. It explicitly imports the definitions of those classes of companies from section 3 of the Ontario Energy Board Act, 1998.
Critically, the bill also blocks provincial regulation-making power from imposing conditions or limitations on this municipal fee power. For municipal finance officers, utility compliance teams and regulators, the measure changes who can be charged for local impacts of gas infrastructure and removes a potential avenue for the province to harmonize or limit those charges — raising implementation, rate recovery and legal coordination questions.
At a Glance
What It Does
The bill adds a new express authority for municipalities and local boards (including Toronto) to levy fees or charges on entities defined in the Ontario Energy Board Act for the use of municipal highways and associated works used in their business. It separately prohibits a provincial regulation from placing conditions or limits on that municipal authority.
Who It Affects
Directly affected parties are gas producers, distributors, transmitters and storage companies operating infrastructure on municipal highways, plus municipal governments and local boards that manage highways and permit infrastructure. The Ontario Energy Board and provincial ministries will be affected indirectly because the bill references OEB definitions and restricts provincial regulation-making.
Why It Matters
The bill creates a statutory pathway for municipalities to recover costs or collect payments tied to fossil-fuel infrastructure on municipal rights-of-way, and shields that pathway from provincially imposed constraints — changing the balance between local revenue tools and province-level regulation of energy system participants.
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What This Bill Actually Does
The Act creates a narrow but concrete municipal revenue tool: it lets any municipality or local board impose fees or charges on gas-sector firms for services, activities, costs or for the use of property that relates to wires, cables, poles, conduits, pipes, equipment, machinery or other works located on a municipal highway and used as part of the company's business. By pointing to the definitions in the Ontario Energy Board Act, the bill ties the covered entities to the usual legal categories (producer, distributor, transmitter, storage company) without redefining them at the municipal level.
The language covers both existing and planned infrastructure — it applies to works that "are or will be" located on a municipal highway — which gives municipalities the legal foundation to charge for legacy assets as well as newly installed facilities. The authority attaches to municipal highways specifically, so fees would be linked to the occupation or use of public rights-of-way rather than to generalized corporate activities in a municipality.Separately, the Act prevents a provincial regulation (made under the Municipal Act or the City of Toronto Act) from imposing conditions or limitations on this new fee power.
That is a drafting choice with practical consequences: the province cannot, at least by regulation under those Acts, prescribe how municipalities must exercise this specific fee authority or carve out exceptions. The bill repeats the same pair of changes for the City of Toronto Act so the City and its local boards have the same unconstrained fee authority.Implementation details are left to municipalities and their bylaws.
The bill does not set fee formulas, approval processes, limits on amounts, or administrative procedures for assessment and collection — it simply supplies the jurisdictional hook. Municipal councils will therefore decide (and potentially litigate) how broad the fees are, whether they are billed as service fees, rent, permits or something else, and whether they apply to legacy assets or only new work.
Because the Act bars regulatory conditions, provincial coordination mechanisms that might otherwise standardize fees or limit their scope would require primary-legislation changes, not regulations.
The Five Things You Need to Know
The bill adds subsection 391(1.2) to the Municipal Act, 2001 authorizing municipalities and local boards to impose fees or charges on entities defined in s.3 of the Ontario Energy Board Act for works located on a municipal highway and used in their business.
It uses the OEB Act’s definitions (producer, gas distributor, gas transmitter, storage company) rather than creating new municipal definitions.
A regulation under sections 400 (Municipal Act) or 266 (City of Toronto Act) may not impose conditions or limitations on the municipal authority to levy these specific fees.
Equivalent provisions are added to the City of Toronto Act (new s.259(1.2) and s.266(2)), ensuring Toronto has the same unconstrained authority.
The Act takes effect the day it receives Royal Assent; it contains no transitional rules, fee caps, or prescribed methodologies.
Section-by-Section Breakdown
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New municipal fee power tied to gas-sector infrastructure on highways
This provision is the operative grant of authority: it lets a municipality or local board impose a fee or charge on a producer, gas distributor, gas transmitter or storage company for services, activities, costs payable or use of property linked to wires, cables, poles, conduits, pipes, equipment, machinery or other works on a municipal highway when those assets are used in the company’s business. Practically, this gives councils the statutory basis to require payments from gas-sector operators occupying public rights-of-way and to treat such payments as municipal revenues rather than relying solely on permits or site-specific agreements.
Prohibits regulations from restricting the new fee power
This short subsection prevents a regulation made under the Act from imposing conditions and limitations on municipalities' ability to impose the fees described in s.391(1.2). That means the province, acting through regulation under the Municipal Act, cannot set regulatory constraints on how this particular fee authority is exercised — a move that limits the province’s administrative tools for harmonizing municipal approaches or imposing guardrails.
