How Ontario’s expanded “strong mayor” municipalities create opportunities for energy infrastructure

On May 1^st, 2025, mayors and heads of council at 169 municipalities across Ontario saw their powers strengthened under the Strong Mayor, Building Homes Act (“Strong Mayors Act”).^[1] Ontario's expansion of municipalities covered by the act marks a shift in municipal governance, aimed at accelerating priority infrastructure projects.

Under these revamped powers, the mayors of these municipalities have been granted enhanced authority to streamline decision-making and "reduce obstacles that can stand in the way of new housing and infrastructure development."^[2] While much public attention has focused on opportunities in housing, these enhanced powers have a broad application, offering intriguing possibilities and opportunities for the power distribution sector.

This article details how Ontario municipal authorities may be able to utilize “strong mayor” powers, alongside recent reforms to energy regulation in the province, to drive much-needed change and capital investment in the sector.

Key takeaways

• Traditionally, mayor and heads of Council were largely the figureheads, with an equivalent vote to every other member of Council. That system required consensus among heads of council and other members. In contrast, strong mayor powers introduce special powers and duties for the heads of council, resulting in additional responsibilities and discretionary powers that can substantially alter the focus of a municipality’s resources.
• “Strong mayor” powers empower Ontario mayors to fast-track infrastructure decisions, including electricity distribution and digital infrastructure, by allowing unilateral budget oversight, by-law proposals, and veto powers tied to provincial infrastructure priorities.^[3]
• Recent changes to the Electricity Act have reduced some—though not all—tax barriers to private investment and consolidation of local distribution companies. Combined with "strong mayor" powers, opportunities are arising for municipalities to merge utilities, attract capital, and modernize their electricity grids under streamlined local leadership.^[4]
• Cross-economy electrification and the rapidly growing demand for data centre power solutions will continue. Municipalities that lower the regulatory and operational burdens for operators in this space are best poised to attract investment.

Municipal governance under “Strong Mayor” powers: An overview

A head of council with “strong mayor” status is granted broad authority on a range of executive actions.

Key power includes the ability to appoint or dismiss the Chief Administrative Officer and other department heads, reorganize municipal departments and create or dissolve administrative committees.^[5] Perhaps more importantly, council heads can propose municipal budgets and any suggested amendments to the budget can be vetoed by council heads, subject to override by a two-thirds majority vote of Council.^[6]

The stated goal of these reforms to municipal governance is the “streamlining” of local governments to fast-track the completion of projects marked as provincial priorities, such as transit, roads, utilities and other infrastructure.^[7]

Opportunities for local distribution companies

Ontario’s remaining municipally-owned local distribution companies (the ‘LDCs’) have not gone unnoticed by provincial policymakers, who have repeatedly indicated a preference for greater consolidation in the sector.^[8] For the province, the current fragmented landscape of Ontario's Local Distribution Companies (LDCs) impedes efficiency and critical infrastructure upgrades, driving up consumer electricity prices and undermining provincial power sector reliability and cost-effectiveness for ratepayers.

To encourage consolidation, recent amendments to the Electricity Act have eliminated the transfer tax for LDC transactions and maintained exemptions from the capital gain “departure tax.”^[9] These changes apply though 2028 and are designed to facilitate merges, acquisitions and private capital investments in LDCs.

For municipal LDC owners, this opens three pathways forward to either:

1. Divest
2. Consolidate and scale
3. Invest to ‘stay in the game’ and retain ownership

Ontario’s “strong mayors” are now empowered to facilitate these choices acting directly or through Council. Mayors seeking to divest or consolidate can now pass the necessary by-laws and municipal regulations with lowered council thresholds. Mayors seeking to ‘stay in the game’ can use budget controls to prioritize LDC investment by waiving dividend rights, converting municipally-owned LDC loans to equity and/or injecting new money into their LDC assets.

Regardless of the path chosen, the moment is ripe for municipal leadership to actively engage in a purposeful utility strategy. Whether through mergers, LDC asset divestitures, or increased LDC investment, municipalities now have enhanced power to act decisively.

Looking ahead

Hundreds of Ontario municipalities are now operating in a new legal and political environment. The convergence of “strong mayor” authority and energy-sector reform presents a rare opportunity for local governments to set the pace on infrastructure development without being mired in delay or jurisdictional and regulatory ambiguity.

Whether you are a representative of a municipal authority or an LDC, Gowling WLG’s Energy Group can help you navigate the opportunities offered by these changes. We invite you to contact a member of our Energy Group to learn more.