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Full text of "General report [of the] Hydro-Electric Inquiry Commission"

■ ■ • ■■-■*W-. 




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ko-Electrjc Inquiry Commission 
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Hydro-Electric Inquiry Commission 

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Sootion X - (femoral •••«•* • ♦ 

tieotion 2 - Advisory ilaports . .... 

Station 5 - Oar Reports •»»•••■••*< 

Soot ion 4 - Plwi of Gonoral H»port 



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Section 5 
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Historical .*...•., 
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Section 


12 


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Lection 


13 


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Section 14 




fiOOtlOU 15 


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iSoetiou 


13 


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Kothods of Keeping Accounts ••»•*»•»•*• »* * t « < 

Investment in lov&r and Hallway unuortuicinga 
oamod or oporatod by tha Cossriiaoicn ......,., 

ConsoX idutsd Balance Shoot ••*••«•»*•»••*•••, 



- Property ^ooonnts •••■•••••».». 

- Ops rat ing account a ........... 

- Audit of Co&jXmion's Accounts 



Definition of *ora w poraor at Coat" 

Xutoroat Charges • 

Sinking rtmds •».. 

Venereal Kates •*•• 

Ueserve for Coating 

Other Charges . .. 

Method of Arriving at Coot of Power 

tflat hat* for Power throughout tsho Province 



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37 
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Hydro-Electric Inquiry Commission 

Copy for Enclosure to 



ED3X (Coat limed | 



tfeot ion ££ - (icissxil ..«•.,.*»•.....•. ...,....»...♦.* 93 

Section £3 - iittia&taa of Cupitkl Cost •»*••*•»••»•»..#••• 94 

Option Z% - Set testes o £ Fever Sate* ••»*•»«•»« « 10V 

Ueot ion 25 - Construction 1 olioy »«••»••«»• * « • » • * ••••»•» • • XXZ 

Soot 1cm 26 - Eethed of Obtaining Funds »»•..**...•»»,,•••• 117 
U0oiiion 27 - ii;g$o&u tares in i*&ca33 of appropriations 

and Diversion of Appropriation • •••••.»•>,»••• ISO 



COPY 



Hydro-Electric Inquiry Commission 

Copy for Enclosure to 



C-onoral £sp 

/^jpyira ration of 

Generating Stations, Sruusforaar Station* and 

Sranon lesion Linos 

Of tilO 

l^&rc-^lootrio Power Comiaalon of Ontario 



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Hydro-Electric Inquiry Commission 

Copy for Enclosure to 



Photograph Slicing 

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As it \?ill appftar If collated for ton \mtts 



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Hydro-Electric Inquiry Commission 
Copy for Enclosure to 



To IUa Honour feny CocXahutt. 

Meutonant-C-ovemor of thn Province of Ontario. 

l&iy It ilenno Your Honour i 

By an or&or of 'four Honour in Council dated the thirteenth day 
of Apr LI | 1922, and mdo ia pursuance of "An Aot r©3po<3tin£ Xnquirlae concerning 
Public Batten"* .levlaed Statutes of Ontario, 1914, Chapter 13, *?e wre appointed 

aa Cosfr.iaaionara to inqrulro Into and 'report uxoni 

X. 6.11 estimates submitted froxa tine to time to tho K/drc-.UXoctria 
Pover Cossaission of Ontario for tho &2eensto&-Chipi sas> Power 
Development, and also all estimates for tho said work submitted 
by tho eaid Commission to tho Government of Ontario* 

2. £he reasona for lnc/ol2r^iTVf]E^ \^ko to tlco In tho eatirxitos 
for tho .^eon^ton-Um^SwG iov/np£i)evelQpttonU 

3- 2he total ooat when completed of tho : t aoenston~Chlppami Power 
Develoi.'eventt . ._. „ 

(a) '4th five units Installed* 

(b) '.1th units Installed to tho full 
capacity of tho Canal* 

4, Tho continuous output capacity of tho '^lo^nston-Cblppam Powssr 
JDevelopnsent, undor tho conditions mentioned In Clause S» .. , ... 

5* 5ne methods of construe* ion, supervision and Banagejosnt 'anion 
have been envio^sd In the ^eiaiston-Chippawa Power uevolovssimt, 
and whether tt»7 can justifiably bo oon tinned for tho economical 
con-lotion of tr;o vscri:. 

6. (a) She quantity of T.utor now available for uac by acana of tho 
'^uaenatoa-Caippa^'a Canal i 
(b) *he po^er that can bO develop! tho rob/ in continuous output 
at too sueonston Poser Utation. 






Hydro-Electric Inquiry Commission 

i Copy for Enclosure to 



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?, la what nana** and to wlmt extent villi the prioe of Sl&garst 
Power bo of footed. If at nil, by the ooat of tho L^eonston- 
Chlppawa Dovo io i Jueu t • 

3. An;/ other power developiaanta undertaken by the Eydr o-;>lootrlo 
yoviQv Coianiaaion, ami generally all matters of expenditure and 
adxninlatratleA by the said Coaalaaiont 

lo entice auoft suggestions and roeoi&iQnd&tiona in connection with 
or arising out of the subjeota tints indicated, as may be 
deeirable and 60 ruport the evidence and foots brought out by 
the investigation, along with auoh findings* 



3y a further Order-in-Councll, dated tho twelfth day of 



September, 1923, the imraodiAtoly preceding paragraph of '/our Honour* a fonser 
Order was e&endsd to readi 

"**o rei>ort the evidence and facta brought out by tho invest i« 



gsiticn. 



COPY 



H Hydro-Electric Inquiry Commission 

. C^py F0R Enclosure to 



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*jemJLxJm®mgm^ 



It was la the year 1306 that tb© Legislature acceded to the 
desand of a curator of ramiolpalltlas In veatera Ontario and passed en Act 
which, aEong? other things t provided for the teppolntsaist of the liy&ro-^lectrie 
£ower Ocssnisslon of Ontario (hereinafter called **tha Cocsnlaslon"). She 
Province then entered upon a eourso which was bound to have a definite 
affect upon it a oeonorclo structure. Dur&ng th$ years that £oXXo?ted t the 
business a&rain late red Toy the Ccoiisaion gradually increased* ftrow a 
purohaaer and distributor of electric pavar tho ComissXon lias no T .7 become 
an otmar and bnil&er of poorer plants of an oh also as to enable it to generate 
nearly ull the power wMcl/T^/SVlfiJ yf also operates on behalf of the 
?roTlaaa tho Central Ontario 3yste&| it haa taken over control, or operation 
of radial and street railways, and has promoted a aohofto for building and 
operating a throat syst-Ti of radial railways which weald have involved, lirid 
it boon proceeded witla, an expenditure of aaay Billion** Sho plants owned 
and operated by the CortjI salon now generate more olaatrio power than any 
other group of publioly-ownad electric pov><nr plants la tho wor&ld* ?he total 
capital involved in tho undertakings referred to r&oun&sd at October 31st , 
1922, to about vl^,^,'^, of which approximately #160,000,000 hag been 
advanced or guaranteed by the Province. 

In and before 1922 there had boon rcuch criticism in the Legis- 
lature and elsewhere of the expenditures made for the construction of the 



Hydro-Electric Inquiry Commission 

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Various d$valG££*?at3 of tho Oomisslon, especially of the Uueoaston-Ohippam 
undo rt .veins', aad of tho nethods of operation and o* tho general aonduot of 
the Com! -j a ion's buslaeis* £our l&te Govomrwnt appears to have boon 
desirous of ascertaining not; enXy whether what had boon done had boon properly 
done, but also to ascertain whether it 3 confidence could be extended to tho 
CosraisiHoa In regard to future dereloi?wats, tho construction of which v?as 
already un&sr aonoido ration and for which the Province night at ar.y time be 
requested to provide the funds* As the Goverment had to go cat tho tfarieoi 
to ©scare present and ftiture loans for tho OeeBslsslon ( it ms aleo important 
that the financial interests should hove independent and authoritative in- 
formation in respect of the organization for which the r.onoy was required, 

fOPY 

Xt thereupon decided to hr^^&i^i&epeildont Investigation tsado of all foots 

t 

pertaining to the natters set forth In tho oonsaisalon issued to ua. 

Upon receiving not 1 float Ion of our appointment as Cosaalss loners 
in this behalf, Wi proceeded , as expeditiously and thoroughly as the nature 
and extent of the inquiry warranted, to Investigate and etndy the subject 
matters referred to ua« 

Briefly tho Investigation say bs grouped under -four headings t 
Sngineorlnci, ?lnaacial f )-egal and General. 3!ho branches of our organisation 
which ^ore responsible to us therefor my be designated as the &iginaorinft 
department, the financial Depa rtuont, tha Legal Department &v& the General 

Department. These several brunches reported directly to us frets tisaa to tU.o, 



Hydro-Electric Inquiry Commission 

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aad &£tor hearing; evidence, studying th# reports of the Departments 
aenticncd and cofclcg oar decisions, ** prepared en? reports to you? Honour, 
^hc reports* submitted to as by the General Departmnt, served to e Xnr£e 
extent, ad dr?*ft* of our reports* 

Cn beginning our inquiry wo tsore isspreseed with tho raagnltude 
of tho woric before us, Involving us it did *ua investigation of a capital 
investment of $170,030,030, i$vi an annual e xp e n diture of ©any nlilions of 
doXXars and tho invent U>nt ion of all activities of tho Costtission li» Its 
reiationji wits tho Government and with tho ganisipalities* Shis isvoived a 
review of tho ability o;^ tho CcsaHlsdiou in respect of business, engineering 
and construction, an investigation of tho accounts, of their distribution* 

fA p v 

of their apportionment fcotU^JSoreiifc eyitews, together with tho cost of po^er 

< 
&n<i the rates charged in various districts. 

Car investigation was primarily directed to the most extsuslvs 
undertaking of the Coffin i anion,- the ;&oenaton~Ciiippawa rower Development* and 
into subject matters in roiation thereto to which Tour honour's oosnission 
directed no partieuXarly to inquire, xt tho tirce of our appointment as 
CoE^lesioaora, however, the t>o^»r plsnt at ^seenston had bean in operation 
bat a short tiwe and tho construction costs of the Devoiojjsant had not bo<Ba 
brought ap to date said distributed by the Gensission* It was not until a'ooat 
sis jQonths Xater that tho accounts and records of the Commission were in such 
shape that engineering and eoonoisio studies oouid be definlteXy undertaken* 
In the saeantlia©, kowv**?, procroas vsaa bsing istide in the investigation of 
other undertakings of tho Cujswisoiou. 



-ov . Hydro-Electric Inquiry Commission 

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Yen? Honour having dssmsd the e&tter Into ^hioh wo woro directed 
to inquire to bo "connected with or affecting th« good govomnettfc of Ontario, 
or the conduct of way part of the public business thereof* v vo undertook tho 
dittos entrusted to us with tho Aesirs tm& deteroirjation of exr»nining f studying 
and folly considering all Batters of administration and expeaditaro by tho 
Ccarsi3 5ion« It was necessary to adopt euoh a course in order that wo might 
be able to auU'iit to Tour Honour a report showing fch« ir?port&at consequences 
resulting from conformity with, or traaagre as ion oi\ tfco Istter and spirit of 
statutory or other anaotxsonto under which this groat public undortaklttf?. 
Initiated "by sn /.ofc of tho legislature In 1906, has been administered* 



In addition sa^tha^ <jW?el# "business and ecou&nio features thors 

COP i 

existed a vast body of oritftflasr; suggestions for botteraent, and so forth, 
easing froia isunioipal bodio*, froa interested and so&atiKos hostile groups 
aad fras individuals more or less inferred* In private business little waif$it 
would have been given to jaony of those criticisms, but In a public enterprise 
of such siatfnltude every suggest ion and complaint had to bo dordt *ith v and it 
was felt that due consideration should be Riven to such criticisms as were 
offered in ordor that tho public jalght bo infonaed a a to tho value of the»« 

Generally speaking,- the degree of confidence that is placed in 
any organisation which is administering a largo undertaking Is measured to a 
considerable extent b'/ the efficiency that the organisation haa # In tho past, 
displayed in the conduct of the affairs entrusted to it. Kith this principle 
in mind, therefore, wo have endeavoured by roans of a complete examination of 



i Hydro-Electric Inquiry Commission 

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ail of the basinoaa affairs of the Cor^laaloa to lay before Yct».r Honour a 
ocaLpiete tuid.it of the lo&ul, fiaaasi&l end engineering features, so that the 
Legislature, aa representing tho Jftrovince in £f*nerr0. t and the rjAniolpal 
corpora ions a/id othora wba imve entered into ooutnaate tftth tho Conxion ion, 
*&iy Know to what extent th#y have been juatiflod in relying" upon the Koihode 
and actions of the Sstealsslon in the adralnlatrat ion of this groat undertaking* 

fte trust, that, having Investigated all of the activities of tho 
Oowsission, vralch necessitated* cuaunget other things, the careful inspect ion and 
condensing of thousand of dccusumts, and having examined ito relatione with the 
Province on one hand and the Municipalities on tho other, our reports will 
prove to bo a usof.il source ok OvfoftaiVion, not only to tho Government but to 
the sranlolpalitlos oonaerned and to individual a -who aro interested* Xn these 
report3 will bo found condensed tho history of every large transact ion of tho 
Oosjsission ■whether with tho Govonsaent, the municipalities, or individuals, 
especially thes$ traasaotions which have called for Investigation or oritioisaj. 
2hey eunr&rlse in ft forta in which it has neve? boon presented to the public, 
the business of the Conauissiou to date* 

It ia wall tauttai that effective and magnificent results have been 
attained by tho Coxxrlsslon* It was for ua to determine if what had been done 
had been done in a Banner and at ft cost which could bo Justified; if mifltafcee 
had boon made and useless and extravagant expenditure had boon incurred and if 
there hn.>X baon breaches of trust Had dap&rturo frees the laws* If certain acts 



Hydro- Electric Inquiry Commission 

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of the Consnisaion fc&vo beon open to question, than the bringing of those acta 
to public attention Eay tond to prevent their repetition, may lead to an in- 
crease in the benefita accruing to tha j^iblio and add to the credit due to 
the CoKinilasion for it3 general axtoiniat ration* 

2ha nature and extent of tho investigation undertaken by us *as 
not of tho character of on investigation that nil£ht be mado of any ordinary 
business enterprise oonrtuoted for private* profit. Tho teessure of success in a 
private enterprise Ray bo gcaif^d with a fair de^roo of accuracy by tho profits 
or losses eho^m on annual balance sheets* An individual or corporation, 
engaged In business conducted primarily for private gain, ia not hedced in 
and roatrlottid in his buairj^i/c^T.SyrVcltfa- to the sane, extent aa is a trustor 




administering tho affairs of others* She business of tho Cocerdssiou mat bo 
carried on in accordance with statutory or other ooKpatont authority under 
whlah it ia created, and opor.asea not for tho profit of any individual, 
corporation, or claaa of tho eoMRnnity, but for tho general benefit of all* 
2&e basic principle of tiso Statu tea governing the Cc?srci33lon ia tho supply 
Of electrical povor to ramie ipal corporations at a price representing the 
actual 003 t thereof* 

Generally speaxiug« those e&eaenti entering into tho coat of 
power are the sas;o for tho Conriaaion aa for a private distributor of pover, 
Vat, through the elimination of profit in the case of tho operations of tho 
Comlasion, the poser oonsussera benefit by the laaount of any dividends which 
aighi be paid to stoosholdern or of Interest paid to bondholders in a private 



• Hydro-Electric Inquiry Commission 
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enterprise over and above tho amount of interest now paid to tho Government 
or others by $lw Corariiaaion. 'ifcas, while there is no standard by which tho 
offaoioncy of tb« Cocsaiasion can bo dlraotly Judged, we have endeavoured to 
determine whether or not the administration by tho Coeasisaion of tiio bualnsas 
oosssitted to its charge hua boen efficient, competent and eoononlc&l* to 
ascertain whether or not eonauiiera of eleotrlcal po^or and others dealing 
with tho Coacilsaton are paying no re than should bo paid, and if injuatiae has 
been dona to the Province or to any Individual or corporation within tho 
Province. Cur inquiry, therefore, has been nseeaaarlly of a comprehensive 
and far-roaohins character* 

la tho Gours'^f/IJTymvT^igatlon into tho business and affairs 
of ths Coffiraiaslon, wo have had occasion and opportunity for treeing e&ob and 
•rory step la tho development of this groat public enterprise arvi its stet^dily 
growing beneficial influence on tho industrial and teatorial progress of tho 
Province* po have viewed cj-iny of the works of tho Commission, have, in different 
parts of tho Irotince, hoard evidence from supporters and opponents of tho 
enterprise, havs considered r^.my ectopia lata n^ainat and criticisms Of 
administrative and other acta of the CoEzaiaclon, have exaialnsd all available 
records un<i doovsa^ta that wore pertinent to oar inquiry and ha/a thus been 
enabled to arrive at definite ooucluaiona of fact. Having regard to tho 
cosrplejcitles of the organisation, its peculiar economic relations to tho 
publia and Its mgnltudo, our analysis of the financial, engineering and 
legal aspects of each of the activities of tho Comrclsalon covers a wide field. 



Hydro-Electric Inquiry Commission 

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la addition to Investigating tho finances of the Cozsaiasion. 
to, vith tho oonsent o.f tho Government, Investigated in tho Department of the 
Provincial ^reasur^r the accounts be free en the Govoramnt and the Cosralssion to 
ascertain whether or not tho Government waa receiving from the Corcsnioston tho 
coat of tho moneys advanced to it. A full report thoreoji entitled "Coat of 
&oney Advanced to tho Hydro-Electric tower C get. Is 3 1 on by tho Province of 
Ontario", was, in October last, presented by us to Your Honour. 

Our reports have boon submitted to '/our Honour with the confident 
hope that full details of ov«ry feature of the Ctonlssion'fl ndnin lot ration have 
been exhibited cad the Government and .legislature placed, in a position to judf© 
in what roaieots, if any* 
revision, aPMmrtment or fuller definite Legislative approval in order that tho 

< 

^?eli- founded policy of public ownerehij> and operation of the witor power 
resourofic of the Province jxay neris and receive univeraal approval and sap-port* 




^jt^j^ai procedure of the CGBnisslan rehire 



f?e now respectfully submit our general Report* which la 
neooss&rily £n a larce masnro a resurso of salient facta and featxirea relating 
to particular undertakings and activities upon '<*:Moh we have previously reported 
In detail, *£he touainesa methods and principles generally employed and applied 
in the administration of all or several of tho undertakings of tho Coi«?ai«i5lon f 
and divergencies there frcan in the ouse of particular wortcs, together with other 
subject natters of jabllo importance which have not bc*n covered "by our interim 
reports, are dealt with herein* 



Hydro-Electric Inquiry Commission 

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^^ji^umnj^LMimM. 



Ss&Ltt&J, 

9l M JLJO U U a 

Sao nature and eattont of our inquiry k&3 \}Qtm Indicated la tho 

preocdintj introductory statements. She undertakings of the Caoraisslon in 

operation at the present time f which have been investigated said reported on 

us, are as follow* I 

A* 2-ower undertakings actaiulstored under the provisions of The 
frower Corals 8 ion Aot t boing those supplying cicatrical power 
or enorg/ tot 

Stemdor Say fcyatera Klde&u Systen 

Sotgenia UyatoflS 1 /^v F) \/Bonaeohere kivor Storage Systea 

Bosfcolca Sysvksu vy 1 I Ottawa Liy3toa 

Severn SyatoH Niagara tfysteta 

Sas&ell'a System asscs Systea) 

St» Lawrence iJyetost "hcrold System 



3* J-'ower undertaking constructed and operated under the provisions 
of £he Ontario Niagara Dovolofrrnrnt Aotai 

The iUoo^ton-Ohlpx^a^a rower Development. 

C» ftraer generating plants owned by Incorporated cowp&nles, the 
control of which is voatod la the CoMEOissloni 

She Ontario tower Com pa ny of ft'iagara Pal la 
♦ TbB Toronto rewe* Company f Limited, ami ito subsidiaries 

D. Undertaking o^ned directly by tha rrovinse and operated by the 
Corsica lea i 



Ceatral Ontario System* 



^ydro-Electric Inquiry Commission 

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3» ETdro-Eloatrio raiXwaya operated ty the Gomlaslon under the 
pro^lsior.a of 3?he /frdro-laleGtrio i^&iXwa^ aet f iyi'» f and 
spocial leglBlatiom 

8andwi&1t 4 ^indoor nad -fcrsheratbarg Railway and 

Windsor and Sootoaseh Ki.©.itria EaiXway 
GneXph iia&t&X ilatliwy 
ii^drG-;-Ioatria JiadloX *kiil??«gra 



* «~ 



*r&a Toronto 3?ower Company, X<lnitoA # and its subsidiaries, 
whila included In tha above Xlst of anderta&inga, wora 
not investigated by ua« It was aoquired after our appoint" 
ment and VMoro is has b««n neeoss&ry to ro£<?r to it in our 
reports* we nave uuod only general figures aurjipiied to ua 
by I'r, 0, $« OX&Jcrsoa, tha auditor. 