Equivalent fee authority for the City of Toronto and its local boards
This mirrors the Municipal Act amendment but within the City of Toronto Act framework and its extended definition of local boards. The duplication ensures the City and its boards have identical authority without relying on cross-interpretation between statutes, preserving Toronto’s capacity to impose such fees under its home statute.
Prevents provincial regulations from limiting Toronto’s fee power
Just like s.400(2) in the Municipal Act, this subsection bars regulations under the City of Toronto Act from imposing conditions or limits on the City’s power to levy the fees described in s.259(1.2). The practical effect is to make the fee authority for Toronto insulated from regulatory constraints available under its governing statute.
Immediate commencement on Royal Assent and Act name
The bill comes into force on Royal Assent and is titled the No Free Ride for Fossil Fuels Act, 2025. There are no delayed commencement provisions or transitional rules to guide how existing installations are to be treated, which means municipalities will need to interpret whether and when to apply the new authority to already-installed infrastructure.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Municipalities and local boards — gain a clear statutory basis to recover costs or extract payments from gas-sector companies that occupy municipal highways, expanding local revenue options and the ability to internalize local infrastructure impacts.
- City of Toronto — receives the same explicit authority within its home statute, avoiding ambiguity about whether municipal-wide Toronto rules apply to provincially regulated utilities.
- Local taxpayers and municipal budgets — stand to benefit indirectly if councils use fee revenue to fund road maintenance, repair or mitigation measures tied to pipeline and gas infrastructure impacts.
- Communities hosting gas infrastructure — could see more local mitigation or community benefit funding if municipalities choose to direct fee revenues toward local projects or compensation for disruption.
Who Bears the Cost
- Gas-sector companies (producers, distributors, transmitters, storage operators) — face direct new fee liabilities where their works sit on municipal highways and may incur administrative and compliance costs responding to a patchwork of municipal charges.
- Ratepayers and consumers — likely bear some or all of the costs if regulated utilities seek to pass newly incurred municipal fees into rates, depending on OEB decisions and company cost-recovery strategies.
- Provincial regulators and ministries (including the Ontario Energy Board) — may face coordination and legal workload as utilities and municipalities test the boundary between provincially regulated rate-setting and municipal fee regimes.
- Municipal administrations — will need to develop bylaws, billing systems and enforcement mechanisms to implement fees, creating upfront administrative costs and potential political friction at council level.
Key Issues
The Core Tension
The central dilemma is between municipal fiscal autonomy and localized accountability — allowing municipalities to charge for the direct local impacts of fossil-fuel infrastructure — and the need for a coherent, province-wide energy regulatory framework that prevents fragmented charges, protects ratepayers, and preserves system-wide planning. The bill empowers local capture of value and costs but simultaneously constrains the province’s ability to manage that fragmentation by regulation.
The bill is legally compact but leaves several consequential implementation questions unanswered. It grants power to levy fees without setting any procedural or substantive guardrails: the statute does not define what constitutes a reasonable fee, how to calculate cost-related charges versus rent, whether fees are refundable, or whether they are payable retroactively for existing infrastructure.
That vacuum hands substantial discretion to municipal councils but also invites disputes over municipal authority, municipal purpose, and potential characterization of a fee as a tax (which carries different legal and statutory constraints).
A key operational and legal risk is how this municipal authority will interact with the Ontario Energy Board’s regulatory regime. The bill references OEB definitions, but the OEB traditionally oversees the economics of transmission and distribution and the allocation of costs to ratepayers.
Utilities could argue that municipal fees are already contemplated in rate bases or that allowing disparate municipal charges undermines province-wide utility planning and creates double recovery or inefficiencies. Conversely, municipalities will argue they need local tools to recoup localized costs that the province’s rate-setting does not reflect.
The statutory ban on regulations that limit municipal fee powers further narrows the province’s capacity to coordinate or harmonize approaches administratively, potentially shifting disputes to the courts or requiring primary-legislation changes.
Because the Act takes effect on Royal Assent and contains no transitional rules, municipalities and companies must quickly decide whether to apply fees to existing infrastructure and how to treat past occupancy agreements. That immediacy raises the prospect of litigation over retroactivity, valid municipal exercise of authority, and whether certain provincial actors or crown-owned entities fall within the fees' reach.
Finally, the potential for a patchwork of municipal fees across Ontario risks complicating infrastructure siting decisions and could incentivize strategic behavior by companies and municipalities unless councils pursue regional coordination or the province intervenes legislatively.
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