June 6, 1996

Between July and December of 1916, while the predecessor of Ontario Hydro was taking on the special powers and institutional structure that the monopoly has today, University of Toronto Political Economy Professor James Mavor, wrote a series of 16 articles in the Financial Post condemning the monopoly’s formation.

Ontario Hydro’s early success came from the confiscation of the property of three private companies with power stations at Niagara Falls. Before being destroyed by the public monopoly, these companies competed to supply the growing Ontario market for power. Mavor railed against the provincial laws enacted, in 1916, to facilitate the confiscations. He argued that competition between the private generators would reduce the cost of power while maintaining the fees and taxes that government then received from the private enterprises.

Mavor forecast with brilliant accuracy many of the follies that befell the corporation. Foreshadowing Ontario Hydro’s later tendency toward megaprojects, he warned, "Nothing is more usual in public enterprises of this kind than to disregard the element of risk."

Mavor also warned of the incentives against keeping proper accounts. "Even when they do nominally set aside depreciation and reserve funds, they frequently, as in the case of the Hydro-Electric, employ these funds for the extension of the system or otherwise, instead of using them as such funds ought invariably to be used." Ontario Hydro nuclear waste disposal and decommissioning funds are modern examples of the failure Mavor warned against. Ontario Hydro’s nuclear cleanup funds are collected from customers but, rather than keeping the funds in a secure separate account, are expended on maintenance and new projects.

Mavor argued that "In Ontario . . . there is little need for governmental attempts at industrial monopoly." He urged the public to look beyond "rhetorical exaggeration and appeals to prejudice." He concluded his series of columns with the warning that "the community of Ontario as a whole will suffer for years from the effects of the foolish optimism of the promoters of the movement for public power."

Mavor’s columns are available at Energy Probe’s office at 225 Brunswick Ave., Toronto, Ontario, Canada.