COPY 

PttaiXad ■todies were nttda of tha several undertnielntfs of tha 
Cossais»lon by our Engineering, ,ioeountln£ t Left&l and General Pepartaieata aa 
bo for a indicated* 



Under the dlrootlon mi<X personal supervision of Ur* '-.iXtar J» 
Francia, 0«£», K«3.X.C», our <JonsaXtln# Kngineer, exhaustive investigations 
and atudiaa wara Bade of tha jttetmston«Chl£pawa l-owor PeveXopttont and othor 
power ayeter&a of tha Caeulsslon and reports deuXlng with the engineering 
eooaocilca thereof *ere sub&ittod to and considered by ns f and hare boon, 
or wilX bo, transmitted to Tour Honour, A ilat of those forma &|>;ondlx *a* 
to this report* 



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She books and staoounts of the Ooraniagion being annually audited 
and reported upon by Hr« 0. f # Clarftaon, Auditor of the isocounts of the Ccm- 
mlaaiou, u mesnher of the £ina of OlarKeon, Gordon & Dllworth, and an 
iooountont of the highaat standing and refute. It tsus dee&ed unnecessary to 
duplicate Ma w>rK» St wm connldorfrd essential, ho%wvor, to ersploy 
accountants to ■*&• opooi^l oxenlnat ions of tho booses end records of the 
Ccasalsaicn* to furnish oortplet* report a of tho fln&nol&l transactions of each 
luULartu&ln^, to express opinion iron en accountancy standpoint upon any truns~» 
actions or nethcds that night appear open to ortticiaja or unwound, and to 



aeoortaln fross the books of 
&P£ineo?ing Doptrtssent , daW$ 



ifr aqgi ^-ecoraa and to supply to our 

and Inforsutlen required by it» 



S&asra* Price, •v&terhouso & Co. ware appointed ey ua as our 
Moountanta* a list of the reports **nd Bierioranda submitted to us fey thest, 
which have b«©n or v?Ul ba transmitted to ftmr Honour, fonaa Appendix H B** 
to thia report. 



Ue did not organise a deflnito Department with a reec(rnls©d head 
to deal with legal rates t ions arising during the course of our inquiry, nor 
esspioy Counsel to appear at our public hearings, except those in connection 
;«ith estimates and appropriations for the Jaesnaton-'Chlppawa Fower Uovclopwent , 

j 
i 

for *hich Honourable H* U« iiora*!!, K.C., teas engaged ss Counsel and examined 



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the witnear.os tasti£7 tn & with n vlaw to establishing all Biafcerinl facta 
relating to that subject isattor, favourable or otherwise to the Cosriiaslon* 

&r* ?• W« Wegonaet was enroloycd during the early days of the 
inquiry as our Secretary, and part of the duties assignee to him was to 
making of preliminary lnvaati#-.tiona of a legal nature* Vhen another Becretary 
was appointed, Kr« Vfogonast'a duties became of a strictly legal nature and 
these he continued to perforti until early in the year 1923* Gther &ot&ber9 
of the profession were frora tine to tiise engaged Tor the purpose of coz.i~ 
piling data of a legal character, &nd giving asslstanse in tfc» preparation 
of reports* Since February , X923, !'r* J* iv* lioAndrew, K*C, has acted aa 
our General Legal Advisor y-,, ^-^ y-^ « , 

fcaaacal LvnartKent 

All secretarial wortc In connection with our inquiries and reports, 
the charge o£ all our official records, and the co-ordination of the worfc of the 
three aforementioned expert department s so that there might bo no overlapping 
or unnecessary expense, wee assigned to the General Department, which was undur 
the direction of ear Secretary, V.r* J, It, W* Bo«er f Civil Engineer* Xt vmn 
the duty of the ffettsral Department to study the reports of the Departments just 
mentioned and to prepare for us, frm those reports and fron other Information 
in our hands, material for our reports* ihls material, aa eotsjdled, set forth 
in a consists zaanna? the physical, ©canonic, financial fmd legal asx>oots of the 
different subjects* 



r j yDR o-ELECTRic Inquiry Commission 
:>-. ' "opy for Enclosure to 



X5 



Sftotlix 



C&T? E'2PQP53 



2ho roporta horotofora- submitted to Tour Kononr hr.To baen of two 
olasaeat nanaly, thoso da&Xlnff "Tilth the aavoral dlstlnofc tmdort&islnga of tho 
CoranlaBlon and tfcoso boarin# upon oortain gonoral cat tars lir/oatl&ated by us* 
?Jbo forsiar of theaa hiivo boon deal&tutod as disports upon Syatcns, using tho 
torn "UyBtesaa** na a<£ilval«nt to worfca or undartaKlnga aarviatf aystama or f;rouoa 
of «uildlpslitlas t and In Utasa tiro oontalna4, with foil do&alla, a hlsfcory of 
tho trndortaklnff, ifco englnaorlT;& feature a. Its financial aapacta, and oomanta 
upon tho lator-rolatlonahlp of tho Cormiauicn, tho I'rovlnoa, KonLoipal Cor- 
porations and others. A /f??/o-\ BsiySyotoa Boporta &2id of thona dealing ^ith 
cortain gonorai rwttora, all of which h*Y9 boon transmitted to Sfour Honour^ 



la hara given* 



2&mdar Hay Syatesi 

CoutraX Ontario Syafcani 

i&ndwion. <$lndaor « Araho rat burg Jfellway 

and Windsor and Vocunseii "«Xoctrlo 1& 1X1*07 
GuaXph ikodial iUilX^ay 
Sagenla 87a tea 
St. I&vronoo Uyaton 
3evarn :';'3tem 
Ottawa \>-j3tam 

%te* Ontario Power Cowr-any of Niagara ?alla 
Szaalnation of auditor* a boporta 
Ky&ro-^lootrla Hadlal Sallwaya 
W&g&all's Oyatczs 
Cost of Koaey 1 drancod to the '.iydro-^Ioct-vlo 

jPawar Cora-ii salon by tiw A-ruuluoo of Ontario 
lUderai Sgratea 
t£aa£ofca System 
Jtlagara Byateai 



Iydro-Electric Inquiry Commission 

0P y for Enclosure to 



IS 



History and (tanoral isolation*? 

VoiiU5f?3 X, XI, III tm<L IV 
Choroid and »0jgQn iiyste&uji mid das&aahoro Rl?«y 
Storage isystota 

Iterlaw of Leglalatlon - b;/ *?• A. 5!oAndr«« t K,C, 
and &. IrBlghton i'oator 






Zhis, our Gonoral lioport, is Intended to b# a gBn&injg up and 
disccuB3ion of the broad general outstanding questions vhioh hava been dealt 
with In our fom&r jwports. tfcwhj-^n ^p shall refer as oeonaion arista. 
Tho dfltallod Information contained in cur Astern Import o in not repesvt*d, 
nor 4ira tne oouanimta in our ruporte on control Batter* Kiven in oxtonso. 
2lse eubjeete doalt tfita heroin are indioatod In the Xndox at tiso beginning 
of this roy,ort • 



j ydr o-Electric Inquiry Commission 

'opy for Enclosure to 



17 



Oar report entitled "History and General -Relatione" is a ecmipre- 
fc&usive record of the incidents connected with the promotion, creation and 
rapid growth of tho Coculssiinu therein la traced the course of Le&isXativ© 
enactments increasing its powers, duties and responsibilities and in soslo 
respects altering the basic principles upon which its oreaSlou ^?aa founded. 
?ho salient points dealt with in onr ftraor report tire here but briefly suftcxurXsed. 

Prior to X^0Sr^lvT > vi3fgr'\c^mv reaonrooa of the Province tsere to a 
certain extent ia the control and possession of private individuals or corpora- 
tions, 'cut Bany of the miter pov/or privilege a of the Province were undeveloped 
or but pertly developed and remitted tho property of the Grown, aa represented 
fey the Province* In 1930, a Movement was inaugurated for tho utilisation of 
those natural resource* for the benefit of nnnlcipalitius and nestings Tforo 
held in Toronto, V.'aterloo and elaov?h<$re* Shsae aro nor© fully doalt with in our 
report on the history of the movement* 3ho leading spirit a were Br* &*. 17, a. 
Snider, iseaber of the aofflslnturo for Berth '.'atorloo* and t:r. D» B. Detweiler* 
A meeting of municipal representatives interested was hold on February 17th, 
19&s, one of those present being Br, Adam Beoic, th«n Kayo? of the City of 
London, who late? became the noat active and forceful advocate of the policy 
Of public control of power supply. a delectation waited upon honourable Sir* iioss 



| yd ro-Electric Inquiry Commission 

18 



L y for Enclosure to 



and members of his C-overnr.erit *ind urged tho appointment of a Government 
Commission to undertake the duty of supplying electrical power or energy to 
annloipallties, or In the alternative, that munioipallties be authorised t o 
OO-operats for this purpose* £h» Oovsranent doollned to accept responsibility 
to tho extent fts&cd, but introduced a 3111, which was passed at the doss Ion of 
1903, entitled "An Act to provide- for the Construction of Itanioipal Tower 
Works and the Vransmlaalon, distribution *md Supply of Electrical and other 
tower &vA .^norgy", referred to in this rnport as the "Act of 13013"« £Ms 
£ct enabled municipalities to acquire and construct works for the direat 
supply of electrical power or energy without intervention or assistance lay tho 
Government said 8ub,j«cts, rb toaomilsitLon of plants, to those provisions of 
the Municipal Act, ootmon^i^4\ ts tfte "Comae® Clauses" (1903,0.19,3.566, 
Cl.(a) to (a9)). 

Ondor the authority of this Act, Dossals* loners were appointed by 
a group of western Ontario mun legalities ''to do to mine tho feasibility and 
desirability of securing tho establishment and operation of municipal power, 
heat and light mores* • In 1905,peadlnu invest lotions by this 2!uniclpal Coo- 
miss ion of which 8r» 8. W, 3. i-/a%<\o? was Chairman, and £r« ndsm Boo'* a member, 
a ohange of t*overoment took place, Honourable J'r. Whitney replacing Honourable 
8r» ixoss as Premier of tho Province* Rr* &oam E&ck beosmo a member, without 
portfolio, of the now Government, which shortly after assuming power appointed 
Commissioners, with Honourable !:r« Seek as Chairman, to inquire into and ro- 
comesend such actios aa they might deem necessary or advisable for the purpose 
of providing man loipall ties with oleetrlcal power at cost* 



jo-Electric Inquiry Commission 

j P y for Enclosure to 



10 



2he report a of both the l&iniclpal mid Goyomsont Cor-aalasionora 
wore presented In 1903, within a fow dbtya of oho another* She eetlisatoa of 
cost in both rr^ns wore approximately the sueq* 

She vecoaKcndat lona of the Comisaiona wore ftenerally adopted 
and the ucglolataro on the 7th Hay, 190o, paaaad an Act entitled w Aa Act to 
provide for the Sraaanj lesion of Kleotrieal Power to iiuniaipulitiea", referred 
to in this report as the "Act of 1906 T '* Under the provisions of this Act, the 
"fydro-Lleotrlo .ower Com is;:* Ion of Ontario" waa appointed and consisted Of 
Honourable Adas 3ec** Chairaaa, Honourable John n. Eendrio and I ? r. Cecil 3. 
SttltA, 0»£» She lot of 190a was revised in 1907, the short title of the 
revised ,.ot be Ins "?ho ^^^f^® 19 ^ *"* 

31nos the passage of the act of 1906, the sogers' and duties of the 
OoEtalscion have boon greatly extended, not only by amendcienta there to f but by 
other statutes* Hany of the .uirmdnonts to Vhe i*0wer Cosniasion AOt were 
occasioned by the necessity tor the approval of aetiona of the Comiaaiea for 
vhieh there had fcsen no legislative authority when they were taken. 

Jfallowlnft its appointment, the voaslsalon actively proceeded to 
carry into offset the previa ions of the Act* Contracts wore na&e with several 
Honielpalities, na& part of tho tfiugstra Syatcw, for the purchase by then and 
sale to then by tfca Oenraission, of Ittagara power, an agretasent for the eapplying 
of which hud boen nado between the corclsaion find 2he Ontario Slower tetany of 
Biagara calls* SHstribatlon of thia power befj-an on iLo 11th *»ove*ibor, 1310, 



j ydr o-Electric Inquiry Commission 

y k or Enclosure to 

20 



over the first trausniaaion ilnoe constructed by tho Commission. Slnoo 
that dato the yoIuqo ©f business transacted by the Cciaaiaalon has roftilarly 
and rapidly increased, hot only had thora b©t:n a continuously Inoroaaing 
deisand for po^^r tfhicsh has bo»m supplied by now construction and extension of 
forjaor construction lu various soatlani of tho Province, but tho ComftLssloa 
has anlerta;*Gn also the acquisition and operation of tho power generating 
jilanta of i'he Ontario Jtomv Company of Klagfera Talis and ?ho Toronto Power 
CospaTiy, ssiid of electric railway ocnpanlea* Unny priv**t*>ly-ovmed power 
generating and distributing plants hare boon acquired by purchase or by 
expropriation, the CoESalsslon not balna hainpered by tho provisions of tho 
*Cone$ee Clause » M # vfoloh thj^-ej^j^yaSjleQlarod not to bo applicable to 
Bunioipilitiiea enterlag invtf s&t&rncts^wlth tho Coswistfion* ,\ list of those 
properties so acquired is &lven in our report, "History and ^enarai delations" j 
the ■uwYinr is over ninety* 

tfhe acquisition fcy tho iroviuo© In lvlti and operation by the 
Coac-ias icn sinoe that d^to on feeJaaXf of eho Province of the po\?*r d»volope»nt 
and distributing systora in Central Ontario, involving tho operation of an 
electric railway in tho City of I^terborourfc, a pulp still at Ca^pbollford, 
ssmlelfal gas plants and other utilities in the Contral Ontario district, ad£ed 
greatly to tho duties and responsibilities of tho Gear I sslon* Great &nl 
iz&port&at as am %'m *?ori::i Kentionad, they are in total surpassed by the vrorte 
not yet eorpletcd ia Bounaetion ^lth tho u»on3toii~0hippuwfl ^ovoloprwnt, 
itfeerited and carried on under the provisions of 2he Ontario Xingara 



YD ko-Electric Inquiry Commission 

,, y F or Enclosure to 

zx 



1 



Development act of 1917, a separate report upon ^hioh we have snbalttod to 

Tour Honour* 

2ha rapid oxjxuialca of the activities of tho Comlasloa Is 
gr&phlc&lly ftfcem k$? tho corresponding inorettsa la obligation asaaB&d by tho 
Province to iseet tho cent of work* constructed or operated by tho C 0223 i a.** ion 
and *e la&ort as j*kce 22 a dlagran inoluclud ia a former report to Illustrate 

thio Increase, 

fomUoa ft 



She power a ;fid ^tld^ozVtho Oocx.il a 3 Ion fcaye frocs tine to tixe 
increased, »o has been hereinbefore indicated. Their oxeroisa ha« eo<?n regulated 
la cartaln ens** by arwutaente to 2h«r lower Gowalaaloa ^.ot and la othora by 
special -»tutates« The constitution of tha Cozaniaalon with Changing perao;utei 
h&a rwsiiiaed the iars alnoe the paseaga of the ^ot of 1903* It conaista of 
three laanbera appelated by the lieutenant-Governor la Council. Every person 
appointed to the Cresrainaion holda off loo daring pleaaure* and the Lieutenant- 
Governor, upon death, resignation or r^r^ovul froa of flee of }>aiy ssonber of the 
Oi—ileeloa rnay appoint o©e» other person to fill his place. 2»o of the meeaera 
nay be and one msi bo a 2!es&or of tho Kacooutlve Coanall* She Lieutenant- 
Governor la Council appoints one of the jr.er.be rs to bo Chnixtaon of the CoonlesLon* 
!?h8 Gosrdsaion la declared to be a body corporate and as such It a corporate 
pow«r3 ead via t lee £U3t be exercised by at teaat a quonnrs of two Renbers* 



22 



% 300 


































280 






























260 






























240 
220 
































• 


























200 
t/) 






























< 180 

_l 
































Q ICA 




160 































140 






























LLIONS 
O 
































2 




100 




































80 






































60 
















»■«■■■■ 




















40 










L -__... 






















i 


1 












20 


. 


1 


1 
































































1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 



TOTAL PROVINCIAL LIABILITIES 



TOTAL H.E.R C. AND CENTRAL ONTARIO SYSTEM 
CASH ADVANCES AND OTHER LIABILITIES 

PROVINCIAL LIABILITIES OTHER THAN 

H.E.P.C. AND CENTRAL ONTARIO SYSTEM ---. 



H YDRO-ELECTRIC INQUIRY COMMISSIO N 

TOTAL PROVINCIAL LIABILITIES 

COMPARED WITH THOSE INCURRED BT 

THE PROVINCE ON ACCOUNT OF 

THE HYDRO- ELECTRIC POWER COMMISSION 

AND THE CE NTRAL ONTAR IO SYSTEM 

SebTember llth., 1923 



u vdR o-Electric Inquiry Commission 

;. « 



♦opy for Enclosure to 



23 



5!hero ia no provision iu Hhe Po^sr Cusnlsslon Act or oth&r Statute 
authorising the delegation of any of the posers of the Cootnisalon to lta 
Officer* or oth*rs» as a bouy corporate jaany ©£ its sots and deeds raust "bo 
evidenced by a corporate seal* In trio absence of aay provision authorising the 
Ocenlaiilon to pasa by~la«s or other regulations governing the conduct of its 
text lues 3 f it would appear that tho affixing of the corporate seal should bo 
under the hands of at least a »juorua of the cwahors* Juay corporate powers of 
the Conmlsslon should bo exaercised by all lta sersbors or at a seating for unleh 
notioo fees been, given to all end at which at least two Bes&srs are present* 

&tr attention has b<ven ilrxxn to the fast that the v&lldity of 
transfers of laud under She Lund titles act executed by officers of the Ceranls- 
sion has been Questioned* rciicfo Vc|tK«;\u authority under the Statutes or other- 
wise for delegation of this poorer of the Ceesslssion to its of floors An tenond* 
isent to the «ot appears desirable to provide that any doocraents requiring the 
seal of the Concession way on Its authority be executed by designated cffioors* 

'She CoxaKissioa, subject to the approval of the hleutonant-aoremor 
in Council* say borrow nosey and Issue b j :ndn # debentures and ether securities 
therefor* It also has power to issue securities In peysent of the acquisition 
of esrtals properties* She so securities have been signed* -we understand ^ by 
the Chnlnaan &n& the Secretary of tha Qonraiasion* aa hare &lso other formal 
doeui&ents of the Comlssiea* Stany corporate acts o- tho GoKsalsslon hare nut boon 
foraally approved at eaeetlngs of the Co&?:l3!ilon» She validity of the issue 
of the securities has not, wo b^iiere, seen raised by purchasers or other 
holders of eeouritioa of tho Cesaalssle&t *hoy probably rely upon tho 2'rorlneiul 



Uy DR o-Electric Inquiry Commission 



, o( , Y F0 R Enclosure to 



£4 



g&arantee thereof . v?alch tote &otterally been £ivoa vsith the securities 
Created "ey and continued in ea:lete»oe at the pleasure of the Lieutenant- 
Governor in Council, under authority of the Legislature, to exercise and 
perfem duties assigned to it fsw, time to tirse ey the Legislature | depending 
?ery largely upon j-rovlnol&X advances «j<i fjuaranteeu to &eet o&pital expend!- 
iiirea, It Is difficult to understand the contention that has fcenn raised In 
certain quarter* that the status of the CogkiI salon ia one sorely of trustee 
for nmnioiptti corperstiona, ^iiioii have entered into contract a ^ith it, and that 
Its actions ure to be regulated, in aceordnnoo *»ith their expressed wishes or at 
Ita owa will with consideration alone of the interests of municipalities, imd 
this free frees all (tevemtaont control or interferons* She practical result of 
such contention, if Oiv^hfi Jfitg iWr^oV, would be a reversion to the principle 
of the Afft of 1903 and eeamienneut of OovenEaent control, upon which 2he ?o^er 
Coa&isaion Act ms originally based* 8t«,tu.tory changes have to a certain 
extent loosened the control of the G-ovornttont over the Commission, but ouch 
chants have not ultercd the constitutional statue of the Cornel:;! 8 Ion, and 
its acta are these of an Agent of fch© Province* 



