The sad end of Ontario Hydro

I’m a big supporter of publicly owned electrical utilities.  A public system where generation, transmission, distribution, and customer service are all vertically integrated provides the best quality of service at the best price for consumers and business alike.  And now, after 25 years of dying a slow painful death, Ontario Premier Kathleen Wynne is destroying the last of one of the greatest organizations that existed for the public good in that province.  The government intends to sell 60% of Hydro One, which is the transmission and distribution successor to Ontario Hydro, to private investors.  This is only going to lead to more influence for large corporations, and higher rates for residential and small business consumers.  There has never been a case of utility privatization anywhere in North America where this did not happen.

Ironically, Ontario Hydro was first established back in 1906 as a result of intense lobbying from small and large business owners.  Manufacturers in southern Ontario wanted electricity from Niagara Falls to power their factories.  Among them was Adam Beck, a cigar box manufacturer from London who also served as that city’s Mayor, MPP, and was the first Chairman of Ontario Hydro until his death in 1925.  Business saw public power as something that would benefit the economy.  It was even a Conservative government that passed the legislation establishing Ontario Hydro!  Conservatives in the early 20^th century quite clearly had a concept of social responsibility and the public good that does not seem so prominent within their ranks today.

Ontario Hydro (known colloquially throughout rural Ontario as just “The Hydro”) grew exponentially over the decades.  The top priority was always to provide “power at cost,” as quoted by Sir Adam Beck to the “people of Ontario.”  Notice the emphasis on the “people,” not the big corporations.  By the mid 20^th Century, The Hydro had taken control of almost all of the generation capacity in the province.  The first phase of the giant Sir Adam Beck generating station opened at Queenston in the early 1920’s.  After World War Two, demand would skyrocket even further.  The size of the Beck station was more than doubled in the 1950’s, four new stations were built on the Ottawa River, the St. Lawrence project was jointly developed with New York State, and stations were also added in the James Bay watershed.  The Hydro operated with minimal to no debt.  The agency made technological innovations in line maintenance.  It employed thousands of people and helped develop a workforce of skilled tradespeople for the province.  It also established the careers of countless professionals especially in engineering and economics.

Ontario Hydro’s financial problems started in the 1960’s through an endeavour it embarked upon with good intentions, nuclear power.  After the success of the small stations it jointly operated with Atomic Energy of Canada Limited in the Ottawa Valley and at Douglas Point, it started building its own facilities.  Pickering, Bruce A and B, and then Darlington.  The cost overruns of nuclear, along with the controversies surrounding that form of power, hurt The Hydro’s image.  Coal burning power plants, and financial fracases caused by oil generation in the 1970’s didn’t help the financial or environmental image either.  Rural landowners objected to new transmission lines.  In 1973, Premier William Davis sparked a scandal when he gave the architecture contract for the new Ontario Hydro office building in Toronto (700 University Ave., or simply “downtown” to Hydro employees) to one of his friends.  That led to a Royal Commission and near loss at the polls for Davis. 

By the 1990’s, Ontario Hydro was a favourite target for anyone who opposed public ownership of utilities.  It was not unusual to actually hear derisive comments made towards Hydro employees or their families that were completely rooted in resentment or misinformation.  The provincial government realized changes were necessary at Hydro, and I believe that is something most people agreed on.  How they initiated that change and how it unfolded up to today is the unfortunate part.  Bob the Fake New Democrat Rae was Premier of Ontario in the early 1990’s.  His solution for Hydro proved he really wasn’t much of a socialist.  He appointed Maurice Strong as Hydro Chairman.  Strong had a controversial legacy.  His career began at Power Corporation in Montreal, owned by the influential and equally controversial Desmarais family.  Strong was appointed by Prime Minister Pierre Elliott Trudeau as the first CEO of Petro-Canada.  Ironically, Strong also claimed to be a staunch environmentalist.  He later worked for the United Nations and was the influence behind the 1992 Earth Summit in Rio de Janeiro.  Maurice Strong is more of a corporatist Liberal in the tradition of C.D. Howe, Robert Winters, and John Manley than he is a social democrat.

Strong weakened Ontario Hydro.  He basically prepared the agency for privatization.  The old system of regions and areas was dismantled.  Customer service counters at Hydro offices were shut, making the agency less publicly accessible and accountable in the community.  Generation, transmission, distribution, and customer service all became companies within the company so they could readily be sold off piece by piece if desired by the government.  This move was branded to the public as “The New Ontario Hydro.”  To supporters of public power and employees of The Hydro, it was nauseating.

