Hydro-Electric Power Commission of Ontario
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The Hydro-Electric Power Commission of Ontario 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.
The first transmission lines began providing power to southwestern Ontario in 1910. Beck was knighted in 1914 for his work in electrifying Ontario.
In the 1920s the commission began generating and distributing its own power when it was given the mandate to electrify rural areas. Besides building its own generating stations, it bought the transmission lines and generators of the largest private electricity company.
By the 1950s the commission was operating as a single integrated system. By 1970 all but the most remote municipal power systems in Ontario were organized into a single 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 Canada, hydroelectric power is so common that "hydro" has become synonymous with electric power regardless of the actual source of the electricity.
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 three companies: Ontario Power Generation, the Ontario Hydro Services Company (later renamed Hydro One), and the Independent Electricity Market Operator (later renamed the Independent Electricity System Operator). The companies were intended to eventually operate as private businesses rather than as crown corporations.
By 2001, Hydro One had acquired 88 municipal utilities. In 2001. the provincial government announced its intention to make an Initial Public Offering of stock in Hydro One. However, in 2002 the Supreme Court of Ontario found that the provincial government lacked the authority to proceed with this offering.
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 put a cap on electricity prices. This cap was maintained after the Liberal party of Dalton McGuinty replaced the PC government in 2003, The cap was raised in April, 2004.