She relation the Comidslcn bears to the Province, to jsunlolpal 
corporations with «hioh it has entered Into contracts ajid to othsra, h&* boon 
dealt with comprehensively in our report entitled "History and General J^o lotions" 
and to a certain extons in our system reports i*nd in those out it led "Cost of 



ectric Inquiry Commission 

[nclosure to 



tj 



Seney Advanced to the 2fydro~. : .l*ot:rio $*©wer Connies ion by the Irovlaco of 
Ontario" and M J&r^laation of juidltor's sports for Storied 1916-1921 Inoiucive 1 ** 
o hare not dealt in detail v nor <1jo \m <X®*m It a&rlsablo or necocs&ry now to do 
so, »lth the several transactions between tho Corcnlssion r*nd private individuals 
and corporations, involvlasg aroengst other* the acquisition of seas ninety 
under* cuclngs connected *?ith the generation and distribution of power* 'i?ho 
general ffjatures of the relationship of too QeoBlsslon to the Prorlnoe and to 
contracting auniclpal corpo*- 4 * Ions are here Indicated* tfor fuller information 
on the 30 subjects! we n*t*r tmr Honour to the reports juat sentioned* 

£eJ^cj3AJ2i&&^^ 

The latent lo^>5HJ:Y^ r \y tara °* *ko *G* °£ WW and of tho 
Legislature in passing thai ^oTmumot' s« doubted in view of the course e* 
•Tents related In ft preceding section of this report. She change of public 
policy whlon took place whoa the act of 1903 replaced that of 19)3 and the 
easting primarily upon tho Urovlnoe the duty end responsibility of financing 
projects for the supply of electrical power or Qwirirj to eueh manic Ipalit lea as 
might desire tho surra, and the public uttereaceo upon the debate Upon the Bill 
In. the house in 1&Q&, clearly show that the ore&tlen of tho Geeaelsslon was 
Intended to be a seana of enabling the Prorlnce to utilise, to aa full extent 
as possible t its water rosouroea for the supply of electrical power to the 
«nbiio at cost and, at the ®>z® tine, to assure to the Province as a whole the 
fall benefit of ewnurahlp of great natural re sources* Initiated by representatives 
of"- ' ' allies, -;c- • cilng bat a portion or the Province, difficulties ia tho 
«ay of municipal ownership or control and of financing the eost of generating 



^yoko-Electric Inquiry Commission 



i ppy FO r Enclosure to 



£3 



plaato fuid wain transmission linen, end tho fe?>Ilng that the undo rtt& lug Ml 
for tho general good of tho i'rovinoo doubtloaa led to the adoption of the 
poiisy of rrovinoi&l control through a Comi»*lon appointed by and reereaontatire 
of the tiovensaont of the ifrovtno0» £h* Ce&nlsalcn was Intended* *s stated in 
1903 by iienourable Sr* Whitney, to be in offset & £e par teens of the Govorsnont* 

Undor i'ne Power Coraraloslon a.ot of 1906, tho Province provided all 
esoneya to bo expended by tho Coroalsaioa *asd tho CossTii salon vua ro paired to aeeounli 
to tho Irovince for those ©onoyo and also to pay over to tho Province all sung 
reoeivod by It la tho course of its baslnoas* 

«R6sdri!«nta to the act and the j -assafse of other Statutes extending 
t&e powers of the CoK7^tsa!*^;^Ii^^E)i5t^}^ tt of oortal& duties la respect 
of the disposition of isoneya received by it fi*ors other than 3rrovlneial son roes, 
neve in a large istasure altered tho original relationship of the Cozssiiagion to 
the rrevinee, but not to tho extent of corr.-^etely res&cvlng it from Provincial 
control or placing it otherwise than in the position it originally occupied of 
s representative of the i*roviaca, created by tho Legislature, #.nd charged as a 
body corporate with tho duty of egeroielng only such powers aa the Legislature 
jsl^fct confer on it» ]/?©<$ueHt disregard of the limitation of these powers and 
of duties l3a.TJ08ednr.on it t appear* to have led to the asausvi.-tiou by tho CoKKissiea 
that it ia a law antd it as If, is nut responsible to anyono for* any of its 
sot ions and mey ecnduot Its business howsoever it pleases under the aaeuraneo 
that if any Breach of trust be com It ted by it in regard to funds entrusted 
to it t or if «my unauthorised course of action be adopted by it t or if an 






^ yuR o-Electric Inquiry Commission 

, ory for Enclosure to 



27 



Auditor of ita accounts or other peraon raises protest or objection , tho 
legislature will ratify, approva and ex post facto authorise ita unauthorised 
acta. 

Xhe Statutes do #ot provide tho sjaehlnory for direct control by the 
Ctarerassont whereby uniuithoriaod courses of station and unauthorised expenditures 
by tho Corns lesion »ay bo prevented* Ouch ft control was possible under tho 
provisions for tho appointnent of a Comptroller enacted by tho legislature In 
1916, feet these provialona wore, in effect, abrogated by subsequent wss&iidsasuts* 
TJa&er the law as It aew la, expenditures have boon zsado at tijsos without appro- 
priations therefor and without tho knowledge of tho Legislature or of tho Govern- 
ment. Appropriations h;ive also bean ro quest ad by tho Comls;;icn for oertaln 
purposes and the 0SvsnirimsV£?W$A>&m aisured thut tho expenditures weald not 
exceed tho amount required, althou&a at tho very tine the appropriations wore 
asked for tho Coaaiaslon knew or should have Known that the expenditures had 
been or vould bo f^r i;i excess of tho appropriations* Tot while tho Government 
h&a no direct oontrul otot tho aota of tho Coios legion, it has a stoat effective 
iadiroo?: control for, as tho Cemission is appointed by, and renewable by, 
tho Govenssent, It a**n, at any tirn, In tho ease of xaiacondaat on the part of 
tho Oojwioaioa or any af ito ysonbors, remove than t?Q& office* If knowing of 
wrongdoing it falls to exorcise thia remedy It beoor>ea to a large extent 
raaponalbio for the Gestosis slea** .not a. 

While t2<o otatue of the CotBEiaaion oa a creation of the Province, 
^ith ita e»»bera holding office at tho pleasure of tho Government nn& entreated 
With th* ex: cadi tare of large eursa of public nom:<y and thus uu Agent of the 
rroriaoa, J3&9 not be^a altered by legislative hnendaonta , sufficient changes 



Hydro-Electric Inquiry Commission 
* 01 copy r° R ENCL0SURE to 



29 



toavo bosn made in the aourao of daaliag' botw^n the Gosriiasion and. tho <*o7ora~ 
*sant to gl*a boss© ground for tha attita&o aaaunod la eartaln quart era that tha 
Oossiilsaion la a trastoo solely for Kydro-ouniaipalltloa and fcfca-fc the ProYinoe 
jcast ra&ico saoa swnetary &&v;iaoos us aro requostad ay tho Cooes! sal oa and oocupy 
the position of a K«ra oroditor of the Cemissica for sdronoaa made and 
obligations ftifEondt 

£fc© gonoml position ^alea mx-oara to ha,vo been takaa by tho Gesa- 
ffllsoion, and roarsy of Its rapport ors 9 la that the Sre&tmry of tho 2-rovinaa should 
be ^laead svt tho disposal of tho Cooz&lsslon, find th?*t tho Govornr-tmt should 
without quest ivn provido for tho Coznnlaalon ouch fanda aa It aajr fron ttrra to 
titse reoulro. to bo etdwdu late rod us to It Buy sann fit, for thyao nanlolp&lltles 

roPY 

o? the ^rovtnao* atoloh huvdMmN^Kl or alay horaaifter ante? lato oontraata with 
the Cozsulsaion for a supply of povor. If thia view woro aaoeptad by tho 
Goverrr-ont and tho legislature, she orodlt of tho Provisos would ba plaaod 
largely la the CooRiaalun'n bauds* 2&« attitude of tho Cosaaission dooo not 
tend towards allaylntf tho ansplaloxui or removing tho objections of those* portion* 
of tho irovinoo which oo far bssre been unable or unwilling to shnr* la any fc^ao- 
fita of publld owcprahlp and Operation of a great publio utility, for tho 
fiaaaola^ of waioa tfceyt as part of tbs* Prorlnoo, e*re responsible, aor Is it ouoh 
&a to pars', it of ji&sscnlous relations between tho Govermaeat and tho Cossaiaaloxit 

Other aspoots of the relationship of tho Com&ission to tho irovinoo, 
particularly with reforonoa to the ownership of wor*a *;ad properties vast ad in 
the Ooani salon are diseusaed later la this report* 



Hyi)R0 .Electric Inquiry Commission 

. C0 , y FOR ENCLOSURE TO 



£3 



Ehla ■abject is fully dealt v/ith in oir report entitled "History 
and General delations* u«d la specifically roforrod to in our 1 various sjsttfsa 
reports* 



As liaa b*sen indicated in the:u» report n f the bsllof hao be«» en- 
gendered in tho popular mind that the Ownership of all vorlca end properties 
vested in the Cons is s ion and constructed or acquired hy no&na of Provincial 
advances or guarantee* are hold by the Consaission solely an tractee for the 
respective asunioipal corporation* *fcioh have cnterud into contracts with it f 
and for those benefit the "work-a and properties havo been constructed or 
acquired* If thin bo the^tenslsn^vf the Legislature as osepre&sed in its 

COPY 

Statutory enactments* it wotrfd TJnoiT likely that *or>o clearly oxprossod 
prcviaicn would be found in those Btt&ctxr.*nts *hlek v?ould effectively relieve 
the Province fron all farther financial obligations tsiA at the ease tUae 
definitely fix responsibility for the repayment of Provincial advances and 
the assumption of -Trovinolal obi i ({at lone by nanicipalitioa in a definite 
isasaor liivl at definite tisiftc* 

At a setting of the Ontario Knuiclpal Klectric Association hold 

in Hiiailtcn on April 4th, 13aT, the following resolution was adopted; 

That thia Rsoting at representatives of the fcunloirolltloc of 
the HLug&rm Syetea aniseed in the development « tr&assaisaioa 
end distribatlon of elactrio energy as a ^Unicir>al undertaking 
dosiro to place era rae Ives on record as believing the tiwe has 
cone to take such steps as ^ili. relieve the Provincial Government 
frosa all financial resi.onsibllity and place the adreinlat ration nr.d 
c. ttrol of the j^-dro-. lioctric 3yst&n in the hands of the Funici- 
palitiea «&o are o^siera and are financially ra sensible for the 
a •rt-.f.lar," 



^ ydR o-Electric Inquiry Commission 

Hoi CoPV for Enclosure to 



20 



tha resolution is a direct reversion to too policy of tha Act 
of 1903, and a rajaetlaa of the priaotyias anuaalatad by tha proootora of tha 
Adt of 1906 and asprassad In that Act. It «&b cada clear to ua t feottoror, by 
representatives of municipalities throughout the irovinca, who appeared before 
us, that tha opinion expvasaad in the resolution above* <juoted tg not the 
general opinion hold by Hydro IJuaialpalttlas through* Ontario* 

SCha st a tenant that the Muni0ip.il it las ara th« owners of tha under- 
taking, prasvasaably avery part and paraol of wor*a and prop* rt las vostad In tfco 
Cos&iaaion, la BUslaadlmj and lnnaaurata* Under &>otion 22 of Tha ftraar Ccces- 
taleslon AOtt 



"tftea oxr^nditnre of tha CcaeslealaR a?Jon tony works undarfcaken 
undar the provisions offthia ..p^LiuAXho bono fit of any 
iwaiolp&lity or mmialp^rlTtV^ wvialJ-Juive entered into con- 
tract a -v?ith tha Cocaaiaaien shall bo repayable tu tho Go?>- , 
siisaion b/ such ssfcalalpnlity or nunicipalltlea*" 



Under .loot ion $3 of the .-xOt only, la th^rs any provision c?ada for 
rapaynent by esuilolpaliftiea to tna Cotaralaalon of the lattor*s azpondlturea upon 
works undorttOCfcn fur tnalr banc fit and then only by annual payments constituting 
a part of tfco "cost of pawar" £o? tha ya.ir a3 apportioned and adjusted by tha 
Cosssiaslcn* Share La no direct raeponalbility c^st by *ho rcmar Comlsslon AOt 
upon BHUftioipalltiaa to rapny tha jfrovinoo tha amount of ita advances or to 
relieve It fron other obli&ttlo&a Manned avan in cannaotion with the works 
undertaken under tha provisions ef tha Aot for tholr benefit, Bach leas for 
• dvanoaa to tha CosElssion for other purposes. Sad Connies ion as Agent of the 
^rovinoe - fcal ' i ! ' : * ". " • ever .:;.:), >:X), >o.), «*n& 

naia expended this ■nrnnt upon narks and undertakings* (2hla maeunt does not 



o-Electric Inquiry Commission 

)(> y for Enclosure to 



31 



inolude oxpeaditaroa on the Central Ontario -.jy3tfc£i or certain bond loou«a not 
guaranteed by the Frovlaee* ) ^uroly those varies and on&ert&kin&a mat bo doiased 
to be hold by the Casmlsaioii as Agent of the rrorlnce and the £ro?ineo to bo 
the bennfiolal owner thereof, tfhe dealarat ion In a(;recjronts between the 
Cefsralaalon and winioipal oorperations, that the works constructed or &c<iairod 
by the Ccssalssion to en&blo l£ to supply the power it undertakes to famish to 
the ssmleipai corpo rat ions ere hold by the Cowralsaion aa trustee for the& t 
rcetjfu no gore than that the ownership oiT theao aarxa will pass frow the ?rovino© 
to then upon paymnt to the Ccmlaalon of each annual flMuunts t invested In 
rroTtnoial securities, aa will At the expiration of a definite period fom a 
fund sufficient to repay ftrorinotal advances. 

COPY 

Up to the present tino the total of these poynoate frosi the ounl~ 
eipalitlos la sufficient to r«£*ty not bio re than two p©r cent, of the advances 
of the Province, and to thia extent only are aunletpal corporations la any 
senas beneficial aimers of the worfee t»ad properties rested in the Cort^isalon at 
this tine. Extension a 12nd itaproveraents are continuously baiug aado to these 
works sad properties, further advnncoa being obtained frow the irovlneo for the 
purpose. Consequently, the proportionate interest of the municipalities in oTsner- 
ship is not gta&erlally Increasing. • Ststs it ?'lll bo seen that it will certainly 
be a very long period before oorsplotn ownership passes to thca and in fact ao 
long &3 expenditures are Hade it will navor pass wholly to then* S3is inprac- 
ticability of the Kunlolp&litlea taking "euch steps an will roller the 
Provincial Goveraeeat f?oa all financial responsibility and place the administra- 
tion %&& control of the Ifydro-^lootrlo [patera in the hands of the Euniolx^lities 



ij aim i— i 



^-Electric Inquiry Commission 






fY FOR ENCLOSURE TO 



32 



who &ra crejnara and &ro financially reaponalblo for tho undo nuking' la 
r/ldonfe* 

Eha relation of fcha Cosinlaalon to Esanlalpalltlos un&or £no 
Posar Coawtaatea Aab, v&ria4 In sciao raapaots by tho proviaiona of other 
St&tutaa which rto hsreln&ftor noted, Involved tna saj^ly to there upon thair 
Initiative by th© Cararal salon of electrical power or energy "at coat n . She 
ele&enta entering into rt coaV are determined by tho ->ot and tin* apportionment 
and *d4«3t8>#nt of this cost lo nuida by tho Coaslaaion* Quo of the ele&e&t* 
of cogi: la tho easaal pajrrwnt ef a taxes stiff talent to fona In a fixed period 
a sinking fund extm'JL to tho aaosuit of tho advances of aha Province to taaet 
the teat of work a, end th^-^^vpf-^'o^/i defends entirely apon tho jud&aent 

ed by wTo Com! 



and eeoB&qr exoraiaed by 



coast ruction* 




alas ion in matters of Bdmlaiatratlon i\&& 



Xftsdar a eubsequent heading- the effoot of preliminary ostlEutoa of 
cost or l^oic of aaoh eatlaattee upon tho relationship between the Corssisaion 
est aosloiifelltieftc and oaa^a in which dftaaatlsfuotion haa been expraaeed, 

&re do alt with* 









03.C- j Y pro-Electric Inquiry Commission 

. '. I ; , ;jy F OR ENCLOSURE TO 



zz 






M^JL^MK^k^LMmjmiJui^mmM 






. 






■ 






The reports of our Aosauntaata, fceesra* X ; riO0 f Mulovh&x&Q & Co»» 
entitled "aeport upon CoaorsJ. Acacunttas 3yat©i2 a aad "£$tall*& £:e«<sor&ada re 
Goner&l froeaurtlag ttjf%tss^* 9 which «*ra traasxsltted to /our heater hsyevlth, 
OTJUl.lt the ratal t a of a detailed etady of the account la*;; £;Gthods of tho 
QesraiftttLoa* Sfcelr viowa ex* attt*r«iri36& in ft stated/at, which »© boro <moiej 



n .»o fuel that v?e bora mod* a sufficiently thorax; -h an way of 
the rat hole of Accounting to 9-v/ that la car epialca tfco 
ayoteni la adequate* a&<Lu»f /ldl£a£ « bath la rospeet to fcho 
jsusoiaor In waleft the difoierf aiel^p^tioaed to tho various 
sub-Kla^artr.xnts, and ftV^o^rds th.T ro 00 run Kept* inhere are 
eae or t&Q poiat» f however, upon which \so daairo ts orstsaynt. 

1.- £he only eeployeoa ut tho Head Offioo who ara under bond 
are ii:^ j^yi*&sifcs*:'* end hia aeaist&nt, who are covered la 
tho aeount of £5,000 each* Bumeroaa employees attached 
to Use i'iold Off Idea ar« beaded ia individual ursouats 
T&ryias frcn * 130. 30 to vloO, 003*00. '.0 thiate it would 
b& ia *oaerdt*ace with uradant; baslaeae practice to hay* 
bonds latoea out to cover other cr.nloyeea and officers 
A&vla£ fee do 4S0?;j L?r 103a dirfjotiy with the receiving 
or disbarring of fundi?* 

2.- «e this* that a book should be prepared and distributed 
atsioag the employees of the »<aocuating ana Un^inucring 
Aepartaeata <i»>-.scriblnfj la do tall the jairpeae of each 
account a] «t eorl&g ia the cnrtl of accouat*» f ^nd statist 
epeolfleally the particular itesie or olaasea of itena 
which eaould bo ea&rged or credited there to. it/a arc 
lnforaad vJx.it she laeuanae of such a booic has bs'n oon- 
aldarcd bat uac b«(;n left la abeyance**' 



. i i ydR o-Electric Inquiry Commission 

HOI pfY FOR ENCLOSURE TO 



54 



X. >» 



M ln conclusion t?o wish. to atutR tnat we have not ru&do any 
specific Invest l{$ition of tbo dotuila of ttkft account lag 
set hods followed la tbe oasoe of the - 

Ontario Power Oonpany of liifig^ra "alia 
Ontario grajigraiasiea Ces<pa«2% Lltalted 
Central untune .iyateR, or 
I&eotrlo Hailwaya* 

*Eo*ever t cur (general Investigation of the eeoeis&t* of those 
ocmpanloa and s^stexas hud aoqn&ln&ed ua tfith iho bv.nos on 
enioh the records arc icept Had having regard tfceroto and to 
the results of our enquiry into the details rvocr&n bo lag 
a^Lntalaed at Seroato sad u*; Riagjtra in eonaofltien ©1th the 
Queens tOB^Chlppcam ?ow»r Develoj^esent, "*€• wt* of the cplaLon 
that &b/ further lnvoatlEsatlou of th<? accounting ayateas lo 
unn^ceasar;?*" 



£ho syatoa of ko»piag account a relating ta the construction wrfc 
oa the v v ;iocnstc»»Ohlp^^a , »a Devslojtaont %uu tho subject of additional studios 
and a farther report by o^io»AaiiJ<iJdt:i oad for detailed inforaation thoreoa 



reforsnao say be sado to tho I? report entitled "B«port upon account inc ilystteaa 
and Methods teiloyed at Ukif^ra, la ©onr/jctlon with Queonaton-Chippuwa. Votrer 
deYeloptttant*"* 

£o find th&t tho laothods and systoia adopted b;f tho Cotsaiaaien la 
keeping Its aeionata are ndeijuate and $re$ier uud draw attention to tho ro~ 
ooatondatioa of our *.oeotun:uita f la which we concur, in reapoot of tho bonding 
of o&ployoea b&vlng the ou a tody and expenditure of public sone/a r.nd the 
Issuance to tten of a book containing detailed ttandare Instruct lone* 

The expenditure for le@ol erases was u subject natter ef in- 
{niry, in regard to uhidtt certain Infftmt&tloa rejected b;* us frow the Coiraission 



L d ro-Electric Inquiry Commission 



ppv 



FOR 



Enclosure to 



33 



• 



has fees:* withheld* A Legal Dapartiaetit of tfca Comls«icn taut, w© twdoratanA* 
se#n recently aatfcbll&fcad &ad better control &ad tutjuststent of legal expanses 
in sett $:rob&bly assured tfcun under the Xoo&a ay at era foraorly prevailing* under 
which large ^cunts* ware |»l& fo* legal serf lees to oertain i>r&ot it loners* 
fearing tiio period fron &stober 31s$, 1916, to October .Slat, 1928, legal fees 
paid amounted to epproxiiB&teljf vlol*>;3» *his usoant incia&aa ji&yRflnta 
mads to three individuals of over £&0 t 9d0 ouch, and a payment to eno ftm 
of C7or <£3,Q0Q» '""ith the esooptlon of ^nafclircr payment of ^5,000, the re- 
isalnt^; amounts aro relatively sa&ll* Sub»e<juent to October 31st, lv££, we 
are loforrrad, largo tssounts t?ero paid to solicitors in connection with the 
guroh&se of those properties of tho Toronto Powar Conpany, Llnited, which 
?*orfi squired fey the Cotaiilsietf uV.fcHf t5p terms of tho sc-aalled ,t Clor*a-»Up 
Deal". 






