In the face of U.S. tariffs, the government is taking action to build a stronger economy by ensuring local utilities are positioned for long-term success. With projections showing Ontario will be required to add the equivalent of one City of Toronto to the grid every six years to meet energy demand, expanded capacity and a modern local distribution system will be essential to delivering economic growth. Simultaneously, local distribution companies (LDCs) are facing increasing capital requirements, aging infrastructure, workforce pressures, evolving customer expectations, and growing connection needs. To make sure Ontario can compete on a global scale, the government is elevating standards and levelling-up across the energy system to enhance access to electricity capacity, infrastructure, skilled workers and consumer protections.
"Ontario's utilities were designed for a different era - well before soaring electricity demand and President Trump's tariffs," said Stephen Lecce, Minister of Energy and Mines. "Ontario's utilities are facing real pressure to expand capacity, replace aging infrastructure and deliver the power needed to grow. In this moment, we are levelling-up to move faster, build bigger and buy more made here at home." That means a strategic lens to leveraging Team Ontario purchasing power so that we manufacture and build more Made-in-Canada.' We are also taking action to expand consumer protection for families, while enhancing productivity of utilities so that projects get built faster, service standards improve and ratepayers see better value."
In 2018, the Ontario Energy Board issued a report calling for reform and recommending that utilities will need to modernize their systems, adopt innovative technologies, and explore new business and partnership models to meet evolving customer expectations and ensure long-term system reliability and value for money. In 2012, the former government initiated the Ontario Distribution Sector Review panel underscoring then that "maintaining the status quo will not serve the interests of customers. Ontario needs distributers that are efficient, innovative and financially strong."
Ontario's 58 LDCs deliver the "last mile" of electricity service to homes, businesses, hospitals, schools and communities across the province. As demand grows, LDCs will need to significantly increase their capital plans to keep up with growth, with the Electricity Distributors Association forecasting up to $120 billion in distribution investments over the next two decades. Despite repeated calls for reform, the distribution sector has seen limited change even as the global economy has evolved and countries increasingly recognize the direct connection between electricity consumption per capita and gross domestic product (GDP) growth, as well as standards of living.
To boost the economy and safeguard Ontario's competitive advantage, the government is proposing a series of legislative and regulatory reforms designed to advance the distribution sector, including:
- New authorities to drive joint and local procurement initiatives, including Buy Ontario and Buy Canada procurements, to improve efficiency, scale and costing, and designed to manufacture and buy more in Ontario.
- Enabling greater use of shared services to help utilities reduce costs and maximize resources.
- Following the precedent set across many municipalities, including London, Oakville and Oshawa, Ontario will strengthen the governance of municipally owned LDCs' and their holding companies' boards of directors to support transparency, elevate skills and good governance practices.
- Supporting long-term planning to help utilities prepare for and finance future infrastructure needs and growing demand, including the requirement for 10-year plans that include condition assessment, financing plans and workforce strategies.
- Enhancing consumer protection for ratepayers living in condominiums, apartments and multi-unit residential buildings served by unit sub-meter providers (USMPs), including a ban on winter disconnections and enhancing transparency for ratepayers.
Subject to legislative approval, the government intends to issue a directive to the Ontario Energy Board outlining its expectations for a modern electricity distribution system that can meet the needs of a growing and increasingly electrified economy.
"A reliable, affordable electricity system is essential to Ontario's economic growth and competitiveness," said Matthew Rae, Associate Minister of Energy-Intensive Industries. "By strengthening local utilities, supporting Ontario and Canadian suppliers, and improving long-term planning, we're preparing our electricity distribution system to meet growing demand while protecting consumers. These proposed changes will give local utilities the tools they need to modernize infrastructure, improve service, and deliver reliable power to the families, businesses and communities that call Ontario home."
Energy for Generations, Ontario's first integrated energy plan, identified the electricity distribution system as essential to delivering power more efficiently and reliably, enabling new forms of customer participation and ensuring Ontario is prepared to meet future system needs. To help inform this work, the government established the Panel for Utility Leadership and Service Excellence (PULSE), a strategic advisory group tasked with examining how LDCs can meet increasing electricity demand while maintaining high standards of safety, reliability and cost-effectiveness. The panel's final report, released on October 27, includes recommendations to strengthen the governance of LDCs, improve operational efficiency and support an improved electricity distribution system capable of meeting future demand.
