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Report On Business The hard-wiring of Ontario’s power system: Tracing Hydro One’s origins

Power lines run out of the the Hydro One Claireville Transfer Station in Vaughan, Ontario Monday March 9, 2015.

Tim Fraser/The Globe and Mail

Hydro One Inc.'s origins trace to Ontario's Hydro-Electric Power Commission. Created in 1906 and chaired by politician and public electricity advocate Adam Beck, the commission was charged with building and maintaining transmission lines that would supply Ontario cities with power generated at Niagara Falls.

The province's first bulk transmission lines came online in 1910, electrifying 13 cities in southwestern Ontario. Ontario Hydro, as it was informally known, would continue expanding to 360 municipalities by 1960.

In 1974 the Power Corporation Act reorganized Ontario Hydro as a Crown corporation. The hydro company continued operating as a single unit until 1998, when Mike Harris's government passed the Energy Competition Act, which led to the breakup of Ontario Hydro. The Crown corporation was divided, principally into three separate companies, known today as the Independent Electricity System Operator, Ontario Power Generation (OPG) and Hydro One.

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Independent Electricity System Operator

Responsible for regulating the Ontario electrical grid, the IESO works with OPG, Hydro One and Ontario's other power companies to balance the supply of and demand for electricity in real time on minute-by-minute and second-by-second bases.

Using forecasting to accurately estimate the demand for energy, the IESO is able to regulate the supply of energy being produced by altering the flow of water at hydroelectric facilities, using energy storage, and on a longer timescale, control the output at Ontario's nuclear facilities.

The IESO is a not-for-profit, non-taxable, Crown corporation.

Ontario Power Generation

One of the largest power companies in North America, OPG produces more than half of the power used in Ontario.

The company operates two nuclear power stations, 65 hydroelectric power stations and numerous other power facilities throughout the province. OPG has a generating capacity of almost 20,000 megawatts. More than 95 per cent of its electricity comes from nuclear or hydroelectric sources.

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OPG operates as a Crown corporation. Unlike Hydro One, it has no direct interaction with individual consumers.

Hydro One

Owning 97 per cent of Ontario's electrical transmission capabilities, Hydro One delivers power to utilities, businesses and individuals as well as neighbouring states and provinces. It maintains 29,000 kilometres of high-voltage transmission lines, 123,000 kilometres of lower-voltage lines and 19 remote distribution systems that serve communities in remote areas of Northern Ontario.

While transmission makes up the bulk of Hydro One's operations, the company has several subsidiaries, some of which distribute power directly to clients in place of a traditional utility, including Hydro One Brampton Networks Inc.

While the Harris government intended for both OPG and Hydro One to become private businesses, both remain Crown corporations.

In Ed Clark's assessment of the Ontario government's assets last fall, the panel said the province should retain Hydro One's transmission business, as it "can play a positive role in many aspects of electricity policy." The panel was more critical of Hydro One's distribution business, saying the company should "dilute its interest" in Hydro One Brampton to help grow and modernize the grid. The panel feels Hydro One is impeding industry consolidation, something they see as negative.

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