She following is a suaa&ry of sash e&renc-fts, bonds and deben- 
tures, leaned or essuseed, ban* loans* etc., as at October Slat, 19£2 9 in 
respect of tho Cc&rciscion'a villous undsrt£blu£a» She nnoont of vl&9,4?7,96S«6d 
Shorn beloi? j&ay be regarded ua the gfexasnent a&pit&l ar^lcyod &8 at tho above 
date, tn all operations of the CoBsisalant 



I ,,o-Electric Inquiry Commission 

foR enclosure to 



prv 






35 



ftUgara »n& oth*r Power Sly sterna lnoltidlng 

Gash &&v&&et4 by ^rovinae* 

i?or Slagnra and otlwr ftyetcffia ,,,,,,..,«, ^44,5??,£;H.&i> 
£or v^uoeneton-Cfcippaiwa ftws-y 

DovoXon vr.t •«*•»*•»•«*«»»••«,••,»••• 

?o cteet deferred iutoi-ous in roopeet 

of tiie .Xi&eider &>y Syet««i »,•»•»,,»», 

Bonds R&4 £>etentaret leeuod or 

asauBoct by the Oomalseloni 






Guaranteed by the iravlnae »»*,«*«, 3&,:-&9,831,95 

li'ot ga&ranteed toy the i'roviaoe «»»»*,•»•• G ,309,584.72 

flank Loana Guaranteed by the Province »,*»»• , I , t £00 t Qa0.OO §1$0,%6,1X2*I9 

Cental Ontario Systeaa Jtarvla X issued 
by tho ProTlnae In Goimeetlon with 



She Central Ontario Byst*»a »«,,,,, ••.,,,,,,, § 8,3£0,Q00.9Q 

2he iruton township i ; uirrcrot>'j, ±4»Ha .,.>...,, 22& 9 9QO*00 
Gash Mv&noed by taa iTOYinea for the 

purpose of aiaiciag extensions and 

iKproresenta ••*»*••••«•«««• *•,,•«,«»•*• • , ? t S33 t 0S8.78 

Bond 3 &nd Debenture a la-sued "by the 
Coasnisaioni 

Guaranteed by the Province »,«*,*»,,*.*•• $ n,314,.')30»00 

Not Guaranteed by the ire? tune •»**••*••• 1 £0,003, 00 



12,107,853,73 



dalanee owing by the City of Gnolph 
on noeount of lUrebnoo Frloo 
ci* Gaoiph iiudS'ii Eallvay »*•««•*»»••,»««, 

B&a& Loonas 



144, 994,31 



Guaranteed by the iruvinoe ,••••«,•»,,•«, 600,000,00 

tot Guaranteed by the *roYlaae ,»••»••••» 315.000,00 



Tot a 1 



• •fttttol't^***** 



1 1 ArtK -« 



Fifctric Inquiry Commission 

F0B ENCLOSURE TO 






37 



Xho Annual iieporta of tho Auditor of 1;ivo Aooouato of t&» 0os>- 
Kission do not lncludo a consolidated balanca ahnot of all ita under takings* 
ior tho rnrpoao of oxhroitlug tho iaa£aitUilo of the fcuslnosa of tho Cofssnlasioa 
&nd to porrait corapatlson of tho results with theao obtained In largo prints 
fcuainaaa enterprises, wo &9&&od it. axfoaiont to bare prepared & conaolldatad 
b&lftrwo ahe&t of all tho powor ii&dertftfelxiga constructed or acquired and 
oparjitnd by the Cotanlsisioa undur tho provisions of 'i&o Powr Coisralsaion AOt 
and 2fto Ontario Vlagara DavaXepBfmt Acts, Stioh a balance shsot as of 



October r>ist, 1922, faaa, &a 
pirsraaac*) of otir Inatructl 




<£c*n prepared by ear /-.cocnntants In 



3 Inserted herein «.s pafjo 33. 



2ha asset a and liabilities of tho Control Ontario 3yBtaa.i&nd 
of Hydro-Electric £ail\mya attain! at or&i ey tii# Corsniaslon arc not included 
therein bett are oxhlbltt?d on aoparata balunoa sheets* 

2no ¥*lna placed on capita.! aaaefcs of tho undertakings „ in- 
cluding generating plants, trun&sisslon linos, trans forainfj stations &n& 
other plant u&'l oqui;mnt, la the aatnal cost thereof and upon this capital 
coat depends in a large tteasttte the revenue of tho CoKB&isslon, consisting 
a* it dot a of fixed ehargee on aapttal ooet as on© of the senv>ensnt elements 
of tho cost of pover collected fron g&nlilpalitlas* Thn e&pital cost is 
■'■ sily det-s-rttlnsd as t! 9 assets ^)?9 « ? :'. •:„ jntlr**ly . ;/ :. - is sua or 
assamption of bonds and dabooturos to tho asooont of $4S,&£9,416«67, of which 






yy-RQ - : . 'rr,;i.i_ s 



I 



A 3 S V S 9 

capital laagggn 

Genaratinr rlnnts, transformer and distribute 
Ijiat stations, transmission linos, distribu- 
tion sys terras, etc, 

Servica Buildinga (Toronto, Hamilton and 
Qobonrgi 

0ffic3 Suildinsa (Toronto) 

Tools, Offise Equipment* etc. 

V/ater rights and vrivilcces, franchises, con- 
tracts and coodwill 

ftALATTi ^Tirs A TT :\\}& of ^alkerton quarry - 

Secured by Mortgage 
£Ipq -"* ?•::" ? :03Iv:;p^ith Provincial Treasurer, 



$137,667,037.03 

496,444,96 
660,357,16 

S13.C? 4. 71,, 



including ^0,500 deposited with the Canada 
Trust Company 



Construction and maintenance materials and 

supplies 
Tower, construction, surely sales and sundry 

accounts receivable 
Amount owing by Toronto and York Radial Railway on 

current account 
Claims Heoeivables 

Against J.J* Albrir&t "■» secured v >295, 633.20 
Against X/ominion Govornraont in 
: respect of income taxes raid for 
.♦the thirteen months ending Tec- 
ember 51, 1921- which should bo 
recoverable 72.334*46 



l f 471,216.39 
2,901,019.90 

227,973.60 



367,957.66 
561,853.49 



79,844.50 

t *> ft 9 to*? it; 



Amount duo frorn the Province of Ontario 

(since jaid) 
Debentures of the Commission duo 1957 

purchased in 191o, par value ^115,000, 

(sin-) a ecld) 
Cash in banks and on hand 

.<Ur,H ADYA^SP .?••> A!D Iirresg-3) in Bydro-Hadial Railwayfl 
Conprl sings 

Toronto to - v ort Credit Railway boinr* the sraount 
expended upon the pur o ha so of rirht-of-way, sur- 
vey in^r, engineering, administrative expenses and 
interest 

A^OHT? ?. ■:"%my. i 7% out of future revenues from the City of Fort 
Arthur and other power consumers on the Thunder Bay System 
boin-n that portion of Interest on the Bipigon Development 
which was doferred at October 31, 1922. 

|rpT^:s c; ? :irr;3 to future operationa being una^rtized bond 
discount, American exchange premixaaa, prepaid interest, 
insurance, etc. 



V 13C, 056,933. Go 

9.GS5,3S5.28 

§148 ,942, 239. 14 

260,000.00 



1, -;C4 f 663. 19 j 



0, G1H, 99 7. 67 



730,035. 74 



518,520.65 

v l 62,152, 470. 34 









I, ST A B I I, I T I 5 3 



30 



Cash advanoes for Hiagara and other 

sy a t arcs $44 ,577, 234* 65 

Cash advarooe for ^ueenatcofr-Ghippaara lower 

Dev el o j a»n t 61,273,545.02 

Fortion ci interest on iar osteon t in 

Thunder I>ay (HlplgonJ f-y st em - the payment 

01 which ia deferred ggO.915.7S $106,216,695.92 

Unexpended portion of tho sum appropriated by 

tho Legislature to cover expenditurea by 

the Cg i-iission for the account of tho Iro- 

v&we 60,220.11 

nx?-^.?:'~T'~ C7Q0& of tho Toronto Power Company 



Liaited(par) 1,150.00 

crrc AT", T; :' ::Tl~HT,S issuad or asswa?*! by tho 



Ci 



Cossaiasion in concoction with tha jnrohaso of 
the Ontario Power Company, tho Toronto Power 
oapany and other poorer properties 

Guaranteed by the Irovinoe 155,219,831.95 

Hot guaranteed by tha Trovinoe 0.509.584. 72 43,589,416,67 

AT/A:rT7D b'f v" : 3*:TK OF rPr^^VL in connection 



with the oonstruetion or tha third pipe 

lino of tho Ontario Power Oo^ieny, (seoured 

by hypothecation of vl, 400 ,000 1st Hort- 

ga*;a 5 I Bonds of tho Ontario Power Qorapany 

and guaranteed by tho Provinca) 1,200,000.00 

Account a payable and aooruod char#03 1,071,734.31 

Aoorned in tor oat payable 507,062.14 

InauranoQ Claiaa and Awards 630,547,86 
Ocatral Ontario Systen - cash hold on Deposit 

for that systes 263,490.20 
Eydro-ladial 3ail^aya - cash bald on Deposit 

fer tcea 69. 510. ,64 2,650,075.13 

■•-"grrrest 



5'or renewal of plant and eqnipssant 4,865,359,87 

For Binding fund for tho repayaant of oagh 
advances by tho rovinoe and for tho re- 
tirement of Bonds and Debentures lsaiod 
or as Era mad by tha Josiaiasion 2,677,047.09 

For oentinsenoies 698.766.37 0,242,093.33 

■^i::?: Uii v : N .? OT-'-pi? SMArres on storehouse 

and power companies' ope ration 254,609.16 



In rosjeot oi* o on tract a entered into for 
works unlor construction 



;i62,152,470,34 



uo- Electric Inquiry Commission 

„ FOR ENCLOSURE TO 



39 















i 






■ 






80S&3 aid sssBsssrjBsa xsotn© uii &8dt&&sD B3f sus ccsasiaaioir, 
jgfaiMcsasp a? ma mmmos .o» qa^io 

tforty-yo&r 4$ debentures of the Co&alsaloii, 
Maturing Attest 1, 1957, issued to so^or tho 
Itiuroh&se of tho oajjit&l utoaic of *ho Ontario 
i'owr Geranany of tfiagum Falls •...•••»*....»•«.»•••*»•» $8,000,000.00 

iVonty-yo-ar 6$ debentures of the Go£3~i03ion, 
Maturing July 1, 1941, Issued for the kurpose 
of retiring an Issue of She Ontario $wmv 
Qoapany which natured in 1$£1 •••*..»».,.»,••*. , , 3 ,600 1 009*00 

flwenty-year 6§S ttciads of tha Coralssion, 
maturing Bso«ratoer 1, 1940, Issued to cover 
the purchase prlo?? of tho capital stock of 
She Toronto Fowtr Ceeapony, Linitwd, nnd 
certain slsotris&l powsr egulgseent of tho 
Toronto and foirtc ctadlol l&lluny »,♦...,», ♦ . . ♦ ♦ . 619,000.00 

Fqrt/-ye.'ir 42l debentures c£ ti(f-> jajOTGYion, 
■fttaring Juno 1, 1353, lih^V^^oornLotion 
with tho puroii&aa of the Essex Uystcn »••»»••«.««»*.«**■ 200 1 000 .00 

Ton-year &/> debentures of tho Commission, 
Maturing June 1, 1928, loaned In connection 
with tho jrurooase of th« assox Systeja •,,......,......... £6,000.00 

Porty-ye&r 4$ debentures of tho Ootanlsalon, 
Maturing Deees&si 1 1, 1960, Issued to cover tho 
paroh^Be price of tho 'Choroid Dyatera »•••»,.•••.,..,*.*. 100,000.00 

*"irst Kortgags £,j Gold Bonds of She Ontario 
xoxsor Company, tee JSebruary 1, 1943, Issued 
and outstanding U 1*400, 000 pledged with 
Ban'ic of Lontre&l aa security for loan of 
$1,200,000 to the hydrc-;*leotrio Vwrnr Cwwlsaion) .... 9,002,000*00 

#iret Berthage ty; Gold ;io;ida of 'fho Ontario 

*>ans&lsalon Uo&a>ay, klmltsd, due Kayi, IMS *»•*«•«*« 1,599,000.00 

Cuii*ranteed 4-1/2$ debenture stoo£ of '-*ho Toronto 
lover Company due *'••</ 1,1941, guaranteed by 
the i;„\~. „--.l«ctri-3 m^r Cocxalssion ^txd. tho 
VroTlaoe of Ontiirio ,............,..,....,.....,., ,lSJ333 f 93X,9ff 

Xotal slurai In tforetfolng Balance Shoot • •• v3S,£19,Q31.93 









;o-Electric Inquiry Commission 



,i fo 



„ enclosure to 



40 



BONDS Alv) BKS$raiE33 XS3UIS3 CI; A33UH83 8T 2H2S GC8®!X83IOir 
OE 8* Ba&AXXiKJ COSRStOLUSD Br Tin; GC83fI33X&ff # 



£2iiO£lat!a& 



£8£23& 



3>obe:uursa Mttmftd by tha Comal 3* ton 
in connection with certain propur- 
tles new Included in tho ^tsXoka 



$ 44.8S4.72 



6/j Itortg&g* Bonds of the fferonfeo 
jftsreer Cksspatfi/, duo July i, 91934 « 
secured by I-retferonse Jltooic of the 
&Leetrl&4, Dovelapseat flcepa^y of 
Ontario, Juiisitea, sojd guurunteed by ■ 
the Joronte c&llftey Oosajpany «** »«*»»*«*»••• »»«»»»••* »•*»• »4, 103,200*00 



* 



First Uertgige, 0^ Gold Sonde of 
the tfleetrieal Develorewnt < ^>- T - N - 
p»ny of uritaria, LJjaite</^OMj D \/ 



i'otal Sheen la Poregolng Bale&o* Sheet •••••• ••••»vQ,309 v &84»72 






I ,o-Electric Inquiry Commission 

, r for Enclosure to 



41 



the sisa of ^3& t £13»$31.98 «M ftunrantoed by the Irovineej by the employment 
of the proceeds of a do«and loun of vl.203,000 frosa tho B&mc of Kent real, 
also guaranteed by tho £rovincej and by advances from tho irovlnco which 
feavo aggregated vl3»»£l&»&)5.9#. Apart frora a complete valuation of tha 
fixed acsota, their real value cannot be dotorrainod by the taet appl ieable 
to a buaiasos operated for purposes of profit to the o&nors, naEely, tho 
extent of that profit, but only \y consider lag tho proportion that fixed 
charges in roapoat of capital cost bear to tho total cost of power* It Is 
quite evident that oxceaai?o or extravagant expenditures in tho construction 
or acquisition of &&?'£* and properties materially increases tho price of 
power wh*n such price la on u cost baaia* 

She total an^rntNd; kha credit of sinking fund accounts on 
Ootobar 31st t 1922, waa *£, 077,^47. 09. Of thla waount, on that date, there 
had been paid to tho treasurer of the Province or invested in provincial 
Boeurltioa which wore delivered to the £r©aauror, the sua of §1,434, 669*19 • 
The difference of yl ,193 ,233 ,90 \saa jsa&o up of cash and Provincial securities 
In th>* hands of tho Cennlsslon* 

A portion of this yl, 123,203.90 represented nxaounta credited 
to sinking fund accounts in respect of bonds Issued or assumed by the Cois- 
mission, the greater part of which have boon guaranteed by the Province* Sfce 
CoBRiaaloa claims that it has th« right to retain thla portion of sinking 
lunds and that It is not required to invest such funds in Provincial securi- 
ties or deliver Van securities to the Treasurer of tho Province* In vie* of 



, .£lectric Inquiry Commission 



. <- : BOH f( f oR 



Enclosure to 



42 












the express provisions of She Power Cesasiasion Act that ail payments <m 
sinking fund account froa jsunioipal corporations sjyi. others ssast bo so 
Invested aid the securitios so delivered, *&o contention of the CoTaaission 
is iseo^prehenalble* excepting in tftoso eaaoa tfhere it is otherwise provided 
in the agreeB**nta w:th the bondholders. 

3ft« Auditor of the aeconata of the Cosssiaaien hsa infonsod us 
that ho ccnsidera tbo values placed on currant and -sowing assots to bo 
fair and sound t and that tho accounts receivable Kay bo considered aa all 
collect iVlo, although sesse of relatively steall amount are disputed. 

^he dsn&nd loan froa tho Bank of Stents?* 1 involves tho p&ynstit 
of interest at a higher race &cy p'/rnln in respect of Provincial borrow- 
ings at present, and it would soon that ifc Slight well bo liquidated by tho 
issue of dobonturoa of tho Co&saiasioa or otherwise, and a saving in payment 
of interest thus effiscted. *he f inanoing of permanent worfes by sjs&ns of 
bank loans is not consistent v?ith good business practice* 

£he reserve for cent ia$enc ies consists Irrsely of estouuts sot 
aside in respect of the jparopartioii of $he Ontario terror Company and the 
Toronto Power Cowptmy, and is corss-»ontod upon in a subsoqrant section of 
this report. 

On pa^j 44 will bo found a etatei&ant of the reservoa at October 
Slat, 1922» according to an dort akin^Sj tho totals of %*hich are shc^a In the 

Xoregaiag Balance Shoot. 



>Electric Inquiry Commission 

or Enclosure to 



43 






Cn ptige 45 la & balance sheet of Hydro-meotrlo ioviiai Hall- 
v*ays operated by the Cocsaiaalou* 

Included la tho bal&noe shoot of Hydroelectric ilkdl&l rail- 
ways under the caption of "Sonda and Debentures Issued by tho Ccsanisaloa 
and guaranteed by tho Province'* la an amount of $2,039,000, forty-year # 4f$ f 
debentures, gtvoa In satisfaction of tho purehaae price of tho o&pltal Steele 
and properties of the Sandwich, Windsor & -teahorstburg ii&llway and It a sub- 
sidiary, tho Vlndsor & ?een»seh ilecfcrlo hallway* Of this total, debentures 
to the &nount of v l,2&£,000 *?oro delivered to the vendors at tho tire the 
properties wore transferred to tha Coraaiasloru '&& renaming debentures 
amounting to $789,000 w»r«»Tj^3^tja vrlpi the Hatlanal Trust Gcapsjrjy of 
Toronto aa security for the paynant of a ll&o aaount of fli*3t mortgage bonds 
outstanding against the properties at the date of transfer* 

Since that tlsse, the vendors (Detroit United Il&llnaya') fcavo 
retired v 110,000 of those first Mortgage bonds and a lliso amount of &ebQiv« 
tures of the OcbbI salon has been delivered to thesi by the Ration*! rrast 
Coispaay, so at October Slat, 192,% there had been delivered to the voders 
of the property V 1»S30,0:}0 of debentures of tho Comiasiun, and tho remaining 
£$79,000 continued to bo held by the national tfrust Company and will be 
delivered to the vendors aa and when they retire the remainder of the #479,00(1 
outstanding first tscrtgago bsMs no^r fanning a lien upon the properties 
acquired by the Cozmi salon* 



I 



-* --■ u. :^. 



o-Electric Inquiry Commission 



r f cr Enclosure to 



44 



mAJlA 



i '"' r S ? / V E *S 






— fraWlM * w "»'x i 









.^ssijrvoa For 



■jwowaw— i — 



Syatms HtannAc 



3 taking Coat lnga&3 laa» 









■ 



31&@a?& Liaa* and stations 
QHQisiet oc-Chij^aiw ; war 

£#y*la racist (: J 
Osfc&rio <>-vr -:o-.v : nvy 



Total G?sat*r Riagara Byw*^ 



v 2*4V5,«i21*Q2 $ l f 30S*9a4*£X $ 4,332,87* 



1,387, 7*fi, 85 

*. V"..*, </ <!►■»*' WiJ 



*• .^ MI^ Uvg^J^T-** 




.**.——" 



<*«-1 






"asdalln 
Ottawa 

I*G»fctifca 

Mdasa 
Sattte 

Bosa«&&ra Sirs* stttraga rs^ss 

HTiea Sttildlaip 
Office 2a U& tags 



:»»; ?*7? 



C4 » 74&* 73 



$5,564: xa 

i:-7,2,<>o> 

434« 59 

35, 771; 00 

47,834*04 

111, W*. 52 

ir> »f> -», hi [~ »? 



