Ontario Introduces Bill 40 to Secure Affordable Energy and Encourage Economic Growth

Strategic Insights -

The Ontario government has introduced Bill 40, a legislation aimed at securing affordable energy for future generations and encouraging economic growth in the province's energy sector. The bill seeks to amend existing energy statutes to prioritize energy-intensive industries like data centers, aligning with Ontario's economic priorities and supporting local communities. A key focus of the legislation is the development of data centers, with the government proposing to establish an authority to prioritize projects that maximize benefit to the Ontario economy and workforce.

Key Takeaways:

  • The Government of Ontario has introduced Bill 40, titled Protect Ontario by Securing Affordable Energy for Generations Act, 2025, to encourage economic growth in the province's energy sector.
  • The bill aims to amend existing energy statutes, including the Electricity Act, 1998 and the Ontario Energy Board Act, 1998, to prioritize energy-intensive industries like data centers.
  • Ontario government energy policy documents, such as Ontario's Affordable Energy Future: The Pressing Case for More Power and Energy for Generations, highlight the need to address Ontario's forecast growth in electricity demand driven by electrification, housing growth, and data centers.
  • The legislation proposes to establish an authority to prioritize projects that create high-quality jobs, strengthen Ontario's digital economy, and support domestic data housing.
  • The IESO and OEB will be required to consider the objective of "economic growth" in their planning and regulatory processes.
  • The Electricity Act will be amended to prescribe rules for the connection of new larger data centers, requiring transmitters or distributors to meet connection requirements specified in regulations.
  • The Ontario government has posted a notice seeking input on the types of considerations that should be included in the supporting regulations for Bill 40.
  • Stakeholders are invited to provide input on the following questions:

+ Data centers that would be subject to the proposed requirement

+ Computational size and geographic area where there could be surplus or constrained connections for electricity

+ Criteria to define a data center that supports Ontario's economic and data sovereignty interests

+ Approval process design for efficiency, transparency, and predictability

+ Timelines for evaluating and approving data center connection requests

+ Balancing electricity needs of data centers with other energy-intensive industries

+ Local benefits to consider in prioritizing data center approvals

+ Cost to prospective data centers for requesting to connect to the electricity grid

+ Policy or pricing mechanisms to encourage large electricity users to contribute to infrastructure costs

+ Adoption of a distinct electricity rate class for large data centers

+ Policy tools or incentives to encourage data center projects in northern Ontario

Statistics:

  • The Electricity Act, 1998 and the Ontario Energy Board Act, 1998 will be amended to prioritize energy-intensive industries like data centers.
  • The IESO and OEB will be required to consider the objective of "economic growth" in their planning and regulatory processes.
  • The Ontario government is seeking input on the types of considerations that should be included in the supporting regulations for Bill 40.
  • The consultation period runs until November 4, 2025.
  • The draft or final regulations relevant to connection of large new data centers will be published after the consultation period.

Sources:

  • Government of Ontario. Bill 40: Protect Ontario by Securing Affordable Energy for Generations Act, 2025.
  • Ontario Newsroom. Ontario Securing Affordable Energy for Future Generations.
  • Ontario Energy Board. Energy for Generations integrated energy plan.
  • Environmental Registry of Ontario. New Requirements for Data Centres Seeking to Connect to the Electricity Grid in Ontario.