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The Ontario Hydro-Electric Power Commission

Published online by Cambridge University Press:  07 November 2014

A. Brady
A. Brady*
Affiliation:
The University of Toronto
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Extract

The development of a form of collective management of hydro power in Ontario must be viewed as a part of the National Policy; Ontario's own positive part; her peculiar sector of the line wherein she attempts through collective action to further the use of her major and almost sole source of power in order to ensure a stable industrialism and a healthy urban life. This development was begun by the municipalities and the government of Ontario in the first quarter of the present century when the federal government was pursuing the main lines of the National Policy—constructing railways, subsidizing the rails of private corporations, providing tariff protection or bonuses to manufacturers.

At the outset the drive for collective action in providing power came from the same class which supported the National Policy of the federal government; viz., the small manufacturers and traders in Toronto and those congregated in the Boards of Trade or represented in the Municipal Councils of Western Ontario. The inland towns were specially interested in power because they paid higher prices for coal than those on the lakes. But all the major municipalities soon became concerned in the collective action, and their initial activity determined in part certain salient features of the Ontario hydro as an administrative system. At first it was assumed, as is reflected in the Ross Act of 1903, that the enterprise might be entirely municipal; an organization whereby any group of municipalities through a Commission, without the financial aid of the government, might generate, transmit, and distribute electrical energy, meeting the cost through the issue of bonds secured by a mortgage on the works. But serious difficulties arose, and the overwhelming advantages of obtaining the financial support of the provincial government led to the scrapping of the scheme. A collective experiment designed to affect greatly the whole economy of Ontario obviously required the backing of provincial credit and provincial supervision. Hence the statute of 1906 which laid the legal foundation for the Ontario Hydro-Electric System.

Type
Articles
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 2 , Issue 3 , August 1936 , pp. 331 - 353
Copyright
Copyright © Canadian Political Science Association 1936

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References

1 3 Edw. VII, c. 25.

2 6-7 Edw. VII, c. 15, s. 13.

3 Ibid., s. 17.

4 But see the judgment in St. Catharines v. Hydro-Electric Power Commission of Ontario (1927), wherein the trial judge contended that the Commission as a statutory corporation with limited powers could not be regarded as a department of government for purpose of treating an agreement entered into as one entered into by the government (61 O.L.R. 465). The judgment was upheld by the Judicial Committee of the Privy Council (1929). See also, Beach v. Hydro-Electric Power Commission of Ontario (1925), 57 O.L.R. 603.

5 See 7 Geo. V, c. 20, s. 3.

6 Ibid., s. 5.

7 Justice Sutherland was chairman of the Commission, and its report was made public in August, 1921.

8 A Report of a Committee of the Legislative Assembly of Ontario on a More Equitable System of Distribution of Hydro Electric Power and a More Uniform Price (1921).

9 The Power Commission received much unfair criticism over the Queenston-Chippawa project. Critics were inclined to emphasize that the original estimate of the work was $10,500,000, whereas the final cost rose to $76,000,000. But owing to the rapid increase in the demand for power, the original plans were greatly altered in the process of construction, providing ultimately for the generation of over 500,000 h.p., instead of 100,000 h.p. Also much of the work was carried out by rush schedules in a period (1917-21) when construction costs in terms of dollars increased enormously. The original estimated cost per horsepower was $105 in terms of 1914-5 dollars. The final cost was $138 per horsepower in terms of 1918-21 dollars, which was really equivalent to less than $70 per horsepower in terms of the 1914-5 dollars of the original estimate. Hence there was—contrary to the claims of Professor Mavor and others—no gross inefficiency revealed by the Commission.

10 11 Geo. V, c. 21.

11 The report of the Gregory Commission was not published in full. The quotation is from a typed copy of the Interim Report.

12 The irritation of Liberals at the speeches of Mr. Ferguson, when he outlined the plans of his government in regard to rural hydro before the provincial election of October, 1929, is well reflected in the editorial comments of the Toronto Daily Star and the Globe. See the Toronto Daily Star, March 14, 1929, Sept. 19, 1929, Sept. 21, 1929, Oct. 23, 1929; the Globe, October 4, 1929. It may be admitted that Mr. Ferguson was justified in most of his remarks since his government voted substantial bonuses for rural lines.