408,856*51 



1£9,$£4*84 



i* ww wwwwwwwi »i >»'■ ww* i — » «« m^ ipMnwwi 



v 2 t SSl,47S.62 I 6£S # 7n*i4 



U*,02&39 

s9 # 04?taa 

sas* is 

< 

4,524*03 

£0,au»w 

* 

eft»9ii;«i 

3,956*98 
5&,6%«84 
67,377.10 



4,4Dltfi8 

0,253.17 

♦ 

6,060: 13 



3*975*51' 



Sl&ALl 



,; 4t3fiS,35?»57 v ^677,847.08 v 



690,784*37 

BBBHMWB 



t#3 



-Jva >a natt» to&*ChlTT>a?a ?oc?or pmralopasnt 
210 1 yrt eo^l^toa. 



MMfcn***. 



ajyae > -- *••••-'. r,^ :.--u. ^ 









* -1 J "1 



^ 



« c es -^ i « 



•aUS 



&Ul*-^ l ,,y vX .'i-'tV,, -, ■ '- .--il-^' 

Hoad and Squijtaont Sight*, yranahises and 
goodwill of - 

Eha Sandwich, ".-Indaor and Asft erst "burg li-iil^ay 
Ehg Gnalph Hadlal railway 
?ho Jarcafco and York Radial Hallways 

Sspon&od upon fcho inrohsao of ?j£ht~of~ ay 
Construction asatoriala loss rosaloi, 
Surveying, Bngiaaasring, Adnsdniatrativa 
Expansoi and interest ior th« a'MiBf.rastion 
of - 
7h9 £oronto-?or$ Credit Itadial Hallway 
Tho rort Cradi*-8t« Sataariaag Radial 
Hallway 

TTTT"*' ffflP » "Kin . 



,1 v< 



City of "Indeor 4?/S Debentures dv«o ^pril 1, 
1960, (nimo sold ) 

2MZSM&12B. &** SSaiatanaaoa, Hateriala and 
Supplies, Off lee Stationary, oto* 



Cash in basks and on hand 

Eydro-rj loo trie Power Postal es ion - Qasa hold 

on d?po»lt for Hydro-aadial Hallways 
Ac ooant o S e 3 o i v a bl 
Xto© 07 the City of Gnelph on account: of the 

operating detfioit of ih* Gaelpa ilc^lial 

Railway 

yarns?!? omagra to tatw operations t>3ins 
vnluatJcTJ ana other expenses, prepaid in*» 
sttranee, oto. 



^2,875,422*74 
595,377.68 

3,510«lt3p5?_. ;S, 731,960, 96 



$ 730,035.74 

&&a$&JSZ 1.231.225.11 



$ 228,950,03 

69,310,64 
53,059.63 



mwnwnn- 



2iL&&kZ£ 






46,4-23.03 



CI ,074. 73 



V / , *>' v/«.» |I,»J ^-» %'. /.' 



120,000.00 



££•3,113,42 , 



■ ) ■■ l'lM« " 




m 



k,XJh.JL.LMJL..X,J, "; ,3. 



' >3 AT' ~ :^""TTrC5_ laatad or* fcha Ooitetlaslon 
la suanection with fena juroha^o sad rehabili- 
tation o-' th* gaauforlofci fflndaor and As&orafcbiirgr 
Railway, taa Oualnfc Radial Railway and tho 
Toronto and Tor*c .ladlal Railways 
5,90 Guaranteed by tho J'rovino* , §5,314,000*00 

got gasrontajd lay tha rrovlnao _,_. 3£O«000.QQ 

AII)IS ©wl»£ to tho City of Gfoslph in oonnaat-* 
ion with tna itirafcaso of ths Gualnh r ;sxUal 
ti&ilway, -f.;;o.hlo la half-yearly installment a 
as par pnrohaaa agreajaant 

£&$ - vwo installment a jaid 



v 3,464, GOO. 00 



L0< 



| iso,ooo; oo 

fi-OQB f &tt 



144.994.32 



Advances to tho Co^isslon by tho Bank: of 
gantraal 



015,000.00 



>0.00 



15,42 



23*03 



74,73 






■ ii it ■ ■ i> in i r ii i i i - - ■ W firr ^nrr n i ~ i ■ - ~ i ri 

Saab advanaad by tfca OoofslBaion to jaoot o^» 
pendituroa in aennaotion with tho Toronto- 
Tort Jradlt Radial Railway 

iocownta ! ayabla 

Acorooa Intarast Payabla 

Amount owlBg to tho Toronto Fcwar Coapaay 

en anrront aoaanrt 
iToriaion far Slalaa end for Injurioa and 

dassagaa 
Provision for anradaaMod tlofcota 



$ 101,027; 43 
89,541.60 



:2?,973.60 



^«7 

• •«■■-• 






I, arallabla for tho payaraat to tho Oity of 



Toronto of an a-acxsitfnot yat datonainodj owlcg 
in respect of tfaa oiar.it ion of the ^ootion of tho 
:: ,iroj.oliVi>j rivisicn in tho City Limits and for 
tho ra&awal of plant and aqxtlpoont 
B>"£ l^Tri era&tod by laatallaanta raid on tho pttrohaaa 
priaa of tha Gnolpb 3adittl Railway out of rovonuaa 
of tho ro^i and aasasa-'iaata againat tha City of 
C^-nl^i 

: "WUJ& raaeivad on tba a&la of tho QoiaHiasioa'a Daaa&tiuras 
of tba sandwlah, fflndaor aui Asfearataarg Hallway 1 



T ' 



700,035.74 



17,444.25 

&£& 492,517.13 



S^2ISS te22 XIA3i:,XT? la respect of o on tract a 
antaroU into for oon struct Ion tutorials * 65,563. 73 



g?^> .ig^ry— > t "%"_** T^fiyfrtSTCt 



120,345,36 



8.005.69 

73,16&# 67 
6,457*52 

^^»— m^mw^p wi i mh outturn , l»J* «J 



^Electric Inquiry Commission 

! roR Enclosure to 



4* 






■ 



I 






XB C0«8G?XQS WITH E!QUQ~3&30^a<3 &DJUA 3&IS$a¥8 
A3 AS 0Cyi ?033a .31, 1922. 



nun i twi wm fci* 



Gut at and in?; Bonda and Pobonturea issued by the Coaai salon 
and guaranteed by tha ^rovinoo. 

3?orty-yoar, 4j$ Bonds of the COEsniaaloa duo April 1st, I960* 

issued to cover tho purehaea price of the? capital otooic 

said aijiiota of tha ttaadvloh, Windsor & Ar«aeratfearg KAilvaj 

l J *?Otal iaana #2,100,033) ••............,..•«...,»,.....••.». £2,030,000.00 



rorty-ye&r, 6$ Debentures of tlio Corliss ion duo July 1st, 
1061, issued ia connection tilth rehabilitation of the 
Sandwich, Windsor A Aran* rat bury L&lXwny .«>..........,... 



900,000,00 



**v5onty-y«i&r 4§S Debp.ituroa of the Gosaalsaloa given in .ur- 
Oh&ao of tho capital atoCiC of the Toronto and fork L&dial 
liaiiwiiy Company and the Uchonbers and Aurora iialiway Coapany i £ »S?5 t 00Q,.ffl 



COPY 



$5,3X4,000.00 



2?ea-yeasp, $>» Soxsia of the CoESalaaioa duo Bay Xat, 1931, 

(not guaranteed by tjio froYt&oe) Issued in connection 

with tha rehabilitation of the (iualpa ha&lal xsaiXvaay •••,.,• , l£O ft 000 A Q 



$5,444,000.00 



Statement of Advanoea by tho Baxtic of Montreal to tha Coranisnion 

%o. wmX..j^mAX^^:jJLA^^t^^^^^l^^<^. ;.4ft.QtEi<v JM14 .^vUg^a. 

Advance a to tbe Qomiaaion h-/ tan Bank of Kent real I 

?or rehabilitation of tha Oandwloh, Windsor A ^aheratfeorg 

Eailmiy (secured by hypo the cation of N .',!,:} jj hydro aadial 

Sobonturea laaued by the Coza&lsaiea and *iy 0,000 Debentures 

of the C ity of fladaer } • .«., ••«•.•»»•••••»••»». y 200,000.00 

For rehabilitation of tha Guelph Hadiul isallway (aa security 

for thla loan tha Sank: of Montreal holds fe 150, 000 h';;dro 

hadl:»l Debenture* of the Co;..- -.is a ion, ah ion have wen alined 

by the Chairman feat not by the Secretary nor has the Corals- 

sion' 3 teal boon affixed tho reto } ........ 1X5, 300. 00 

i-'or ©33 audit urea ccdo in Qonueotlon with the iort Credit and 

St. Cat] ■/ {.y : by fcyj >tfcecation of 

el,L0O, .-• ." sire • . -l 2 ■: ■ , ' ; t . lasoe 

of yii, .,,„:-*> @ia; mteed by tha irovinee of Ontario I •••••• 50-VDO.oo , 

v 815,000.00 



iR0 _Electric Inquiry Commission 

■ F OB ENCLOSURE TO 



47 



For Information concerning debentures deposited with the 
Ce2sni33ion by the Bsmielpalltlon and boada issued by the Corasission in 
respect of the £>ro|>oscd $oronto-3t« Catfcarina a aadtal Hallway, wo re for 
you to oar report on "Hydro-;.leotriQ imdial i-aii'#ay3% dated £to£tOKbor 
7th, 1923. 

We Include bare in ag page £3 a balance ehe«t as at October 
31st, 1922, of tbo Control Ontario Systea which ia o"?aiod fey the I^ovinoe 
and cj^sratod by tha Coar.l salon* iror details ooncornlnj; the properties com- 
prising this nndortaKin& and tho operating results thereof, we rofor you 
to our report on ♦'Central Ontario Bystots*** d-ited &&rvh 2nd, 192,*5, At the 
tin>o the foregoing report /Qr/^ftFj^cll/'only tontntive re suit a ?*ere avail- 
able for 1922 operations and on the b^ais of thoso tontutivo results the 
total operating deficit to October 31st 9 1922, ma stated at about £207,000, 
Since that tiroa the CohrI salon decreased its renewal r&teo and made sundry 
other adjustment*! reducing the deficit of §207,900 to ^165,1 19, M ^hioh 
amount ia sho-*n ia t)u» balance sheet included herewith* 



section, xx 

Cur ^usoouutanta have prepared a ouzauary of the property account 
of tha power nndortustintfa of tha Coosd anion, exclusive of the Central Ontario 
w/atwa, vthioh ahews the following 



_..,„■■»..,<- U. . ■. i.T.,1. - .. 



ft - ' i t f ' * * 

ia : ■■-■> ■.:--; ~ — 






.,..--■ — 



A 



flA ^?>I> A*tn?3 - (teolttding infcmclbla -valnao) 

:a-vor Dot*! omenta and Hy^raulio lights 
SrenaforsiQ? station! 
ftrasaalaalozi ]4uos 

Loeal Ut II Hi os - Eloofcrla, Sfetar, Gas 
and Jltroot Hallway 

Sorvioo Build ia^s 

rowar ]'-ov©lD}asnt and Staaa Maut 
?r&T-sf o naar St»t i oca 
Transalsoirxs Lines 

local Utilities - El stria 

Sural Lines 

iXilpaill and Fulpwood Areas 
Tools and Equipaaat 



lteoor.turos or fcha So*a of ftgpanaa 
Dabanturaa of tha .'o^n of ^ponton 
Aospuod Interest thereon 

crercr? a re. —arc jrq^gi 

Caflh in Banfca 

Ac o omits lioooivaola (less Reserve) 
Hy4PO-?*l«otrio Few©* CofflKsis*inn of Ontario 
a&torials and Supplies 

X*P0JV114 expanses 

Deferred Maintananoa, ra-olnsul&tlon of 
transmission linos 






§6,155,445*01 

7£5 f 237t53 
fr f 570.974. 29 £B,45i,656.88 



g t SS4 f D18.81 

17,477*57 



36,177.40 



504,906.29 
199,842.63 

806,182.96 

56.775: 
§12,305. 639» 16 



1$, 637. 66 
12,459.15 



2,C06.14 
363,400; 20 

I •". ? ''- fi T 



33,377.69 



>45,782.9a 



£6,044.94 



54*403.02 
165 ♦US, 54 



£13,494,453.18 



iWSMpTf " ?T* 






40 



il t 6SS.G3 



17,477.57 



l 

199.84S.68 L 

- 

34,323*16 ! 
606,182.96 ; 



►•639«1$ 



23,377.69 






3lUUU .UL." J UL 



4 * —<■■>■ !■■'■'» > ' ai^ w i l i ii i n m m n .*.i» -«< ii nwmh^ . n i i i Wi. i iiii ^> i ' ■— B | m 



Ittrokaaa ^riaa oX Syatazs pal4 by the 
Province in 4,'j dodantraraa duo Baron 1, 
1926, 
C&ah advances by the Proviso* 
Dabantttrea (5.* fiaa 1927) iaasad by 
ths iroYlnjo In connection with tho 
jurcfc&aa oi' tha Hruton "ovmahip itilp- 
ft-ood .Araaa 



Account i Payable and Accrued Chorgaa 
Conatsacra 1 Dapoaita 
Unearned "atcr ."lent 3 
Sua &unloipalltiea (raid in oleosa of 
power costs) 



£0,350,000100 
3,f)3M,C53. 78 



£25,000.00 



111,317; 11 

2,400.00 

4,273.68 



$12,107,358.79 



151,1170,13 



945,732.93 



54,453. Si 
155,119.54 






,494,450.1^ 



For renewals 
For staSdag rend 
Tot* aentlngoBoiea 



-;i, 179,922. S3 
33,050.00 



1, 295,322,27 



£13,494,453.18 



mm mmmmm^ m 



* 



,~ .Electric Inquiry Commission 
roR Enclosure to 



40 



prngt^m mmmm ■' 



Particulars 



USQUlit 



£<ar coat, of VqUiX 



*>■<*! »' *-#■- 



Transit ssica Liuos 
ffttuasfui^ar and Dlafcri- 

but lag Stafliiani 
Bar&I Linos 
W&tor rights* franca toon* 

goodwill, «tO» 

ZHaoeliaueoua Building* , 
tools, etc. 



^80,092,319.03 

22,140, 603.96 

15,4,74,193,93 

1,115,£0S.£4 

9,895,38&*29 



6&.41# 
14.8$ 



10,39% 
0.74$ 



$•&»/» 



■P iVffi 



$143,942,289*14 



100.00^ 



fc A-»**CiSttiSi*i*ES.JC*«*a<E4* 



She foregoing i»idio^to3 that 66.4$ of tha total capital investment 
la represented fee; powar di*^^^'Ti3 t \>a"ila &»64> la represented V intangibles, 
*hioh, fOsr ti:o gtost part, represent water right* w.t Siagara jfalla acquired in 
connection with the purchase of U*he Ontario Slower Cesr.i*.ny and the '-Toronto rover 
Company. If tits intangibles wore grouped with power developaents, as they night 
be, 73;> of the total laroatrusnt would bo represented 07 power dovoloi-monts, 
which leases 27,* for irnasBlssica line*, transfomer stations and so forth* 

Za addition to tho amounts shewn above in respect of rural linos, 
tha Commission ©harmed $202,953.07 to tho j-rcvinod up to October Slot, 1928*, 
on account of bosasos roaeiva>ble frees the irovinee undo? authority of the l&ral 
Hydro-;-, iaotrio Distribution &at v 2.9&X* If thia at*eunt war* added to tha total 
shova la tha foregoing statement, tho total investment la rural lines would 
amount to v l*313,l&3.31 at tha close of tho fiscal pear, I9£g* 'a understand 
that up to October 31st, 1923, tha Province had paid bonuses a to tho Cocjnis3ion 
on kttc< of tha construction of rural line a u"^^x%iii : i to v4£&,033*33 



1<0 -Electric Inquiry Commission 
pc--l fob enclosure to 









ao 



i*ho detailed statement on pa&o 61 also shc^a that over 90$ 
Of tho total o&pltal Investment In all tho undertakings of tho Commission 
la represented by the Greater Niagara System* 

gftgfcteaJUl 

In each of our reports upon tho soveral undertakings of tho 
Ccevnioslon we have given our oonolnaions upon the operation of eaoh Rnder- 
taking:* Operating escponsos forr* u relatively snail proportion of the total 
coat of potior and It ae'ssa unnecessary to oosssont here upon differences in 
the operating account 3 of tho various undertake ln&a f as injustices In tho 
esse of one aa compared wwr otroJa &r* but of alight importance to power 

i 

■jMiwtTTi 2ha apportionment of auoii ito&s ao Send Office Hxponaea requires 
intricate and exaot calculations on tho part of tho Commission and tta 
officers and •MBS to bo roado upon § baaia equitable to all concerned. ?here 
should ho ao tsttta for eorsplulnt by any ffiuntoipal corporation of its propor- 
tion of the operating costs apportioned to it and otfaora in the s&ro aywtesu 
iatveen aysteisa Operating accounts nay display greater operating expenses in 
one than in another, but this ia naturally to be ejected tthen oonaideratloa 
ia given to the varying extent of the koiser loads and the location of g«norat« 
iag plants* Attention, hOTsever* should be drawn to overhead ejqenses, and 
tbs nocsaslty of riiS'td ooonor^y in ordor to &eop those at aa lo-w a point aa 
l<csalbl» f consistent with efficient administration. 






„ ...rtwtflifrWtBii- 11-^1,;-, .w^^iwikfeatt.... 






System 



Pova* 

Devoloj'Tnonta 



Trsasstissi n 
Lin 03 



Tr&csxonaar 

and 

Sis tribst lag 

Stations 



Klagara Llasa and Stations 
Qaeeaaton— Chli paw* J ova? 

DevaloT&o&t 
Ontario I oarer Contpany 



63,642,615; Qa 
13,233,967:44 



Toroato rower (taapaay Unit 4. 9, £-33, 010. 41(b) 



v 10 t 340 t 535. 63(a) $10, 779,068. 25 



2,024, 298*. 30 
6,615,73- :. 03 



Total Creator Hlapara gyataiB. 90,020,593.73 



ttmnder say 

Severn 

St. L.a^renoe 

v/asdella 

PHf^aia 
Ottawa 
"fiiafcofea 
aidaaa 

Essex 

Thorold 

Bonn ooh ere Hiver Storage Dana 

Service Bulldlaga (Toronto, 

Hamilton sad Jobourg) 
f f i o e 0a i Id in<ra ( lor oat o ) 
Tools, Office &qulpnat&t v oto. 
•fork in i'ro'iraaa 



3aia3 



5,772,133.31 

530,275.51 

■ 

144,579.3s 

994,757.54 

131,107: 74 
756,926.70 



34,163*74 



63 1,630. 36 

566,276.93 
521,052.01 
203,106.79 

# 

804,940.51 

64,423.23 
861,964.20 

116,661.89 



1,034,725,. 09 
2«2^9«574«94 



15,900,548-04 $14 t 073,368«3a 



253,998: 46 

211,540: 91 

4,747-25 

31,466*22 

261,265:66 

1,033.00 

2,696- £5 

60*855.90 

4 

72,993:96 

27,943.32 



$96,692,319.62 $15,140,633.96 V 1S ,474,190. 93 






?sr Coat. ?o Total 



66.411 



<- -j 



14. GO.* 



an -4 



10. so,* 



(a) Xnolu&ea ..240,294. OQ representing rranaadaaloa and attribution 

Kqniyaont carried in she Accounts of the fforonto and torli Radial 
Sailvay, 

(b) Inolndaa Ste&a Plant at Toronto audi Seott Street propertioe. 

(c) Incites District lag 2yst$aa, 



p f j. "._ , i.ui m.! »i h . . m ii < ■ ■mn i t -riT i r 



51 






ftVi'rti ■i.Kt,;. , ai& 



&L. 



0.1,^ 31 » 1922, 



rsiif 
lias 

0133 



l t 063» £5 



1-574-94 



:m?&l 
Lines 



gfeter Eight • 
Fraa&lMi 

Contracts raid 
Ooodwi 11 



i'isaollmiooiaa 



WV.TTXftSmM 



039,540. Q5 



4 



7,304,1 535 07 
2,358«S57.63 



3 ,"69.58 039,540.25 



1,998:46 
1,549:91 

« r," "7" •>*» 
■ j , tit* *rtJ 

1,4*35, £2 






1,265:66 

1,033-00 



9,896.66 

;),G35.90 

■7,949.39 



10,100:55 
J3 ,46^.82 
14,955-95 

5,?09.90 
24,866.74 



190,C3Q.43(a) 



I 9,662,950.69 
114,011,00 



3 



17,366,00 



6,900:00 
7i, 127. 50 



496,444:96 

660,357; 16 

213,004:71 

64,624.23 



TOTAL 



j 21,959,144. 76 

03,642, S15;8S 
£5. 647,1? 4. 02 
£0,836,137, 05 



^4,005.001.69 

6, 642, 770; 13 

1,442,303:90 

1,035,262:08 

594,007.31 

2,066,25:!.' 61 
85,949:74 
212,790 # .82 
1,0*9,746.80^ 

5-97,441; 20 

102,076.98 
54,165.74 



406,441". 96 

660,357. 16 

813,094'- 71 

64,6249 23 



?o Total 



14. 74$ 

44J07£ 

17; 22i 
13. 99 



Pi ■■■ '^'kiiMMNN 



10.89? 



