Institutional Disempowerment and Energy Governance Shift

Bill 5 introduced a significant restructuring of Ontario’s energy governance framework by shifting key decision-making authority from independent regulatory agencies and municipalities to the provincial cabinet, specifically the Minister of Energy. While the legislation was justified by the government as a necessary streamlining effort to reduce delays, support industrial competitiveness, and ensure coordinated system expansion, the restructuring has raised critical questions about regulatory independence, transparency, and long-term planning integrity. The downstream effects of these changes are still unfolding, but institutional authority, technical oversight, and multi-level governance have all been substantively altered.

Collapse of Arms-Length Oversight

Bill 5 redefined the governance structure by reducing the operational roles of the Ontario Energy Board (OEB) and the Independent Electricity System Operator (IESO), concentrating oversight and procurement authority within the executive branch.

• Ministerial directives replace technical review Amendments to the Electricity Act, 1998 granted the Minister of Energy the authority to issue binding directives to both the IESO and OEB on system planning, procurement, and electricity market operations. These directives are not subject to prior review, consultation, or technical evaluation by either agency.
• Since January 2025, at least four major procurement and planning decisions, including over 900 MW of new generation capacity, have been approved via ministerial directive. These include new natural gas contracts in the Greater Toronto Area and southwestern Ontario.
• The OEB’s historical responsibilities (such as assessing cost recovery frameworks, consumer rate impacts, and emissions implications) have been significantly curtailed under the new directive regime.
• Loss of multi-agency accountability The IESO’s prior mandate to develop and publish long-term integrated resource plans (IRPs) has been deprioritized. As of June 2025, no updated IRP or planning scenario has been released following Bill 5’s passage.
• The government has argued that direct ministerial control enhances responsiveness to shifting infrastructure demands, including those driven by economic disruptions such as U.S. trade policies and manufacturing reshoring.
• Organizations such as the Ontario Society of Professional Engineers (OSPE) and the Association of Power Producers of Ontario (APPrO) have expressed concern that reduced technical oversight could increase the risk of reactive, short-term planning that does not align with long-term system reliability or emissions objectives.
• Special Economic Zones (SEZs) A new provision in Bill 5 enables the creation of Special Economic Zones, which grant the provincial cabinet discretionary authority to exempt designated companies or projects from compliance with any provincial statute, regulation, or municipal bylaw. This includes exemptions from:
• Environmental protection statutes
• Labor and occupational safety rules
• Local land-use and zoning laws
• This provision is unprecedented in Canadian energy law and effectively allows the executive to override environmental or regulatory safeguards for projects deemed to be of strategic interest. Supporters argue it facilitates urgent infrastructure development; others raise concerns about procedural consistency, legal clarity, and constitutional authority under federal-provincial jurisdictional boundaries.

Municipal Disenfranchisement

Bill 5 altered the long-standing relationship between the provincial government and Ontario’s 444 municipalities by revoking delegated authority in energy-related planning and code enforcement.

• Rescinded local authority The Act repealed municipal authority under the Planning Act and Building Code Act to adopt or enforce:
• Local energy performance standards
• Green building requirements for new construction
• Distributed energy resource mandates (e.g., solar-ready building codes, micro-grid integration)
• Many municipalities had developed comprehensive energy transition plans and adopted net-zero targets tailored to local infrastructure, housing stock, and development patterns. Following Bill 5, these plans have lost regulatory enforceability unless mirrored by provincial standards.
• Municipal opposition and grievances As of May 2025, at least 15 municipalities (including Toronto, Ottawa, Kingston, and Guelph) filed formal grievances through the Association of Municipalities of Ontario (AMO). These grievances cite:
• Loss of local planning autonomy
• Incompatibility between provincial directives and municipal climate strategies
• Legal and administrative uncertainty around energy-related zoning or permitting
• The Ministry of Energy has acknowledged the submissions but has not announced any new framework for municipal consultation or code harmonization.
• Practical impact
• Municipalities no longer have authority to require green energy standards in new housing developments or commercial projects.
• Energy infrastructure projects (such as substations, generation sites, or storage facilities) can now proceed without alignment with local planning instruments, climate goals, or community input.
• Local capacity to pilot clean energy systems (e.g., district energy, net-zero neighborhoods) has been constrained by lack of enforceable local levers.

Data and Transparency Rollback

The repeal of Ontario Regulation 506/18 and other energy reporting mandates has produced a measurable contraction in public access to institutional energy data.

• End of public benchmarking
• Prior to repeal, public institutions (including hospitals, schools, and government facilities) were required to publish annual energy consumption data and conservation plans. These reports supported demand forecasting, emissions inventory modeling, and performance benchmarking.
• As of April 2025, the IESO and Ministry of Energy have decommissioned all associated public portals, and no energy usage data for 2025 has been made publicly available.
• Loss of evidence for planning and oversight
• Civil society organizations, municipal energy offices, and academic researchers report an estimated 85% reduction in accessible energy usage data streams compared to 2023 availability.
• The lack of data complicates:
• System-level modeling and forecast validation
• Post-retrofit performance assessment
• Program evaluation for public investment in energy efficiency
• Government rationale vs. stakeholder critique
• The government has argued that these reporting programs created unnecessary administrative burden and diverted operational capacity from more pressing infrastructure needs. Officials also cited low utilization of benchmarking data in policymaking and a desire to streamline reporting requirements across agencies.
• Stakeholders, including environmental nonprofits, municipal energy planners, and data transparency advocates, argue that the rollback weakens evidence-based decision-making, limits third-party oversight, and reduces Ontario’s readiness for emerging disclosure obligations tied to federal net-zero reporting systems and international frameworks.

Broader Regulatory Context and Risks

• Regulatory fragmentation and legal uncertainty Bill 5 modifies multiple statutes, including the Electricity Act, Ontario Energy Board Act, and Environmental Assessment Act, introducing cross-sector legal uncertainty regarding project oversight, permitting consistency, and regulatory scope.
• In designated Special Economic Zones, project proponents can now be exempted from environmental assessments, species-at-risk protections, and land-use zoning, depending on cabinet determination. This creates varying regulatory conditions within the province and increases potential for litigation around due process and intergovernmental conflict.
• Public and sectoral response
• Bill 5 was passed by a legislative vote of 71 to 44, with opposition raised by political parties, environmental organizations, Indigenous representatives, engineers, and municipal bodies.
• As of June 2025:
• The Ontario Ombudsman is conducting a review of complaints regarding governance transparency and the loss of oversight safeguards.
• The Auditor General has opened preliminary inquiries into the termination of energy efficiency contracts and the fiscal implications of unreviewed procurement.