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Ontario Government Releases PULSE Report and Related Legislative Changes

November 02, 2026

On October 27, 2026, Ontario’s Ministry of Energy and Mines released the long-awaited final report from the Panel for Utility Leadership and Service Excellence (the PULSE report).

As our team previously discussed, the PULSE was launched to provide the government with advice on how to ensure Ontario’s Local Distribution Companies (LDCs) are positioned to meet increasing electricity demand while maintaining high standards of safety, reliability and cost-effectiveness.

The PULSE report includes 10 recommendations to position LDCs to succeed in meeting the “largest demand surge in Ontario’s history” and the associated need for increased investment.

The recommendations are as follows:

1. Strengthen Planning and Board Accountability

Each utility should file an Ontario Energy Board (OEB) “Certificate of Readiness,” signed by its board chair and CEO, confirming that it has a 10-year asset plan, an agreed-upon funding strategy with its municipal shareholder(s) and a workforce strategy. The OEB would oversee this through a proportionate assurance/compliance framework.

2. Align Dividend Policies to Funding Strategy

Utility boards of directors should have to ensure that dividend policies do not undermine the utility’s ability to finance its long-term capital program.

3. Ensure Municipal Recognition of Funding Requirements

Municipal shareholders should be expected to align their municipal capital budgets with the utility funding strategies developed under Recommendation 1.

4. Adopt Best Practices for Utility Governance

Utility governance should move toward more explicitly skills-based and independent boards of directors. The Panel suggests that boards generally have seven to 11 directors, possess expertise in areas such as finance, infrastructure, strategy and risk, and limit municipally elected officials and their delegates to no more than one-third of the board.

5. Ensure the Next Generation Rate Framework (NGRF) Supports Sustained Demand Growth

The Panel recommends that the OEB’s current NGRF should “seek to better align incentives, capital recovery and performance outcomes so that utilities have a credible opportunity to earn the allowed return on equity while delivering the infrastructure, service quality and system capacity required to support electrification and economic growth.”

6. Enabling Scale and Capacity Through a Fit-for-Purpose MAADs Framework

A number of recommendations are made to streamline and modify the OEB’s LDC merger approval framework (MAADs), including to “clearly recognize scale, financial capacity and long-term investment readiness as relevant public-interest considerations, consistent with recent amendments to the Ontario Energy Board Act emphasising economic growth.”

7. Create Tax Policy That Incentivizes Long-Term Investment

Ontario should establish a permanent framework under which a utility could raise new external equity representing up to 50% ownership without triggering departure tax. Above 50%, departure tax would apply only to the portion above that threshold. By contrast, where a municipality actually sells its existing ownership interest, departure tax would continue to apply proportionately.

8. Mobilize Public Capital to Catalyze Private Investment

The Province of Ontario should use public investment vehicles such as the Building Ontario Fund to “crowd in” institutional capital for utility infrastructure, consolidation, expansion and other investments that improve long-term financial sustainability.

9. Strengthen Workforce and Skills Capacity

Ontario should work with utilities to increase the supply of line workers, electrical trades, protection and control specialists, engineers, system planners and project managers in an era of sustained growth in demand.

10. Monitor Progress and Adapt Policy Settings

Ontario should conduct a followup review by December 31, 2029, to determine whether the measures have actually unlocked capital, facilitated consolidation and partnerships, and accelerated infrastructure delivery, and whether further changes are required.

In response to the PULSE report, the Ministry of Energy and Mines announced that it is “taking action to build a stronger economy by ensuring local utilities are positioned for long-term success.” In a related presentation, the government indicated that it is bringing forward, “as part of an upcoming legislative package, a series of proposed legislative, regulatory and policy changes to drive growth in the distribution system, improve competitiveness and reduce red tape, while giving LDCs and their customers the tools and clarity to support future growth.”

The proposed legislative changes are set out in Bill 140 (Building Ontario Faster Act, 2026), which would amend the Ontario Energy Board Act (among other things). The proposed legislative changes related to the PULSE report fall into two main categories: (1) distribution efficiencies and competitiveness; and (2) utility governance enhancement.

The key proposed changes are as follows:

1. Distribution Efficiencies and Competitiveness

Changes to the Ontario Energy Board Act are proposed to enhance the use of shared services directly between LDCs and provide regulation-making authority to enable the OEB to require provincewide/multiple service territory recovery of distribution costs.

2. Asset Planning and Utility Governance

In relation to asset planning, changes to the Ontario Energy Board Act are proposed to give the Minister authority to direct the OEB to: 

  • Require LDCs to create and submit 10-year asset plans, a funding strategy and a workforce and capability strategy.
  • Require board chair and CEO-signed Certificates of Readiness attesting to asset plan feasibility.
  • Require mandatory dividend stress test results to confirm LDCs can meet capital requirements.

In relation to governance, changes are proposed to the Ontario Energy Board Act that would (among other things):

  • Require skills-based, independent LDC boards of seven to 11 members.
  • Require that no municipal councillor or employee may be an LDC board member, though one such person per shareholder may participate in LDC board activities without voting rights or compensation.
  • Prohibit distributors from placing a residency or geographic location restriction on board member eligibility.
  • Require LDCs to establish and publish policies related to declaration of dividends to LDC shareholders.
  • Allow the Minister of Energy and Mines to make further regulations as required, including but not limited to skills-based board composition and dividend policy consistency with long-term plans.

Also in relation to governance, the Ministry of Energy and Mines presentation indicates that “[m]irroring provisions will also be enabled through changes to the Municipal Act and City of Toronto Act to capture municipal holding companies.” While those changes are not included in Bill 140, they will presumably be advanced after Bill 140 is passed and will impose restrictions and prescriptions on board membership for utility holding company boards.

Bill 140 was introduced on October 27, 2026, and has now proceeded to second reading.

As the proposed legislation continues to be debated, the government has also released a related proposal on the Ontario Regulatory Registry, seeking comment and input from the public. This posting, titled Local Distribution Reforms to Enable Economic Growth, asks for input as to whether the proposed measures will enhance the distribution sector’s ability to meet growing electricity demand, improve affordability and customer service, and advance Ontario’s economic competitiveness. Comments are due by November 30, 2026.

The Energy Group at Aird & Berlis LLP will continue to monitor and report on developments related to the PULSE report and associated legislative changes. Please contact the author or a member of the group if you have questions or require assistance.