00b T4g 



6.6$£ 



90.02.* 



9.98$ 



74,190.93 1,115,205.24 •#885,368.25 v 1,454,521,06 $149,942,289,14 100,00$ 



1 1 iiii nw urn i mi'ip.i i ^""" «-^*^-'^ » ?">^ i »-»-^*^ , >^»" . 



0.96,* 109,00,3 



LOjI 



: t -■ 



I >Electric Inquiry Commission 

„ , f 0R ENCLOSURE TO 



bU 



• 












~ 






.ation 15 

Cfcir report entitled "Esswinat Ion of Auditor's iioporta for 
period 1915-1921 inclusive" deal© ©zhaaat ivoly \?ita thia sub J o at f and We 
dipaot particular utvoation thereto, as therein uill bo found a aGuoiae 
fussae ry of outstanding f©atOr«a of tho CoEssiaaicn'a adrainlatratiou ishieh 
have beoa brought oat la the Annual lioporta of the Auditor* W© fcore con- 
fine otir coss&onts to the airciuagtanaes surrounding tho a^pointsent of a 
Special Auditor* 

The latent Ion of tha Legislature, as expressed In the Act of 
1906, w*a that the oporatijrBtJ/O-^ $fa* %>5»nlflnJLon should bo carried on in a 




lamaor atrallar to that of u 'Joyovnnent Department* All raoneys recalled wer# 
directed to bo j<aid lata the Consolidated Several* 3tod cf tlie Proving* * and 
the isocounts of the Co&ciiflsion wora subject to audit by tho Trcvinai&l 
Auditor. Ko susa appear to have beon paid by tho Co^niaaioa to the Province 
prior to 1916* She reports of tho Prorinol&l Auditor prior to 1915 contain 
rofor«noo3 to tho aeoounta of tho Coixnlaaion, but ho aoea not appear to have 
ever s?&do an audit of thorn. i?hc correspondence botwoen tho Provincial Auditor 
and tho Chulareaa of the Cu&nlsoion discloses great divergence of opinion and 
*ant of hansony between the two officials. In his report for tho fiuoal year, 
1916, the i'rovlnoUl auditor characterises tho attitude of tho Corinlaslon aa 
one of "defiant disc badlands" to the law and states that Information required 



iT33j3 o-Electric Inquiry Commission 

■'■ ' i, ,0ft ENCLOSURE TO 



83 









"fey him &*3 been withheld im& it waa found Inposaibla to complete any audit 

or meato any progrous towards coispletonotts* Ke further statoa that i 

"Iho Annual Stataassata rendered b/ the Corardoaion to tho Hon- 
ourable tho ir'rGYinoiftI !?r»rtaurer for tho years 1^0^ to 1215 
inclusive, afford iio aotual account inn Information and fall 
to disclose tba osistonco of a X&r&e end rapidly increasing 
unauthorised expenditure In tho years 1911 to 1915«" 

Honourable &*• J-oO:irry, thttn JrroYlaol&l Sreusurer, apparently 
held the opinion that thoro should bo Provincial control over the expenditures 
of the Cosssiasicn for ho proponed tho appointment by tho Government of a C&ap~ 
troller who would eounteral{Tn all che-iues of the Coi&tiasion* ?hia proposal 
aasuif-sd forra in ^jsendtiont to xhe Power Commission Act passed at the Session 



Of l£l$ v which authorised th^ lAoui^^it-Governor in Council to appoint a 
Comptroller* Effect t?us «rt ijtven t^^thia anendrjent to tho Act, and at the 
Session of 1^17, the suggested, oontrol over expenditures through tho no-Hun 



Of an officer sppo luted b^ the Governniimt and independent of the CorsEniaaion 
Vfas nullified by a further anendrsont to tho £ct passed in 1917, undsr which 
the Comission itself mi authorised, "with the approval of the aieutenant- 
Governor in Council * to appoint u Comptroller. Ko auoh appointment has boon 
afida by the Ccsfcdsaion. 

InlUy, 191$, Mr* G. £. Clarkaon, of tho fira of Kessra. Clarfcson, 
Gordon & Dilworth, accountants, ts&s directed to csn&a an audit of the accounts 
of tho Ccssaissioa. His appointment as Auditor on behalf c£ tho Goveraswut has 
been continued and annual Eeports iuvo boon furnished by hia since 1919. By, 
Claritson tagaa hia audit in July, 1916, and hia draft report waa completed in 



so-Electric Inquiry Commission 

oxm3 k for Enclosure to 



64 



February, 1918, and covered tho entire period fma the uppo intreent of the 
Copies ion In 1905 to October 31at t 1914. 



In tho report of tho Caraslssion for tho year ending Cetabc-r 31st, 
191^, it is stated that !&?• Clttiteson's report for tho period from 190$ to 
191d waa duly presented to tho treasurer of Ontario. ^'hie statenemt In sis- 
landing. !2ho report of Ur» Clarsson corering tho period mentioned tag drafted 
aiid in February, 1^13, disauseol with tho JroBiuaial Ureasursr, but was nayer 
•forjsally presented ?md never published* In explanation of tho ctrswrsstansos 
surrounding this draft report* wo were informed by £r. Clarvrson th.it tho 
report was a series of oritioiates of tho Coresisslon for overs topping authority 
in ono direction or onotho>~¥iyfc->fchtt^ IAmaa thought boat before presenting a 
report that a&ea&jae&ts bo i^io to tlijo To^or Ooasisalon lat legalising tho 
actions ^iloh hod been taken by tho Coast ss ion without authority, 8lfca tho 
aid of i;r. Glarxson and tho oonoarrenoo of tho Provlueial treasurer, amend- 
aanta to tho Act «ero drafted* £hese wtsro paa&ftd at the Session,, of the 
Legislature of 1913, and later in the year I'r» Clarfcson presented his report 
for tho period ending October *5l*jt, li)17» Kr» Ciarkson has stktodi 

M X have a very definite idea in Ey nind as to the way 
aecounte should be isodelled ikiui should bo carried &<rsa to 
display the? actual progress of tho Cosnission* X put tho 
account a lato .hat shape uud then modelled the legislation 
to follow it ••• Xn presenting t?.:;t account to October 
*?ilst t (19171 it was sosjpletely stodslled on tho legislation 
which went through in .-prll 1919 ..« That is tho position 
^itfc rcfrr-rd to that li'lo report, «hieii was not reported until 
1913, because it was thought desirable to bring it into line 
with that legislation »•• la other words wo rssouldod the 
accounts to tho aha};e they ought to ta'sce,** 



Electric Inquiry Commission 



K , s Enclosure to 



53 



Thin was certainly a moo*, effective, If unusual, course of 
action. Shd accounts not conforming with the Statutes, the (Statutes *ere 
DQAdo to conforms with the accounts* "Sfhs overstepping of authorities In one 
direction or another" $ orisiolsod by Itr* Glarkson was apparently not brought 
to the attention of the kegislaturo or tlie public* Sir. Clarisson hao fur- 
nished us with a copy of his draft report upon Accounts of the Co&nlsslon 
to 1^I<S and we find that it exhibits a condition of affairs vaatly different 
froa that Indicated in the first published report. A perusal of this and 
other reports of £r* Claricson, Including the last one published, show* con- 
clusively that the Comisaloa has continually disregarded statutory restraints 
and haa a;>parently doenod itself even fro© from the obligations to oop-lcy funds 
entrusted to it for spool /fa /u^| -;3s}sVjo"r those purposes alone • Breaches of 
Statutes and unauthorised, ooursoe of astioa ha7© so frequently been condoned 
and ratified by SBbeequent legislation, and the lav hus bO'*a so often changed 
to validate the wrongful act or to declare that no fault has bo»*n oojnrsitted, 
that theaa wrongful practices on tiss part of the Osnslssion beo&raA habitual • 



o-Electric Inquiry Commission 

,. F0B Enclosure to 



M 



gep.U.O-n 3A 



MyUBvM JOT ,,*>#?! .T^M A" nfffiK 



*j*t» 






.• 



It til provided la Section S3 of fho Jo\mr Commission AOt 

that la a&litlon to tho prlco por horso-powor payable oy any rcnnioipal 

oorporation under tho tenss of a contract oat ©rod Into with the Cess- 

missiou, ^hieh sh&ll bo the ooiit of the povatr to tho Coculsaion at tho 

point of development or of Its delivery to tho Commission, tho corporation 

ahall annually pay to the Ccmis alon its proportion as adjusted by tho 

Comiasion of* 

(a) Interest at fo*ir for oont* v,ev &nxm\ open capital expenditure 
m& wording oupitii/T 1 /^N O \/ 

lb) &aaoal sums sufficient with interest at four per cent, to form 
in fchirty years a sinking fund for the ropaynnnt of advances 
m*da Is? Ontario for payment of tho cost of tho works, and 

(o) Cthor ohargos, including line loss, ooat of operating* super- 
vising, Baintalnlng, repairing, renewing &xxi in sarins tho 
woriw, rer&no ration of Eioiijsox's of tho Coc&issloa, appropriations 
for establishment sna support of niy f&nd for superunnua-tion 
and retiring allowances r^nd sick benefits, to permanent er.pl oyeos 
of tho Carasi salon and such tj&z us th^ hiouton-int -Governor in 
Council Bay direst to cove* the difforeno* betmten tho four per 
cent* ofcsrged on mo&ry expended en capital account, advances for 
vestfeisg capital sad all charges imd expenses of providing such 
money* 



**Po^or at coat", accordingly, may he defined to 00 po^er 
at sash a prise j&? horse-po^r p«r as&uaa as represents the cost of racn 
po-^er to the Ccessic^ion at tho point of dovolopraent or delivery, plus 



Electric Inquiry Commission 



ron Enclosure to 



5? 



agna&l paysaonto, apportioned and adjusted by tha Coses 1 3 <s ion, of tho 
custciAor'a proportion of fixod and other ohargoa required to bo paid by 
Soot ion £3 of She £o Y .sor Ooaniaalon />ct# 

*ho policy of tho legislature &a expressed in £he Power 
Costal a-; ion Act vhea originally enacted and throughout Its development and 
v&rloua aftendeiente* ftppftnvi clearly to h&vo been to provide to oaoh con- 
treating municipal corporation p&mr at ft coat comprising tho aacia element a* 
She cost la do to rained and fixed In tho casno way In tho case of all groups 
of eon t root lag &un l olpal corporations* 

It io quite evident that conditions prevailing in respect of 
vorkfl free wnioh poro* is fer^{ii\i-vo\no different ftroupa of n&iaiclpal, cor- 
poretlona or "Sya tores", as defined by tho Aet wast differ, so that "coat* 1 
Otttmot oo tho aaae to oaoh. "hue tho sovoral corporations oosaprislag one 
*%¥%toa n rsay bo required to pay an annual price per horse~powor for po^or 
greatly La ©aceaa of or leas than that payable by those la another ay a tern* 

An Ideal situations? ** practicable, trould bo created, If 
"cost" of power eere tho enmo in all parts of tho Province, so that a jnb- 
lloly-oisned and operated public utility *?oul& be available to each and eyory 
■aalolpallty of ths Zrovlnco on precisely tho aassa basis, mid industrial 
progress In one locality not handicapped by higher rates for po^er than pro- 
vail in others* It la contended by aero that tho «a tor-poser resouroos of 
tho ircvince, tho ocsrwn heritage of all tho inhabitants thereof , ahouid bo 
adralnlsssrod in such a. «ay that all vouid equally benefit, and that potior 









Electric Inquiry Commission 






. . 









,. 



. , 0H enclosure to 






08 



produced therofroa should bo distributed to all $arto of the xrovinoe "at 
cost", anon cost being arrived at by combining all tbo several undertakings, 
now conducted In reality aa distinct and separate businesses although under 
the same administration, into one perioral business or undertaking in vhlca 
all ^orfca, resources and revenues treuld bo pooled and eaoa contracting *auai~ 
elpal corporation receive power at the smso price. -2fcfiro are roany xsraotical 
difficulties in the way of adopting such a system and there aro wide differ* 
en.?©a of opinion upon it snoag the public generally and airong ourselves. 
Later in tiie report wo state sores of the vio^a pro and con vhioh have boon 
submitted to ua. 



r diooriialnation find unfairness do now 



The quest i<ti a it 




rovn 



exist in respect of fixed oharges especially vhsa the total coot of power in 
the several ay atoms la cowpared, *^ill hereinafter be discussed. Variations 
la total coats ia Illustrated by the Allotting table of average ooat per hor»o» 
power for tie year ending October {Slat, 19£2« to nine "^ystens * 



tfisgar* 86,37 
3evs*n 83»&7 
Eugenia &£•!$ 



Tiaadoll , a 4A.20 
J'us&o&a 



at. Lawrence 41.32 

Jaide:iu I5S. £0 

# Sbander Buy £6*00 

Ottawa 14. OQ 



£2.09 



# - /lat rate charged, only about 3£0«90 being paid. 

£hat the same basis and riothods are not employed ia arriving 
at cost la all cases ia Indicated in our report « "Hlatory and General 
delations" and in a cttnsuro in t)» succeed inu sections of tula report, which 
1 vita "Interest Cfaarges% "Slaking x*unda M , "iisnewal Bates", "Continconolea 



i »r ©Wi i •:......._, 



- 



Electric Inquiry Commission 



or Enclosure to 



53 






S&&A&01 



A detailed discussion of thB subjoet of interest charges and 
the effect of aasendsonts aa&a to ?ho Power Comlsaion Act relating to interest 
psya&l* b^ tha CcE£ii*slon to the rrovlnoe and by Municipal corporations to 
the Gces&iasloa are to be found in Our report, "Coat of tionay Advanced to the 
Hydroelectric Pcver Cora sisa ion by the Province of Ontario". SJhat roport 
aloe shows the effect of the cost of money, forming; as it does the sosfc iia- 
portent regalatlng factor upon the coat of jjovwar* 

She increased oo3t of raonoy &3 shown j?y the enhanced r&te of 
interest payable by borrov^r.j fcjAckA A*, naturally changed conditions 
rsapcc&ing Provincial advances to the OoBBaission, de^nas for which beoarao 
more insistent and for increasing atcounta* £he original Powor OGssiisaloa 
Act was buoed en the as caption that am annual rato of fear per cent, s&s 
adequate to recoup the 2-Tovlnce the cost of noney ttcvanced by it to tho Ccs>» 
aiisaior*. itor deton:lnkj& the oost of po^r payable by rcanicipal corporations, 
intercfst charges on capital Kqxftidituros for -works xmr® fixed by the Act at 
four per csat* jor annuia, Xn VJ1& the Legislature provided by wrmndKent to 
fcuo act that aoaicipal corporations should pay to tho Corliss ion in addition 
to four pjr cost., the difference betweon that rate and the actual cost of 
providing the seney required for pegraont of the cost of worfts. Prior to that 
d&ta sad until 1>1S the snosnt s collected by the Cerraission fron is&Ucip&l 
oori-orcitioas «ad othei's wore puyubio l^y the Ccmlssion to the Province, tho 
latter thus supposedly bulng re-l&bursed the cost to it of noney advanced to 



Electric Inquiry Commission 

5 I , , enclosure to 



so 









tho Cor&uiaaion for capital expenditures* Undo? the amendment of 1^X5 the 
difference betvroan foar per omit* and tho actia&X coat of zsonoy puyabla 
fey &anicip&l corporations waa required to ba detoxftlued 'fey the Lieutenant- 
Governor in Council* but it «ao not tmtil 19X7 that an Order- in-Connoll ma 
phased so datenslnlug thla difference and thon only for tho then current 
fUoaX yo**r» In X913» a radical ohon&e ma cuade in tho roXutlonahip betw&an 
the Province and tho CoE&lsaion by further tiaondriont to tLe Act under which 
tho Cossets a ion waa re^iirsd to pay to tho Province annually tho cost of 
aonoy to tho Province as fixed 1);/ tho hioaten;uit-ȣovsmor in Council. It 
Taa presumably, teat not oxproaaly, provided th&t an Order-in-Council fixing 
tho arcount should bo passed each yo&r. fi» poXioy of tho Act In respect of 
the pt^m-nt of interest ba^in^aia*! «p»poratioii8 to tho Coiaaiasion &n& by the 
Corasission to tho Province Ska novbr b$on atriotly oompllod with since tho 
aiB0]Su!r!«iit3 nentio&cd v^era enacted. Vhsn a fixed rate of four per cent. 
prevailed, the i'rovinco atiaply biiXed tho Ccnsriisaion ^ith Interest at that 
rata upon advances, and the Corsnissioa included in tho power blXio rendered 
to onnloipal corporation? an lteia ro pre 8 anting thoir proportion of interest 
at the soaa rate upon capital expend itaroa ftede Upon the worica serving them* 
So lon?j ao tho cost of Money to tho Frovinoa, and, therefore, to tho Coss3igsion» 
6ld not exceed four par cant* par annurs, each wao fail/ re-ii&burscd lta pay- 
swats en account of interest* She aaae sua t hod of billing for interest w&a, 
hoover, continued after the anendttanta, and account a were roador«?d by 


















Euctric Inquiry Commission 

,-q Enclosure to 

: 

the Province to tho Coiswiaaion and by tho Coasaiaaion to BUnioipal oorpor&tlona 
at ratf»a aot determined In acoordonoG with tho l.at but at aaoh ratea &a wore 
considered by tho Departaout of tho .Provincial Sreunuror to bo tho average 
cost of nonoy to try? ^rovlnao during tho ye&r» tfe \rero informed that in 
arriving at tho rat© to b» ehargud an official of tho !2re&sury ;DopartRont f 
after ma&ing hla calculations, dlacuasod tho isattor with a representative 
of tito Co£2al«3ion. I21 tho result, as ahovn In car report previously men?- 
tioned, tho cost to tho ?rovinoo of iaoneya advanood for purpose a of the Cocj- 
Blasioa, find ooaooouontly tho araount properly receivable by tho Oocffstasion 
frcis rranloipal corpor&tioaa, haa exceeded tho mount received by tho Provlnco 
for interest by a aura of from ;^I50 t 4S3.40 to ^6£3 t £71»46 according to tho 
basis of calculation adopt/T2 /^lIDioWrability of a atrial cceipliroiao ^ith 
tho Act, and the further desirability that tho rate of tutors :?t to bo x^id 
each year by tho Coj&nlailon to tho i^rovinoo, and, therefore, by rramioipal 
corporations to tho Coisnisaiun, should bo cheo&od and approved \>y tho Govern- 
■sat auditor of tho Ccrasiaaioa'a accounts, ia solf-ovldont* 

A3 between "JJystejoa", tho only caao of discrimination by tho 
Ccerisalon in interest rates charged by it 4a part of tho coot of power waa 
thkt mentioned In previous reports a&traly that ;ft>r tho period from 1913 to 
1$*1, during «hich the prevailing interest rate was over si* per cent, per 
mn, tho CosEiisclon confuted intorost on expenditures in connection with 
tie Blplgan Developnoat for tho Vhunder Bay r]yat*?n at tho rats of five yqr 






■ 



Electric Inquiry Commission 



■ 



A 



Enclosure to 



52 



cent., and proposed pacing tho 3a^o ruto to the Sroviaee In respect of Its 
advances therefor. ?his Eoesit a loss to tho Province aaid gain to tho ftystesa 
of over v 71,O00.Q0. !2h© action of tho Commission was not endorsed by tho 
Government, and the Cessnission recently has charged on itr* boo*s against tha 
S/steia an amount for interest which places it on a parity with other systems. 
2he attention of Tour Honour wac drasm in our H Inter iza import, 2fcnndor Bay 
Bp*tm&" to the farther fact that although, the municipal corporation of Fort 
Arthur h&n boon so cnar;?ed with interest as part of tho cost of power payable 
by it, tho corporation has continuously refused to i^ay for its power "at 
cost", and up to October 31st, 19S3, tho expanses in connection with supplying 
$o«er to said tmaioipality exceeded revenues received by isoro than ^630,000 
and interest iem>1i)'ii1 unp^/fo 1 jr^YlfT^^fc/inco in connection with its advances 
for this undertaking Vj on amount exceeding v&So«00Q» 

fhe «or*s which supply powor to eoae of tho systems *?or© con- 
structed and the advices for tho cost thereof m«do by the Province, prior to 
October 31st, 1914. &i undo? tho ^ot interest on such advances is ooriputed 
at the rate of f®i? per coat., while interest on advances isade since that date 
is computed at rates greater than four per cent, and sinco interest charges 
fora, as they do, a larso factor in determining the total "Cost of Jo^er", it 
is dear that "poorer at coot" Rtoans power at a looser coat, vhan supplied froa 
aorfcs constructed prior to W14 than froia worfto constructed since 1^14. 