13 See Gaby, F. A., Trends of Electrical Demands in Relation to Power Supplies (Toronto, 1933).Google Scholar See also, by the same author three informative articles in The Bulletin, published by the Power Commission, in the issues of August, September, and October, 1931. Mr. Gaby was chief engineer to the Commission, 1912-34, and throughout this period was virtually a general manager for the whole enterprise.

14 The contracts provided for the delivery of this purchased power in blocks, the last deliveries being from Beauharnois and MacLaren Companies in October and November, 1936.

15 The total generating capacity of the three publicly owned plants at Queenston and Niagara was 915,000 h.p. The total power to be ultimately purchased was 731,000 h.p.

16 See especially a speech reported in the Toronto Daily Star, March 29, 1935.

17 See the evidence submitted before the Royal Commission presided over by Justices Riddell and Sedgewick and quoted in the Globe, April 20, 1932.

18 Quoted in the Globe, May 18, 1932.

19 Quoted by Mr. Cooke in the Legislature six years later. See the Globe, May 9, 1933.

20 Some of the criticism of the Commission in these years was based upon the bond prospectuses of the Quebec power companies; an obviously unsatisfactory source of information and one which under the circumstances only the most astute publicity could counteract. The Commission did make a formal statement concerning the prospectuses on May 6, 1931.

21 Dimock, M. E., “Selling Public Enterprise to the Public” (National Municipal Review, vol. XXIII, p. 660).Google Scholar

22 See the report of his remarks in the Mail and Empire, April 7, 1933.

23 It was not, of course, Mr. Gaby's wish to engage in public controversy with the leader of the Opposition, but such was the interpretation placed upon his remarks.

24 See article on this policy in the Globe, July 19, 1934.

25 See this type of criticism in an article on “Public Operation” in the Wall Street Journal, Nov. 18, 1930.

26 For an examination of the purchase of the Dominion Power and Transmission Company see Report of the Royal Commission Appointed to Inquire into Certain Matters Concerning the Hydro-Electric Power Commission of Ontario (1932). This Commission considered that the purchase “was reasonable as to price, and was not prompted by any motive other than the public good”.

27 An important change is at present taking place in the financial relations of the Commission with the government. By an amendment to the Power Commission Act of 1934 the Commission may issue its own bonds to repay the former advances made by the government. The effect will be to separate the debt of the hydro from that of the government, and it is also planned that the needs for new capital will be met in the future by bonds of the Commission guaranteed by the province, instead of as formerly by bonds shown in the Public Accounts as a direct liability of the province. The obvious result of this policy is to make the Commission financially less dependent on the government.

28 In Holland, Germany, Sweden, and France a larger percentage of the farmers have electric service of some sort than in Ontario. It is true that the concentration of the rural population in villages in most European countries, combined with the greater density of population per square mile, makes electrification easier and cheaper. But in such a “new country” as New Zealand, where the density of population does not differ greatly from what it is in Ontario and where the farms are on the average larger, over two farms in three have electricity, which is evidently a higher percentage than in Ontario. All statistical comparisons in this matter must, however, be made with reservations because of the absence of truly comparable data and because the statistics throw no light upon the relative financial soundness of the methods adopted to extend rural electrification. Condliffe, J. B. in New Zealand in the Making (London, 1930), p. 286 Google Scholar, suggests some weaknesses in the New Zealand methods. For general comparisons, see a brief article in Rural Electrification News, April, 1936. This publication is issued monthly by the Rural Electrification Administration, Washington, D.C. The annual reports of the Ontario Power Commission contain much information on rural hydro.

29 See a report of the survey in the Globe, November 28, 1934.

30 See 23 Geo. V, c. 47 for the legal basis on which the Power Commission constructs and holds hydro works in Northern Ontario. These works are owned by the government and simply held in trust by the Commission.

31 For the repudiation see the Power Commission Act of 1935.