As electricity demand continues to grow across the province, these actions will help ensure LDCs have the tools they need to meet future demand, support investment and continue delivering reliable and affordable electricity to Ontario families, businesses and communities. Together, these measures will help ensure local electricity utilities deliver power where it is needed, are ready to meet rising demand, and can support the government's plan to protect Ontario and power the homes, businesses and industries of tomorrow.
Quick Facts
- Ontario's 58 LDCs deliver the "last mile" of electricity service to homes, businesses, hospitals, schools and communities across the province.
- Utilities such as Oakville Hydro, London Hydro, and Oshawa Power, have adopted a skills-based board model and are already seeing results.
Quotes
"The EDA welcomes the release of the PULSE report and thanks the Minister for establishing the Panel and beginning an important conversation about the long-term financial sustainability of Ontario's electricity distribution sector. Local distribution companies are at the forefront of one of the largest infrastructure buildouts in the province's history. As electrification accelerates, housing development expands and communities attract new economic investment, local utilities will require access to new sources of capital and modern regulatory tools to continue delivering safe, reliable and affordable electricity while ensuring the grid is ready to meet customers' evolving needs. We look forward to reviewing the recommendations in detail and working collaboratively with the Government of Ontario, municipalities, regulators, and other stakeholders on their implementation. The EDA remains committed to ensuring that any next steps strengthen reliability and support economic competitiveness for Ontario families and businesses."
- Teresa Sarkesian, President and CEO, Electricity Distributors Association (EDA)
"AMO welcomes the province's focus on local electricity distribution and ensuring energy is available where and when residents and businesses need it. As majority owners of local distribution companies, municipalities look forward to working with the province as it considers the report's recommendations. This collaboration will be important to planning the electricity infrastructure needed to maintain reliable service, support economic growth and meet growing energy needs in communities and across Ontario."
- Riley Brockington, President, Association of Municipalities of Ontario (AMO)
"Toronto Hydro welcomes Minister Lecce's leadership in recognizing the vital role of electricity distribution utilities in powering Ontario's biggest priorities, including new housing and a resilient economy. The PULSE initiative brings critical attention to the infrastructure investments, financial stewardship and good governance that are necessary to pursue economic growth in Toronto."
- Jana Mosley, President and CEO, Toronto Hydro
"Healthy, dynamic electric utilities are vital to enabling growth for Ontario's communities and businesses. We thank Minister Lecce and the Ontario government for their leadership in launching the PULSE panel. Today's announcement is an important step toward ensuring utilities can invest for growth while continuing to deliver safe, reliable and affordable service. Hydro One looks forward to working across the sector to build the electricity system Ontario needs for the future."
- Megan Telford, President and CEO, Hydro One
"The communities that Elexicon serves are some of the fastest growing in the province, creating jobs and fuelling regional and provincial economies. This economic growth comes with an unprecedented increase in electrical demand, challenging us to build the grid required to meet our communities' needs. Elexicon appreciates today's announcement and supports the Government taking action on the PULSE panel report to ensure good utility planning, access to capital, good governance, a strong Canadian supply chain and effective regulation. Elexicon thanks Minister Lecce for his continued leadership during these extraordinary times."
- Amanda Klein, President and CEO, Elexicon
"We commend the government for releasing the PULSE report and thank its Chair Anthony Haines and the other panelists for their work in creating it. Today's announcement and the associated policy changes are an important step in the direction of tax reform to enable minority Canadian private capital investment in municipally owned utilities like Alectra, which is of critical importance to the energy sector, reliability and affordability for customers, and Ontario's economy."
- Brian Bentz, President and CEO, Alectra Inc.
"Around the world, all successful and growing economies have one thing in common: abundant energy and electricity. Under the leadership of Minister Stephen Lecce and Premier Doug Ford, they have outlined a long-term vision to leverage Ontario's advanced energy sector and provide energy security to underpin a strong economic future for its citizens and businesses. To realize the government's vision, and secure our economic future, there remains a challenge we must tackle as a province. To deliver the energy from our expanding reliable diverse electricity generation fleet, we must make significant investments in our distribution system - the last mile connection to customers. The Ontario Energy Association (OEA) commends Minister Lecce for his leadership recognizing this challenge, launching the PULSE panel of experts and his commitment to action on the panel's recommendations. The OEA looks forward to working with the government on the implementation of its policy actions in response to the PULSE panel recommendations."
- Vince Brescia, President & CEO, Ontario Energy Association
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