Bob the Fake was turfed out of office in the 1995 election.  Conservative Mike Harris, and his hard-right Common Sense Revolution replaced him.  Harris completed the task Bob Rae had started at Ontario Hydro.  In 1999, the agency ceased to exist.  Generation became Ontario Power Generation, transmission and lines became Hydro One, system operation became the Independent Electricity System Operator, customer service became On Source, there were plans to get into the telephone business so  Hydro One Telecom was created, and even branch once responsible for much of Hydro’s finances and pensions became the Ontario Electricity Financial Corporation.  This was all done to enable the free market obsessed Harris’ electricity deregulation and privatization plan.  Most of these entities have remained in public hands, although On Source and Hydro Telecom were sold to other utility companies.  Near the end of his tenure as Premier, Harris set the process in motion to privatize Hydro One.  It backfired.  The deregulated system was causing rates to skyrocket.  Customers were angry.  Harris’ successor, the more moderate Ernie Eves, canned the plan. 

It should also be noted that the Harris deregulation program, and not the green energy policies of the Dalton McGuinty and Kathleen Wynne Liberals that have followed are what really enabled wind turbines and fields of solar panels to blight the Ontario countryside.  It was all part of the ideologically motivated plan peppered with the overuse of “competition,” “the free market,” and “liberalization.”  The same argument applies to the arrival of privately-owned natural gas-fuelled generating stations.  The Liberal Green Energy policies, and the controversial gas plants were enabled by the Conservatives.  All that the Liberals did was accelerate the damage such policies cause.

This brings us to the present.  It is clear that Premier Wynne’s government has serious financial issues.  Selling off most of a public asset is their way of addressing the situation.  What they really should be doing is making the most wealthy Ontario residents pay more in income taxes.  The Premier says the revenue from the Hydro One sale will go to transportation infrastructure.  I’m skeptical.  Ms. Wynne was part of a government that 12 years ago introduced a health care insurance premium that was soon discovered to not actually go to the Ministry of Health, but rather the government’s general revenue fund.  The misappropriation of the health premium revenue remains uncorrected.  I also fear that the transportation infrastructure Ms. Wynne is referring to means commuter trains, subways, streetcars,  buses and highways for Toronto and the surrounding region, and not commuter trains, bus services, or highway improvements in smaller urban areas and rural regions of the province.  Ironically, this is not the first time however that Hydro and transportation infrastructure have had a tenuous relationship in Ontario.  In the early days of Ontario Hydro, Sir Adam Beck had a grand vision for a network of electrified commuter railways radiating from Toronto and other southern Ontario cities to serve outlying towns, villages, and townships.  Ontario Hydro even purchased the Hamilton Street Railway, that city’s public transit service.  The Hydro continued to own and operate the HSR for almost the rest of the 20^th Century, long after it abandoned electrified trains for buses.  The plan for a larger Hydro-owned commuter rail system was stopped after a thorough government investigation into the cost and management of the plan in the 1920’s.

Ontario is a peculiar province in that it never seems to have any cultural or institutional ties that give it a great sense of identity.  I’ve lived in all regions of the province, and none of them are very similar.  There isn’t that sense of identity that is found in other Canadian provinces.  Ontario Hydro was one institution that helped put Ontario on the map.  It was a tremendous sense of pride and purpose.  Unfortunately, ideology and mismanagement got in the way and it has all been sacrificed.  What is there to show for it?  What will there be to show for it?  The answer is the unpleasant consequences of deregulation and privatization for the average household consumer and small business owner.  Private electrical utilities often spend much less on system maintenance.  Will this mean more outages because of poor quality infrastructure?  Private utilities also have higher rates.  This is in order to achieve higher profits and not for investment in capital improvements, research and development, or human resources.  Publicly owned utilities do all of these things with their profits.  I have been a Quebec resident for nearly four years and am honestly pleased that I live in a province that has held firm and kept power in public hands.  Hydro Quebec is not a perfect organization, but by being a public entity, it is more obligated to serve the public benefit because each resident of the province is one of its owners.  I suppose a silver lining to Premier Wynne’s Hydro One selloff would be for Hydro Quebec to buy a stake in it!