History
Hydro One was created out of the Hydro-Electric Power Commission of Ontario (HEPC 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 an advocate for a publicly owned electricity grid.
The commission's initial responsibility was to build transmission lines in order to supply municipal utilities with power. The power that was being transferred by HEPC was already being generated at Niagara Falls by private companies. Also during 1906, the company appointed Adam Beck as chairman. A year later, Beck and his colleague William Peyton Hubbard fought for the public ownership of the company. Later in 1908, HEPC purchased power from Niagara Falls and sought to transmit this power over its own lines, which at the time, had not 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.
In the early 1920s, HEPC expanded further and became an electricity distributor itself. The company now transmitted to rural areas in addition to municipal utilities. In 1922 the company's first unit of the Chippawa hydroelectric development on the Niagara River began service. Upon the unit's completion in 1925, it was the largest generating station in the world.
HEPC bought the generation and transmission assets of the Electrical Development Corporation, which was the last remaining private power company. In 1926, HEPC entered into a long-term contract with Gatineau Power Company, located in Quebec. These contracts were needed 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. The development of the St. Lawrence and Ottawa rivers was stalled by jurisdictional complications. The development of the rivers would have allowed access to a preferred source of power. In 1939 the Quebec contracts were reinstated and the development of the rivers were continued.
In the late 1940s and early 1950s HEPC took a great leap forward with development of hydro-electric potential along the St. Lawrence River. During the mid-1950s HEPC joined all its power stations and transmission systems into one network in order to become more efficient 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 HEPC began construction of Canada's first extra-high voltage (500,000-volt) 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.[10]
In 1974, the Power Corporation Act reorganized the system as a crown corporation called "Ontario Hydro", the name by which it was most usually known.
In 1998, the Progressive Conservative Party (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 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 its intention to sell Hydro One under an initial public offering (IPO), however by April 2002 various groups in opposition to the plan challenged the government in the Ontario Superior Court of Justice, forcing a halt to the IPO.[11]
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.
In 2017, Hydro One agreed to acquire U.S. energy company Avista for CA$6.7 billion in cash.[12]
In 2018, the annual CA$6.2 million compensation paid to CEO Mayo Schmidt became a campaign issue in the 2018 Ontario election. Progressive Conservative Party leader Doug Ford promised to remove Schmidt if elected, although it was speculated that it would cost CA$10.7 million in severance payments under a clause of "change of control" in Schmidt's contract, which shareholders had approved in May.
The PCs won the election and in July 2018, the newly elected government convinced CEO Mayo Schmidt to retire immediately. News reports indicated that Schmidt would receive a payment of CA$400,000 in lieu of continuing benefits and would also be entitled to receive incentive bonuses for previous years' achievements, Hydro One stock with a value of approximately CA$9 million. His annual pension was estimated as exceeding CA$160,000.[13] The government and other major shareholders in Hydro One then began the process of appointing an entirely new board of directors after accepting the resignation of all previous members. The new Board is searching for a chief executive to replace Schmidt.[14] In the interim, CFO Paul Dobson is serving as acting CEO.[15]
In December 2018 the Washington Utilities and Transportation Commission blocked the purchase of Avista, citing concerns about the independence of Hydro One from the provincial government.[16] Hydro One paid Avista a $103 million termination fee.[17]
In March 2025, Hydro One Networks announced that it completed the acquisition of a 48% interest in the East-West Tie Limited Partnership, which owns the East-West Tie line, a 450-kilometre line between Wawa and Thunder Bay, for CAD 261 million.[18]
