“Hydro” is a term widely used in Ontario referring to electricity and the electricity sector. The term’s history traces back to the 1800’s with the invention of the Pelton turbine which was designed to extract energy from moving water. In 1906 with most of the world’s electricity being generated from water flow (hydro) the first Ontario power company was created as the “Hydro Electric Power Commission of Ontario” (HEPCO) .
In the 1950’s the province’s energy needs had exceeded hydro-electric capacity and Ontario began building coal-fired generation. In the 1970’s Ontario’s economic growth drove the development of nuclear generation. In 2018 Ontario’s energy is derived mostly from nuclear generation. Hydro provides less than 25% of our energy needs.
While the Ontario industry is most commonly referred to as ‘Hydro’ it is not where we get most of our energy from.
In 1974 Ontario Hydro was created as a crown corporation to manage generation, transmission and rural electricity distribution. Local distribution was managed by over 300 municipal utilities under the jurisdiction of Ontario Hydro.
The term ‘Hydro’ was well recognized and was used until the break-up of the crown corporation into 5 separate entities in 1998.
(1) the Ontario Electricity Generation Corporation (“Genco”);
(2) the Ontario Electric Services Corporation (“Servco”);
(3) the Independent Electricity Market Operator (“IMO”);
(4) Ontario Hydro Financial Corporation (“Debtco”);
(5) the Electrical Safety Authority (“ESA”)
Following the Ontario Hydro break-up one of the successor companies (Servco) chose to rename itself to include the term ‘Hydro’ in the corporate name – Hydro One. Genco changed its name to Ontario Power Generation. The IMO became the Independent Electricity System Operator (IESO).
Hydro One retained the Transmission and Distribution business of the former Ontario Hydro. A Telecommunications subsidiary was formed in 2000 to market spare capacity in the power system fiber optic network. Hydro One is the second largest of the successor companies behind Ontario Power Generation (OPG).
As part of the 1998 industry restructuring, the municipal utilities were required to incorporate and operate independently of other formerly integrated services. The cost of incorporating and adapting to the new industry structure led to many mergers and a substantial reduction in the number of Local Distribution Companies (LDCs). Consolidations are ongoing and there are fewer than 70 LDCs remaining in Ontario today.
32 of 67 LDCs used the term ‘Hydro’ in the company name in 2016.
More than 30 privately owned generator sites have the term ‘Hydro’ associated with them.
What Hydro isn’t
The term ‘Hydro’ is no longer a representative term for the electricity industry in Ontario and seems to cause confusion among many ratepayers as evidenced by social media.
It may refer to a commodity or any one of over 60 different companies.
It is a common misconception that all aspects of Ontario’s electricity sector have something to do with Hydro One. There are a large number of players in the industry today and for most of electricity users in the province it is only the high-voltage transmission where they rely on Hydro One for service.
In the distribution business Hydro One has most of the rural customers and a small number of higher density urban customers from acquired distribution companies. Only one in four ratepayers are Hydro One distribution customers.
Hydro One Distribution manages the most geographically diverse and lowest density customers in the province but is only one of more than 60 Local Distribution Companies.
Derek
