Bill 40: Protect Ontario by Securing Affordable Energy for Generations Act, 2025 Introduced in Legislature

June 04, 2025: Yesterday, the Government of Ontario introduced the Protect Ontario by Securing Affordable Energy for Generations Act, 2025. This legislation is reflective of several themes and priorities raised during the recent Ontario Election for the province’s energy sector, including affordability, energy security, economic growth, and domestic control.

With the Independent Electricity System Operator (IESO) forecasting electricity demand to increase by 75 per cent over the next 25 years - largely driven by data centre expansion, electrification, and industrial growth - this legislation lays out a more purpose-driven and strategic approach to system planning, project prioritization, and inducing investment in Ontario’s energy infrastructure.

Key Areas of Focus

If passed, the legislation will implement changes in the following areas:

Codification of an Economic Growth Mandate

For the first time, the IESO and Ontario Energy Board (OEB) will be statutorily required to consider economic growth and job creation in their planning and regulatory processes. This introduces a clear policy signal prioritizing economic activity requiring access to large quantities of electricity, and the infrastructure required to enable it, in ways that support unlocking high-value employment and investment in strategic industries.

Specifically, the objects of the IESO in subsection 6 (1) of the Electricity Act, 1998 are proposed to be amended to add provisions to support economic growth. As well as subsection 1 (1) of the Ontario Energy Board Act, 1998 is amended to add a new objective of the OEB respecting economic growth in relation to the regulation of the electricity sector.

Expanded Eligibility of the Future Clean Electricity Fund

Expansion of the Future Clean Electricity Fund (FCEF) to encompass nuclear and transmission projects will open new funding channels and de-risk private and public sector investment in large-scale infrastructure needed to meet demand growth.

For transmission specifically, a new section 78.3 is added to the Ontario Energy Board Act, 1998 to provide that payments to a transmitter may be made out of money appropriated by the Legislature. If those payments are made to the transmitter, the OEB must take those payments into account when setting rates for the transmitter under section 78 of the Act.

Inducing Investment in Ontario’s Hydrogen Economy

By expanding IESO’s role into hydrogen development, the legislation positions Ontario as a hydrogen innovation jurisdiction, increasing opportunities for partnerships and funding for electrolyzers, storage, and fuel-switching technologies.

Grid Access Prioritization Function

The province will establish a new authority to prioritize grid connections, especially for large electricity users such as data centres. While this will help preserve access to grid capacity for high-impact projects, the structure and accountability of the new authority, as well as the criteria upon which the ~6,500 MW connection queue will be prioritized, remains to be prescribed in regulations.

To enable the prioritization function, the government is recommending a new section 28.1 is added to the Electricity Act, 1998. It details that transmitters or distributors shall not connect or reconnect certain load facilities from their transmission or distribution system unless connection requirements that are specified in regulations are met.

Security and Sovereignty Emphasis

Reinforcing measures introduced as part of Bill 5, Protect Ontario by Unleashing our Economy Act, 2025, regarding restrictions on foreign ownership and operational control in Ontario’s energy sector - particularly related to cybersecurity and critical infrastructure – which could influence cross-border partnerships and capital flows from certain jurisdictions deemed to be hostile to Canada.

Support for Domestic Supply Chains

Utilities will be empowered to “Buy Canadian,” and encouraged to pursue procurement practices to favor local technology providers and manufacturers, potentially benefiting domestic suppliers but balanced with the potential of limiting options and access to critical components for developers.

Amended Powers of the OEB Chief Executive Officer

Apart from the new economic growth remit in relation to the OEB’s regulation of the electricity sector, a new section 13.1 of the Ontario Energy Board Act, 1998 authorizes the OEB’s chief executive officer to issue internal policies respecting various procedural matters in relation to hearings and determinations, including:

• Timelines for conducting a hearing.
• 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.
• Requirements respecting information or documents to be considered in conducting a hearing or making a determination.
• Any other matter prescribed by the regulations.

Sussex Insights & Next Steps

Sector participants should anticipate an environment where economic impact assessments become important components of project approvals and grid connections - particularly for energy-intensive operations like data centres, hydrogen production, or industrial electrification.

Large electricity users - especially those in manufacturing, mining, and digital infrastructure - should engage early with policymakers to ensure their projects align with the government’s broader economic and workforce development priorities to avoid risks of delays or deprioritized access to the electricity system.

Developers and utilities should assess how to align project proposals with “Canadian content,” data sovereignty, and high-quality job creation objectives. Partnerships that demonstrate these attributes will likely have a competitive advantage in regulatory and funding processes.

The legislation supports the forthcoming Integrated Energy Plan (IEP), expected later this month. We anticipate this plan will provide additional clarity on infrastructure timelines, regional capacity planning, and demand management.