Electric Inquiry Commission 



poR Enclosure to 



63 



! - 



' j,tf 



Tho amount j.'a^abl<j unnaally by Kunloip&l corporations on 
interest account boir*& the ohiof factor in do to raining tho annual coat of 
powi' f tho Iftport&ttOii of avoiding ftxtra/u^unt capital oa^ondlturofi upon wor*L3 
upon vrhiali intercut is puyublo tninuzilly will also bo roooguiaod* Farthox» 
cou&tcnt aa tho aafejoot of fixod o/vargoa &a part of tho cost of powftr will bo 
found in suoc««ding sections horoof. 

SaaUaa i A 

In tho &dx2iniatr&tion of tho affairs of tho Co^laUan, tho 
eat &bli simian t of sinking funds for tho ropayr^nt of Provincial advances &n& 




ret 1 1 resent of other obli£;*\lcr,| i^rAEJodYbv tho Conuiiayion iind the Province in 
cennociion «rith the construct ion smd acquisition of dories Is of prime import- 
ance. 2Tno subject has reeoivod attention in our rsvports already subnlttod to 
Your Honour and tho 8is.lio.nt features are hore sursKiirissod &n& evttention dxt^n 
to existing anotiallas arising froa tho interpretation placed upon Statutory 
Provisions. She Legislature evidently hM t^o objects when E&klng provision 
in £ho Icrser Coneii salon .vet for tho accumulation of a ftmd in respect of each 
of tho undertakings) operated by the Conr.ission which, in a defined period, 
tfouid bo ental to tho total capital cost of tho undertaking In tho first 
placo, tho Provlnao as tho bitnicor aupplyintf tho ssonoys for capital expenditures, 
in tidbit ion to receiving into re as upon its advuncos, ma to bo rope id those; 
or there vsoro to bo deposited v/ith tho ffreasuror, Provincial securities pur- 



~'^ r: Electric Inquiry Commission 

. o enclosure to 



■i 



6* 



■■■■.- 



. 






■ 






ft* *•?« 



iv 



? 






ohassd by tho Comisciion with suiss paid by municipal corporations and others, 
these securities to bo hold by tho ?rcvinoo as security for its advances ffade 
and obligation* aaaunMd. In tho socoad i?laoo, tho rep-iyramt of tho s/Jhrtknooa 
of tho ircvincs and release of obligations assun^d by it war* intended to 
diysst tho irrovineo of a proprietary Into rout in the works ana prop® rt to a hold 
by tho Commission and tho beneficial osuorship thereof was to revert to muni- 
cipal corporations in proportion to tho oeiounts, with ao^m-ulafcions, paid 
by theja on sinking fond account* 

Only la respect of advances by tho Province for the cost of 
writs serving f&unloip&l corporations under contract with tho Coaxal ss ion* do 
tho Slatataa relating to tj^ rs*t*J?^s>4 electrical power or energy aako definite 




provision aa to tho basis upon which sinking fund paynents shall bo Esft&o. 
Tho JPOWO* Ccmlasiou acs, ho^ovor, does definitely provida that all suras 
resolved by tho Ccmlasion frcsa mniolpr>l corporations and others shall bo 
inva&tod in Provincial securities and those delivered to too £reacuror of tho 
Province. Sinking iuiid accounts havo boon opened by tho Cows is a ion in res- 
pect of undertakings, tho coat of which baa bocn raat otherwise than by tho 
•oploymont of advances by tho Prolines, and tho anouata credited to those 
accounts aro hold by tho Car&aission and not treated in tho sane maimer us 
are tho payments received on uccaunt of iTovlnoial advances. $a> aro advised 
that this poo it ion of tho CoK&Iaslon is unjust If iablo, and that those funds 
should likewise be lavostod in rrovinoial securities and delivered to th© 
^rovinoJUa i'roasarer. 



r33j! .Electric Inquiry Commission 



fC« 



Enclosure to 



60 



In respect of certain undortaJcinga ao sinking funda hare bmn 
established for the retire&ent of certain aaauisod bonded indebtedness sad 
the liability of the Province for this indebtedness will continue for iiv- 
do finite renewal periods* She polls/ of ?he £©wer Qcoaisslon Act undoubtedly 
waa that till cemioipal corporations entering Into cent mote with the Cosa- 
ffllssion for supplies of "power at cost", would, as part Of the "coat" of 
power, pay anneal suns sufficient to fora in thirty years a sinking ^ind for 
repayment of th$ advances, by the Province in respect of the cost of the 
works* £ho sana baa Is for accumulation of linking funds being applicable 
to all, naniolpal corporations are till presumably on *m e<niul footing as to 
that piirt of the cost of y-o^or attributable fee poyrcflnta on account of sinking 
fa#do, AaeadMsnts to thf^^'/T^vlI^^'Wcloubtedly for their object the relief 
of Bsunloipol eori -orations daring the firot five years In which they bisjCo 
payjaents for pos?>r t and the girinc to such mniolpnlltles ox* an opportunity 
to balid up their power loads before being called upon to p&y their propor- 
tion of sinfcing funds, hare been Interpreted and applied by the CoHalsslon 
not only to the deferment of the tk*> for payment a on account of a Inking 
fund in the case of all Municipal corporations for a period of five years 
fron the date on which payraaats for power supplied thee* oor&eaes, bat also 
have been hold by virtue of the Interpretation placed by the Ccaaaioaion 
upon £he Ontario Hiagora Dcrolcjseant Act, 1917 1 to apt .iy to the coat of the 
xueenston-Chlppawa Dove 1 orient, which, in effeot, ts im est one Ion to the 
*oj - •• of the Slagora liyatcn, and repeyssent of which scat It is proposed 
to defer for a period of five years fron the tine at which the plant was 
|ttt in operation. Shis, in our opinion, goes ?&r beyond the clear in* 
teat ion of the Legislature aa express** in the act* 



.Electric Inquiry Commission 

:B Enclosure to 



6S 



She intension of the Legislature la establishlug a five-year 
deferment x;eriod ^aa apparently to halp thooo sysfcurja, \3here the demand for 
pe^er wi^ht be light t over tho five ya&va following eonstruotion so that 
they might not hare to pay what might be prohibit Ivo prices for $omr 
daring that period. I5ut the Comisaioa has adopted th« practice of granting 
fcho extension not only whore t. v u> demand is light bat in thooo system vhere 
the whole of the power (jenorutod is disposed of froza the beginning, thus. In 
effeot, extending tho general 9 inking Aind period from thirty to thirty-five 
years* i'he necessity for a unifona cleurly-do fined procedure In respect of 
all siii&infi £inds tot repayment of rsoneys expended or obligations assumed 
for construction or acquisition of pouor undertakings of tho CossaintJlon Is 



apparent. 



COPY 



Speoial legislation affeotiutj tho worka of the ^/snMer Ba^r 
System, established a basia dlfforont frora that relating to other wor&s for 
accumulation of a sinking -fond, tho period being fort/ instead of thirty 
years. She CoBsaissioa applied the provision for a five~ycar deferment in 
this Base also and in effect established a airJcing fund for the Shnnder Bay 
System cm a forty-five- year basis, authority to do which seesis doubt fit 1* 






ThB Ontario Hiogara Dovelox-ffi^nt Acts, under «hieh tho -.tooaaton- 
Chlppaws, iowor Development was constructed, and to which She ro'wer Coxs^lsslon 
^ot, except where specifically laa&e &£>plioablG, doos not apply, oentain 



Aectric Inquiry Commission 

M ji. j enclosure to 









* * \ 



„ i « 



! 






■ I - 



* 



• 



* 



•. 



»\u 






67 



prorislon for s^a/wsnt, aa p&rt of tho cost of powar payable by mnicipal 
eorior&5ion3 contractor for xtovwr to do supplied fron Niagara plants, of 
s'jss oa account of sin&iiv* fluid for repayment of tho cost of that Dovalop- 
©oat. ?£© original eatimtoo of tho Cor^ioaion of tho cost of power 
generated at tfea v uaea3won-Gl:di:p,wa plant Included paynonts oa sinftlncs fand 
account on & thirty~ysur a«auisulut.ioa baaia* She Coisaisi-slon has oinco inter* 
preted Oectlcn 6 of 'i?ho Ontario Niagara Development Act, 1917 f aa authorising 
it to establish a sinking fund la roapeot of tho worfca oonatructed or 
acquired pursuant to tho Act on auch basis as it Bay dao« necessary «nd 
proper, and in oatiisatoa submitted to us has adox^ted tho basia of payrsonta on 
account of sinicinfi; fund extondlas over a period of forty years, cosrrenoing 
after fivo yoara fron tliofC^c^'^E^Wituros* 

5!h.o adoption of diverse baa* a i'or the establishment and 
acowraiat toa of etaklBg Xunds baa resulted not only in causing inequalities 
and dlaorircinatlan in unugul powor rates payable by Municipal eorpo rat ions, 
bat It has alao expended tho tins originally conteetplated within which the 
Province will bo repaid ita ad'/anooa and relieved of ita obligation* and 
fcuaiolpal corporations acquire a full proprietary interest or osmerahip of 
the; eor&s constructed and acquired on th^ir bohal£« She extension of 
slatting -fund period in the case of tho -'.noenstoa-CMppawa lover Uavelop- 
fcoat to forty-flyo years and the prccocur© adopted iii reapeot of sinking 
fund* for ?he Ontario Poeer Oosapwiy *m<i -The Toronto Potior Company, has a 



Electric Inquiry Commission 



- w . ,o* ENCLOSURE TO 



vary mtorlal off oat upojj. the a»5nual cost of famr to tho corporation* 
In tho Kl&garu i?yatna» With tfco Hlagara plants controlled by the Cotfaission 
■operating at full capacity and tho fall sexraKt of power generated being 
conauswd, the totU. aoctmt paid annually for pewa? "by Bunlolp&l corporation* 
of tho Klag&ra Syatea will bo, it ha* boon calculated by our Accountants, 
at least §300,000. 1©33 than if sinking faud p&ywcnt* were mde on a thirty- 
year basis* Est&nsiona and improvement a doubt leas will bo na&o to tfceae 
plants* tuid the thno when the rcunlcipolltle* Interested rmy expect to acquire 
ftoaplot* ownership la roasdtiis Into tho dirn future* In the neaatistt the 
jsioiaipiil corporations in tho Ht&fiara Syaten aro not only benefitting by 
their favoured location In prosiwity to tho greatest Witer pawn* of tho 
tfrovlnos, but thoy aro tidc^u/nuYlE^aNp^rod by discrimination in aiakinfl g&nd 
rates* 

Th9 total amount of tho credit of a inking fund account a on tho 
boofca of tho Cozsaiasioa on October 3l3t, 1922, wa* \)2,677,9<%7.Q3; cash adnata** 
and guarantee* of the ircviace and oth^r bonda aa of tho atone date totalled 
vl&3,fH$,112«&9s tho proportion tho ono amount bo&ra to tho otfcor represents 
tho relative interest of tho mule ipallt lea and thn Province in tho owner- 
ship of vorfes ocntrollod and operated by tho Goaalsoion under tho provision* 
of Xhe lower Ccfisiiaslon .uot and *b* Ontario £ingara ^ovolopsent ^cta# 



Electric Inquiry Commission 



„ ^closure to 



69 



'iha belief has aeon engendered and leapt alive in nnny Binds that 

SBmlai$>&2 corporations wUl acquire outlet© ownership of the undertakings 

of the GasaliatoB la thirty years and in the lafliintino ara the ronl owners 

subject only to payment of certain indebtedness to the Province* $horo ia 

no foundation for such belief, but it ia refreshed froa tin© to tto by 

utterances of entires lags 3 ♦ &■ recently as December X£th, 1923, a newspaper 

report quotas Sir adaa £oc& as saying 1 

"Under our present ays tea \se have provided for the retirement 
of the debt on capital investment at the and or thirty youra* 11 



By wsy of oxaraplo, and having regard to the fact that the 
capital invoatjeaut in JJiagam plants amounts to over #J,i of the total 
capital invaatrsmt in all /CI^^5dj??p)iMj?rtiUcing3 of the Corasiaaioa, out of 
a total of *13&, 0-30, 3)0, of which bat #55 t 833.&28» or about 19$ U coins 
provided for toy a alexins fund on a thirty-year basis, it ia clour that 
the statement just quoted ia untrue* 



. 






SastelssLXL 



'*hs acounnlation of reserves to cover depreciation of pro- 
perties ia deaated expedient sad necessary in all woll-reenlated enterprises, 
especially T»hor© the uao of tfas* properties entails considerable depreciation 
ia values. '^he Ccesalaaion, fearing beta authorised to •stabllsh renewal re- 
eorvas, and to add the amounts appropriated therefor to the coat of powr to 



■i 



rr-rr—. 



iectric Inquiry Commission 

Enclosure to 



70 






■• 






municipal corporations, aft or ootsaiinlaat ing with tho isaiiageisent of largo 
public utilitioa ou the Continent, adopted renewal rate a, which, ^ith few 
exceptions, were continued to October 3l3t, 19£1. i'hcao rates wore 
necessarily variable aa applied to different olassea of property, but ^ore 
baaed upon a general policy of expending sufficient to maintain each and 
erory portion of tho undertaking In a condition to operato economically. 
the plan adopted vsas to aainfcuin the vor-ca 78?i aa good as ne\?» The ratea 
established by the Coi^aiaalon woro baood on the prospective .tiff? of tho 
aoveral conpon«nt parts of the prcpertl&s, sorao of vrhlch extend to one 
bandred years, but did not take Into consideration tho possibility of 
obsolescence of plant through devolo^vnit of electrical science* Tho 
rental rataa In force at 4^/*Ti\crc^w' , V>& Appoints nt as Cone;! a 3 loners 
«ore the subject of investigation by our Consulting anglneer und ho re~ 
portod thereon to no. 



In 19£2, raoved no doubt by a doalro to lower tho annual coat 
of po-?;gr, which was steadily increasing- and ocjus lonln^: oorsplaints, and to 
wipe cut arrears due by reunicipalitio;}, tho CosmslSiUon took Into consider- 
ation tho advisability of revising and reducing the removal r.->to:.i thnn In 
effect. As appears by tho Hiuutea of a noet.ing of tho CoerHa-Uon h«ld on 
Sovejsbor 2£nd, X9ZZt 

*?h« report of tho Chiof :.nfrinee? ro depreciation rate on tho 
Sa&e&la Bysten vaa oor^lderod, ana thu B&tter tos deferred in 
order t&it the Chief angineer cay placo tho fall facta before 
r.esars* E. a« *.os3 and W. «T» i'ruricia, so aa to f.;ot their 

opinions oovcrin& the recot-iacn&ation Bade*" 



■ 

1 






po-Electric Inquiry Commission 
for Enclosure to y\ 



Hr. It, A, Boos la one of our number and ;'r. W« J. ifra&ola la 

our Consulting &ngino«?r» 

Ca DeoaaW 33th, X9£2j tho a-.ibjoct again oamo beforo the 
Qotialoalon us appeara V t^ 3 BloatoB of a Booting of that &ato t fro® which 
f?e v^uotoj 

w "ho Chief JJnglnoer having rorioanonded a roviood depreciation 
rate, calculated on tho fe&els of tho Hfo of tho oqnlp&ont, 
also having odviood that tht a Rat tor iu.vd h&cn taken up with 
l£r» brands, and approved, it *aa decided that tho depreciation 
rata for tho augmita tfy-.it on should bo fixod at l.£av. t aiid that 
this- rate bo ^acio retroactive to date of first operation*" 

Other minutes referring to tho approval of Kr» Francis vwro 
passe* In roforonco to a ao^jjO^F^^pftiottil ratea for other spates?** 

It would of course havo boon fcs&nlfoatly Inproper for tho 
CoEK5l3slcn to approach our tinglnoor for an opinion In this natter, and *Si% 
irraaols Infomo u» that tho alleged ataternont of tho Chief iSn&luoar "that 
this matter had boon taS;ea up with 8r« ^ranola sand approved" wa.3 wholly 
ua'sarr&ntod* She stj*te*3ont auboe^uontiy f&o&o that tho oexjroelatlcn rate 
was ofeaJQ&od en tho racouiezidatlon or approval of &r« Francis, ma, of ooursa, 
also baseless* 

Wo consider tha revision of depreciation rates, je&uo retro- 
active In oa«y oa»os to the ditto of first operation and consequent redaction 
of acounta standing to the crodlt of renewal reserves, was an unwise pro- 



rt3 S 









iCTRic Inquiry Commission 



^.CLOSURE TO 



7a 



asodiag en the part of the Uosaleiiion and r.ore especially on isocount of 
the disposition «»£" of tLcee re^rves. £he nat results effected by the 
decision of the GcsslftaiCtt cm Uecoabcr 20th, 1922 f appears from the fol- 
lowing tabic: 









ifeluioe 
October 
31st, 
1921, 
be faro 



AdoohS ttikon 
fron tht* re- 
servo upon 
the reduction 



li&laiicu 
October 

1921, 



oi* tho ronouil after 



Increase in Balance 

iie serve during; October 

1922, through Slat , 

chares a in power 1922. 
costs, interest 



/ fl^aetraont r r^te a 



.™^^jujjtagnt_ js^a^ati^^i^-^oj^ 



H lagtira $2 , 228 ,7 22 . 27 
3wsr» 227,347.21 vllV ,^76.30 

181,830.21 &3,10o.93 

2S,V}?<5,73 

£5,471 .59 

74,369.49 

33.365,47 

41*302.22 



■Eugenia 
tf&sdall's 

St.L&wrene* 
fiidean 
^bonder &a7 
Ottawa 



10,270.06 
13,398.99 



,<lVK|» ^» 




07 



£2,223,722. £7 ^246,633.75 
107,870.91 20,1572. 01 
113,723.23 

• > *i vol- i' ry 
»*(? ^t,j.! .j-, of 

12,072.40 
53,970. 92 

M| ii.-.V. ,'jO 

41 ,S 02. 22 



23,477.46 
7,160.43 

13,772.06 

11 9 647.60 

1,12.1 .20 
434.69 



£2,470,421.02 
1«>2,7 43 » ?2 
137,200.69 

&5, 664.13 

16,216.17 
64 ,743,78 
33,771.00 

f 42,433,51 
434.69 



M Mfc >■ ♦ i -»mw ^^ 



^2,858,331.99 £253,700.97 



£2,604,601.02 |333,344.38 #2,337,527.60 



# ■• Kepreaents interest accretions for 1922, 
llo provision rata &Me for reno^ula out 
of revenue for 1922. 



In addition to the enount ($263,700.97) shovsn In the forego tag 
table &a having been trjinsforred frcta the renewal reoorvou, there %*&%, an wa 
nava sho&n In our rej/ort upon Tho Ontario Power Costpooy, a reduction Bode in 
renewal resarvea of tfcut undortalci:i& of tba Comission of t-579, 269.19 so at 



Cstober 31st, 1922. 



^so-Electric Inquiry Commission 

t roR Enclosure to *g 



Of the amount, $253 ,700,97, above aentlonod, the mm of 
&&la,<&2.05 w&g credited to mnicipal corporations interoatod, 43a, £33. 37 
to contingency rejervoa and £&3£»58 to aideau iowor 3ovelopKeut. *Zha trans- 
fer of v£13t&*£»0ii to th© credit of ftunicipui corporation* reduced the 
avartnjo annual ooata of pcsor to than from the data of first operas Ion, and 
brought theao annual ooata tiorn nearly to a parUy vrith the catinated ooata 
farntahed to the aorporatioua* Sao amounts credited to than, howevur, wire 
not paid over to the mnioipal corporations at cr*ca, but -ore employed to 
cancel deblta on power acooanta or retained for the purpose of ceetinj? 
future accounts. *he Coxaciauiou mil tfcua enabled to oraploy a larg# portion 
of the asaonnta to the credit of ttunioipal corporations for Its general pur- 
poses ut a coat to It of four )>or coat, per annma for interest thoreon. 

