Ontario is facing significant challenges in its electricity distribution system, which is struggling to meet the demands of a growing economy. The province's nearly 60 local distribution companies (LDCs) were designed for a different era, when electricity demand was lower and technology was simpler. As a result, these utilities are now under pressure to adapt to rising demand, new technologies, and expanding communities.

The Ontario Energy Board has highlighted the need for reform, stating that utilities must modernize their systems and explore innovative business models to meet evolving customer expectations. A report from 2018 emphasized that maintaining the status quo would not serve the interests of customers. The former government had previously initiated a review in 2012, which also pointed out that efficient and financially strong distributors are essential for the province's energy future.

Currently, many utilities are facing a significant infrastructure financing gap, estimated at up to $120 billion over the next 25 years. Municipalities, which own most of these utilities, are already at their maximum allowable debt levels. This situation has led to credit downgrades for several utilities, resulting in higher borrowing costs that are ultimately passed on to ratepayers.

Without intervention, the options for filling this funding gap may include increasing property taxes, slowing down growth, or redirecting funds from essential services like parks and roads. For instance, the City of Toronto raised development charges last year to address Toronto Hydro's funding issues, a trend that is emerging across the province.

The current state of Ontario's utilities is concerning, with many facing maintenance backlogs that threaten grid reliability. Experts warn that if the distribution networks cannot keep pace with demand, Ontario risks falling behind in its economic competitiveness. The government is now seeking input from leaders in the economy, energy sector, utilities, and municipalities to develop recommendations aimed at avoiding a fiscal crisis that could negatively impact families and ratepayers.

The goal is to transform the electricity distribution system into a more sustainable and customer-focused operation, ensuring that energy rates remain low and reliable for families. Ontario's energy advantage has historically relied on proactive planning, and the government is committed to addressing these challenges to secure a stable energy future for the province.