Hydro One - History

History

Hydro One was originally part of the Hydro-Electric Power Commission of Ontario, or Ontario Hydro, which was established in 1906 by the provincial Power Commission Act to build transmission lines to supply municipal utilities with electricity generated by private companies already operating at Niagara Falls. The first chairman was Adam Beck, minister without portfolio in the provincial government of Sir James P. Whitney. Beck had been a prominent advocate of a publicly owned electricity grid.

Based on the company's historical timeline, Hydro One was created in 1906 and was originally named Hydro-Electric Power Commission(HEPC). The company's initial responsibility was to build transmission lines, in order to supply municipal utilities with power. The power that was being transferred by Hydro One was already being generated at Niagara Falls by previously established private companies.Also during 1906, the company assigned Adam Beck as chairman. A year later, Beck and his colleague William Peyton Hubboard fought for the public ownership of the company. Later in 1908, HEPC purchased power from Niagra Falls and sought to transmit this power over its own lines, which at the time, had not yet been established. The company continued its steady growth for the next few years. and by 1914 HEPC built its first owned power generating station located on the Severn River.

Years later in the early 1920s, HEPC expanded further and became an electricity distributor itself. And no longer did the company only transmit to municipal utilities, but to rural areas as well. Moreover, in 1922 the companies first unit of the Chippawa hydroelectric development on the Niagara River initiated service. And upon the units completion in 1925, it became the largest generating station in the world.

Prior to this Hydro One bought out the generation and transmission assets of the Electrical Development Corporation, which was the last remaining private power company. Further in 1926 encountered a speed bump, for during this time Hydro One entered into a long-term contract with Gatineu Power Company, located in Quebec. These contracts were needed in order to accommodate a growing demand for power and electricity. However, these same contracts were to become a source of controversy during the Great Depression when there was an overcapacity in the system. Also,another project that was undertaken during the same time, which was the development of the St. Lawrence and Ottawa rivers was stalled due to jurisdictional complications. This was extremely infortunate seeing as how the development of the rivers would have allowed access to a preferred source of power. It was only in 1939 that the Quebec contracts were reinstated and the development of the rivers were continued.

Further, in the late 40's and early 50's Hydro One took a great leap forward with development of hydro-electric potential along the St. Lawerence river. During the mid-1950s Hydro One joined all its power stations and transmission systems into one network in order to become more effcient and flexible. Also during the 1950s, hydro electric development was supplemented by the construction of thermal coal fired power stations in Toronto. And by the end of the 1950s Hydro One began construction of Canada's first extra high voltage (500 000 Volts) transmission lines. This Brought power from northern Ontario to demand in southern Ontario. However, these transmission lines would only come into service in 1967. And by the start of the 1970s all of Ontario's power systems had merged, creating a province wide grid.

In 1974 the Power Corporation Act reorganized the system as a crown corporation called Ontario Hydro, the name it was most usually known by.

In 1998, the PC government of Mike Harris passed the Energy Competition Act which authorized the establishment of a market in electricity. In April 1999, Ontario Hydro was re-organized into five successor companies: Ontario Power Generation, the Ontario Hydro Services Company (later renamed Hydro One), the Independent Electricity Market Operator (later renamed the Independent Electricity System Operator), the Electrical Safety Authority, and Ontario Electricity Financial Corporation. The two commercial companies, Ontario Power Generation and Hydro One, were intended to eventually operate as private businesses rather than as crown corporations.

By 2001, Hydro One had acquired 88 municipal utilities. In December 2001 the provincial government announced the intention to sell Hydro One under an initial public offering, however by April 2002 various groups in opposition to the plan were able to successfully challenge the government in the Ontario Superior Court, forcing a halt to the IPO .

In 2002 an electricity market began operating. However, critics questioned, among other things, whether the market was truly competitive or could ever become competitive, given that an electricity grid is not a private good. Public dismay at an increase in prices led the government of Harris's successor, Ernie Eves, to freeze electricity prices for residential and small business consumers. This freeze was maintained after the Liberal party of Dalton McGuinty replaced the PC government in 2003. The freeze was removed and prices were raised in April, 2004, and have been increased again subsequently.