COPY 

in the caae of *ho Ontario Power Co&p&ny, the renewal reserve, 
wiii oh our Conaulting raijjlneor )i^d reported to bo inadequate before the redac- 
tion, waa further reduced, and the CoEsaiaaion enabled to determine aa the 
"coat of pcrser* produced by that company a figure lose thun would otherwise 
have boon necosaary. In the reduction of depreciation ratca, aa In other 
course a taken by the Qqapiliaiott, present app«rt i ut advantage to coua <s,ars 
of pceer appear to over— r Ida considerations of the future and evidence a 
wide disregard of tha intoreata of the Province aa a ^holo* 9&» Gilding up 
of adequate res^wul reserves, while at the m&e fcl&o tho wo ike of th© Cca&sis- 
aion aro Maintained at the staiidard condition of efficioniy, provides not 
only a fund vfcioh assures ssmioipa} oorporatioua tliat tha wor-fca tov/arda the 






>Electric Inquiry Commission 

or Enclosure to 



74, 



cost of which they are contributing, sill bo in an efficient operating 
condition, but also jirovidos additional security to tho I-rovinoe for the 
advances mde togr It to Rest tho cost of tho woriss. It la but natural to 
expect that a consideration of tho Interests of the Province aa a whole 
would lead tho tasalssioa to confer with and obtain the approval of tho 
Govornciont before adopting a policy reversing; one deliberately adopted and 
consistently follo??ed tax years. £hla It did not do. 

after ooasidaraUcn of tho report a of our Consulting Engineer 
upon tho wor&s of tho aever.il syatoKs, and a full investigation, we find 
that, while, subject to tfco approval of the Lloutonant-tscroraor In Council, 
a reduction of dopreoiatlocrr/^TF)l'^&rns to some of the worisa of tho 
CoE*nis3ion from thoas originally prevailing would bo justifiable, a reduc- 
tion ranging froa ktyl to 1>^ In reapect of nearly all tho an&e?tukir.£s of 
the Oocrsiaalon vas wrong a»i unsound. i'he prospect ivo reduction of tho 
renewal fund apparently paved the woy for the eouron&atiou of the Contaiaalon 
in tho pablto press. 5?ho following paragraph, appearing in tho press imior 
date of September 14th, 1923, la a saraplet 

h a redaction of rates which affects throe cltlsa, thirty- 
five towns, seventy vill^es and one township, waa formally 
announced yesterday aftomooa at tho off looa of the Hydro- 



ulectrlo Cctsiiaslon 



m 



vElectric Inquiry Commission 



*3 l , 0B enclosure to 



78 






I 

■ 






Wo attach hereto an Appendix "(J* 1 , iishodiil© "A" and Schedule 
W B" of renewal rates no*» used fcgr the Cor-al salon for Its various properties, 

giving tfcO follOVittg lilforoatlonj 



(a) Clasa of Property. 

lh) Jfeara Life, 

(oj iiOSidUii.1 Value a » 

(&) Depreciation *ate on straight line 

basis* 
(o) Depreciation rata on sinking fund 

baais. 



3?hero 13 aloo attained ^ita these sahednle* a c^raorfcndxcs &y 
the Chief £nglnoor of the CoGsaieUoa, a«ttii*tf forth reasons for the adoption 
of the rates ineluaed in the soned-iiea, 

COPY 

£ho following table aho^a the b&lange In the reserve for 
oontingenoiea at Gatober 31at, 1922, for e^ch of the H/dro Systeas u«dor 
the direction of the Ccrsaiaulon, together \»itii the reraarka of oar Consult- 
ing iiaginoor relative to tha ado^u&oy thereof, Bade by alia in respeot of 
the balances at October 3l3t» 19:21, vhloh were, of oourae, leaa t3ym on 
October 31st, 1922, the figures of which are shcKn on the tablet 



; o-Electric Inquiry Commission 

F0R Enclosure to 



76 



System 



• Balance. October 31 t 192£ 



Klagsra Systsa 

Severn Sjrstan 

Eugenia System 

Waadoll'e Systcw 

&usiro&a 3yaten 

St. LaiTrenoo Syatsia 

Eideau gytjtea 

♦ fhunder Bay Systsn 
Ottawa System 



ss&ox System 



Choroid S^stea 



# 4,653.07 

29,8£0,08 
12,801.88 

6,068.13 

3,375.57 

6,255.17 

COP v 



1 



7,673.25 

4,601.60 
&0H9 



TTOUO 



Kcno 



Cosrsants of Consulting ^^ineor 
la reapeot of Balances aa at 
Pot oft er 31. 1921 






'. 



* - Sot in full operation. 



^onslderatSon should do given 
to a larger prop/ is ion for a 
contingency reserve* 

F.eaorv© should bo increased" to 
120,000 or (30,000, 

Reserve ahculd do increased to 
^5,000 or £30,000. 

Besorvo should he increased to 
$5,090 or sio.ooo. 

Reserve should be increased to 
$5,000 or ^10,000, 

Eesorve should he increased to 
4'12,000 or v- 15,000. 

Resarve should ha increased to 
£16,000 or $20,000, 

Ho ooss&nts* 

Reserve of anout £5,000 should 
he established to provide for 
losses which might ho incurred 
through tho orjyratlon of rural 
lines. 

liosorve should ho built up of 
CCOCQ or £10,000, 

It ??ould seen to ho a good 
policy to establish a reserve 
for cout insane ies. 



I 



i~»* iaikJi 



^o-Electric Inquiry Commission 

for Enclosure to 



77 



It will bo noted fros* this table that the balances tu th$ 
reserve for contingencies, although increased In 19&2, aro still in all 
tat two instances below tho requiromnts considered adequate Xrj our 
Consul t lng Snginaor • 

Sp^oial attention ia directed to tho bal&nco of v^*d&3«67 
on tho niag»ra ftystecu '£his reserve Is entirely inadequate and should bo 
built up to an oroomt Of approxiiautely $5Q0 # D00, Itarlng the year 1922 
the charges B&de agafcmt tho yoaorro for contingencies for tho Slaffaro 
3yatera wore $243, 707*74 and tho additions to the reserve throng ehasges 
Included in the cost of por*ur and lntore>at aoorotlon3 ax&cuntod to $£&£ 9 $96,6d* 
2he charges thus exceeded the ort».tit3 in this year by more than §20*00$, 

COPY 

In the preceding section of this report attention has oeen 
directed to the reduction in tho reserve for renewals to rates ^hlch pro- 
vide only for the renewal of the property and do not provide for obsolescence 
of plant thrcurh devolopaenfc of electrical science* £hia night ssell have 
been provided for \sfcea determining tho arncune to be appropriated to re- 
serve for oonttr.coacii«3. *ith contingency reserves standing at figures 
each l0T»'er than they should bo, a prodont and natural course of procedure 
would have been to transfer the amounts or major jMrt thereof available 
through Justifiable reduction of renrsal reoervoa to tho resarves for ccn~ 
tinge&oios. On roferring back to otr discussion of renewal reserve It will 



- 



ro-Electric Inquiry Commission 

for Enclosure to »g 



be found that out of a reduction of nearly ££54,000,00 only £36,000,00 
was credited to oontingonoiea* 

3peoial /ittentton is dlrosto:l to the rf>s«rvo for contingencies 
In the case of The Ontario Poww Conpiiny. 2hia amounted to v527,6»4.30 
at Ootober 31st, 1VZ2, tout, with the exception of vl>39,924.84, ^s&a made up 
of reserves for accrued liabilitiea and other &s»et-9 of a moat question- 
able character. Oar Consulting Engineer has pointed cut that the coa~ 

tlagsnclea reserve for tfho Ontario Power Company la entirely Inadequate and, 
while it la not anticipated that aerlouc accident a ^ill occur «uoh as the 



aeeidont of April 23th, 1922, the eatimted ooot of which ia $300,000, 
thla accident nsvertholeaa furnished a striking proof of the necessity of 
havln.iT reserves for ooatiassnVlA Jpf s ACh smounta aa would provide for extra- 
ordinary loBsea. Ho tiro of opinion that this ooatimrenoy reserve should bo 
y^t? substantially laoronsed. 

As noted in our report on the ^eenston-CMppawa Potto r 
Development, estinates prepared by the engineers of the Cofscdeciion, and 
submitted to our Consulting Engineer, setting forth the probable cost of 
pov*er from this Jevelcpsont, induced no cjoount whatsoever in respect of 
contingencies. Our Consulting iJnglneer In dealing %*Hh this subject re- 
CQosciends that contingency resr?rv«a be provided on thla worie, and in this we 
are in co??plete anruesont with him, Aa pointed out in our discuss ion of ro- 
■»* -1 r serves, o ur Qunaoltinr Snginesr &lso considered that the r t«s applied 
by the engineers of the Oomi union in thla respect were also Inadequate. 



I 






i 









Electric Inquiry Commission 

r Enclosure to - 79 



We believe that for a 650,000 horse-power plant, an annual &i»ount of betvwon 
$400,003 and $500,000 Might wall bo sot aaide In respoot of contingencies 
to take care of happenings of a oatttstrophio nature ^hloh, after all, are 
not altogether Improbable occurrences. 

i.3 st&ted ^?hen sotting forth the charge* entering into the 
cost of po'ser, in addition to Interest, sinking fond, renewal reserve «nd 
continue no lea, the Comiaaieu la reonircd to provide for line 1 as, for the 
cost of operating, gu^orvisins, maintaining and insuring tha Y?or;ts, and 
for such oKonnts as may beVr^.f^i/o^to^rovidr* for the remnerution of the 
Coaaaissionera end in respect of superannuation, retiring allcrcmcoo, siofc 
benefit and so forth. 

'Jhoso charges, insofar aa *?o h&vo been &ble to learn, have 
all ba<m provided for In accordance with the requir create of the Act with the 
poaslblc exception of lino Icaa, for *hich there oseraa to be no specific 
provision in the distribution of coats snoag the municipalities* Line loss 
ia necessarily provided for sntormtioally by the ■yitew which the Cezrrcirjaien 
eaes in billing the rsuaioip&litloo. ?he allocation of lino lose to the 
differont manic ipalltiea vug not be in exact accordance with the leases 
accruing in respect of each, bat «e are informed by our Consulting Engineer 



K 



so-Electric Inquiry Commission 

for Enclosure to 



80 



that this is a very difficult itoia to conpute with accuracy, and it mmld 
appear that tho raothada no%? employed by the CaDsiasion in this rospsot, are 
fatriy tqal table to all eonsunora. 

She Rain itcwa coning untlar this heading include tho coat of 
operation and tho cost of maintaining tho merits. Of thoae tv?o # maintenance 
is probably tho most inportant in that it has a definite Soaring upon the 
basis on which tho ronev»al rotjorve is established* As previously pointed 
cat in our comsonte on roorwal reserve^ it is the established policy of the 
Casals- ion to reaintain the vsortca and iceop each i\nd evary portion of tho 3y§ten 
in a condition to operate in accordance with th<* requironcato of economical 
production, vshioh ia consii^n^-^'Dp^^^out 76^ as good as now. as far aa we 
can learn It v?ould appear t^itsne ConAaalon haa strictly adhered to this 
policy, and that all worits operated by it are kept up to at least thla 
at&ndard of efficiency* v.'e believe that usany of the pluato are fcopt above 
this standard and on the whole it uiay be stated that the condition of all 
plants visited by us haa be^n excellent, and Euoh credit ia due the oporto ln*r 
dop^rtsiant vhoso duty it is to see that the standard of efficiency is nain- 
taiuod* 



>o-Electric Inquiry Commission 

f0 r Enclosure to 



01 



She various elo^onta entering Into the cost of power supplied by 
the Cossraissioa to contracting j^micipal corporations aa sot forth in Section &3 
of The Power Comaiaaion Act hava been consented upon in the preceding sections* 
!Tfce duty of adjusting: and apportioning these several iterca of coat aaongst the 
nanloipal corporations ootsprising the different "Syateas", in order that each 
isay bear its Just proportion, is cast 07 the Act upon the OorEisaion from which 
there is no appeal. What is torasa tho "coat* of power in the first part of 
Scot ion £3 of the ;.ot la the original coot to the Ccixdaaion at the point of 
production, or genar&tion. 8uah »03t of jower eoneuraed 07 all nunioipal cor~ 
poratioas, in a systess hssA&g asAXgandr al rule the tana source, is vithout 
difficulty apporti enable aaongst the runicipal corporations, deploying the amount 
of potcer supplied to mull as a basis* ?hia baaia can also be applied to deter- 
mine the proportions of other elessenta of "cost" or annual payments to be ttade 
in addition to original "003t". 2he proportions of annual payments to be Bade 
by a ays tee on interest and sinking fciud aocount in connection with the cost of 
transmission linea, t ranaf oicor stations, ana so forth, necessarily yary cx&ongst 
the asmiolpal corporations in the ays test, 30 th**t although each Kay pay for its 
power "at cost", the "coat" nuafc necessarily be grafter in aoiae than in othara* 

!The relative importance of the constituent itens of tha cost of 



porer baa teen dealt T ^ith la our report entitled "&>at of Money »dv:;;no9d to tha 



^Electric Inquiry Commission 
0r Enclosure to 



02 



Kydro-51eotrio Power Oofnraisaion hy the i-rovinoo of Ontario". In that report 
will oo found tables ■ showing tho percentage ratio of the various itezss entering 
into tho Cost of povor for tho yo^r ending October 31 at, 1921, tho ° :-;ystsjKs" 
being considered under two headings s 

(a) Systeras in which all or tho greater portion of tho power is 
supplied by a generating plant, part of tho works of tho system. 

(b) Systems in whlah the power is purchased fron outside sources* 






for convenienoo of reference those tables ar© here repeated* 



U) 'Ms&mJJL^ti^&f&w. JyUtemxa&sSL 



















# 


• 


* 


«k 








ffiausdor 


Severn 


Vaadell's 


Dagenla 


Buslcclca 


Hi dean 




^COP 


V 










y 








Power Purchased 


6.03 


0.9 


- 


*» 


«• 


5.72 


Interest 


73.13 


£9.7 


3 #*<3 


37.90 


35.63 


&5.03 


Benewnls 


«• 


18.0 


16. Z 


19.06 


19.156 


£1.65 


Sinking Fond 


- 


9.0 


13.4 


5.65 


£.77 


- 


Kaint&inanee 


3.37 


11.7 


7.9 


11.60 


10.13 


£.82 


Qperat infi 


11.98 


9,5 


ia.1 


7.25 


20.SU 


9.41 


Overhead and 














General Expense 


5.65 


12.6 


10.2 


10,02 


10.4* 


6.87 


Contingencies 


- 


0.& 


0.0 


0.63 


1.11 


0.60 


Surplus 


M 


■■ 


mm 


~ 


— 


«• 




100$ 10$ 


10($ 


loop 


100/3 


10$ 



Sots i # - In 1921 Cessron /alio Development in tho thunder Bsy 
Systera had only two generators in operation and oon- 
strustion wcric was still under way. uo renewals, eon* 
tin&enoios or sluicing fend charge a had been applied &n 
that tirio. *»s soon as these Charge a are applied the 
offset will bo to reduee tho ratio that interest 



ro-Electric Inquiry Commission 

for Enclosure to 



--.■*_*.. ... 



63 



• _ 



bears to the whole cost* en4 tho figure of 73jC given 
say than bo considerably reduced. 

Those throe systems have em interchange of poorer and 
all purchase power fron the Drill J a plasty but each 
has its e?m generating plant B3 wall* 



0>1 ^.gtesa ,,^ic^IlBXSM5^^n!l£ 





# 

ftlag&ra 


8t* lawrence 


'Siorold 


Bases 


power purcaaaed 


88*96 


34,9 


3G.2 


S3.9 


Interest 


15.60 


23.9 


4.2 


10.6 


Renewals 


7.49 


15,7 


i.i 


13.3 


sinking ft&4 


4*93 


7,8 


2.3 


4,1 


fcaintenanoe 


3*54 


8.3 


0.4 


13.6 


Oper&t isg 


4,51 


2 .3 


0.8 


4.3 


Overhead and 


/^ /A 


rn \/ 






General Expense 


vb 9 U 


P Y 9 * 6 


■» 


12 .8 


Qoat ingenelei 


T^C'M 


1 * 0.5 


M» 


- 


Surplus 


- 




53.0 


«*» 




100$ 


100$ 


100$ 


100$ 



Kotej # - Eias&ra Systan in 1021 did not include the srosp of 
generating plants at Eia.*ara and was shown in the 
bocks of the Corliss ion a* a purchaser of powsr. 

In group M the itesi «?o*?or Purchased'* forma a large percentage 
cf the total cost of povror. Xn the Niagara System this atnounts to 55.96 per 
cent. ^ The Ontario Power Cosssny and 5he Toronto Power Company being considered 
as entities distinct from the Ccsraiasion and Yendora of po^sr to the Copies ion. 
•Vhea consideration is ciYen to the fact that theco companies are controlled cad 



.■ 






o-Electric Inquiry Commission 

or Enclosure to 



Si 



operated fey the Ccraniaaiou, It beoowoa a^iirent that the itma of &5.9& per cent. t 
as far as the Ccnsriiasion is concerned, la divisible into the component parta of 
the coat of jxmor to these oonpaniea end that If so divided, the percentages for 
interest, renewals, alnliing fund and so forth would be increased, the re- 
lationship of the charges entering into the 003t of jxjwer fros: the combined 
oporation of the ^eeriston-Chippawa Power Development, ft* Cut art o rewor Company 
and the Toronto Tqvit Qvnpany la illustrated by the following tablet 

Kstissats of Operating Jixpensea of ffli© Ontario lover ttoftpany, 
The Toronto Power Cornpany, including Toronto Stecoa i ; lant {not operating), 
and '-'he i&eenaton-Chlppava i-ower Dovolojaent 

LLtJJ jii U ,j in . 1 n i r — | i — m ii i n r — ■ 1 — - ■'---■■-■—■ — 1 .-.-.. -, .....— ■—-. .. , -.-..-.-..-, — - — _ .... r — . _ ti- i i ii i i i i t ii i mm 



Intorost 

Operation 

Sinking i^d 

taint onanoe 

&ater Cental 

Depreciation 

'-.'axes and Insurance 

hzzk e^c&ange t bond 
discount, etc. 

Add charges on go. 16 
unit, G.l-.Cp. t - 
interest 6£>j sinking 
fund X«8^| depre- 
& tat ion 0.33£> 






6.07 

6.77 « 
3.32 
3.29 
£.80 

3.41 



55^^:0^030 H^..,. 650.00-) H^. 700,000 K.?, . 

74.732 74.78^ 

6.06 6.05 

6.61* 5.41 * 

3.35 S.SO 

3.49 3.58 

2.G7 2.93 



1.03 



:.34 



1.00 



2.23 



0.97 



69.00$ 
&.B2 

12.92 
3.61 
3, £3 

1.98 



0.85 



0.05 



0.05 



0.05 



0.04 



Sotat * - Siskins Fand deferred on the Ci,uo{?astoa«Chij:iJa^a plant 

— — — ■ ■ '• ■ " ■ n > wit I I i I 'I ■ — » i * ■ - ■ i»n ■ ii ■ ■ m m » m ■ * ■«.... i.,i.i, i. i.. i 

25ie rsost important elenont and the Bain ^overninft factor in the 
cost of pewor is undoubtedly the annual Charge for Interest on capital invaatneat. 



^oElectric Inquiry Commission 

por Enclosure to Q5 



which in the table given above agitata to about 70£ of the total. Vt>wi 
to interest charges are added payments on aiuaing fund and renaml rssnrve 
accounts, the relative percentage to the total cost anoaato to about 8i$. 
Thla fact cannot bo too strong!,/ ifapreasod upon all concerned ^rith the future 
of tho undertakings of the Comisaicn. It should ever bo kept la view "a-hen 
expenditures are being iaade or are oontosiplfcteA for perajr developments, und 
©Tory effort «ade to keep construction costs as lot? aa ycsaiblo, having duo 
regard to proper and effect lT« design and worlcmanahlp. i&ch ton dollar in- 
crease in the capital coot por horae-pesor of a power development of the 
Coasalaeion, entails a substantial Incrouso in tho annual cost por horse~po'#er 
of all energy supplied froia such develox^nt. V/e have previously drawn 
attention to the fixed rntyTKf^drvttTrylLtff four per cent, per annus r^iioh 
prevailed under She Po^or Uosaiaaion Act until the arsondisont to the Act in 

1915 to which effect was not given until 1917. Corsaont has also bean directed 
to tho thirty^-year sinking fund basia provided by the Act and to tho standard 
rena'Ksl rates adopted by the Coram I a a ion. Prior to 1917, assuming capital ex- 
penditure was properly ©sttasod and waa Kept vitals tho estimates, it "was a 
simple isattor to forecast the cost of power, because the sain olew^nta of 

such cost were definitely predetermined. £ho changea in the rate of interest 
payable by the Cczsiiasion to the Province, and by Euniolpal corporations to 
the C emission, apca capital expenditure a to meet advances by the Province 
subsequent to October 31at, 1^14, effected by statutory amendments made in 

1916 and 19 IB , and dealt with fully in our report on tho "Coat of Uoney Advan- 
ced to tho ^ydro-^leatrie Power Ooaaisslon b/ the trovinoe of Ontario", 



; " 



dro-Electric Inquiry Commission 
t for Enclosure to 



66 



rendered it eoawwhat jaore difficult to determine In advance the cost of poieer 
to Erunicipal corporations entering or proposing to entor into contacts with 
the C emission for a supply of power. 

fho Ccmiaaion, h&a, horror, had considerable latitude In several 
outstanding respects* -There is no definite restriction regarding reasml 
rates, and as pointed Out, it haa greatly reduced its rene^l reserves thereby 
malting oubatantial reductions in the cost of power, it has fixed at wiii, the 
amount credited to contingency rose rrea until now many of these reserves are, 
in o-4? opinion, isaoh too assail. In tho establishment of alnking fund, tho 
Ccsaniaaioa appears to have aaarosad author it/ under tho tertss of the Hlagara 
Uevelepmcnt Aoto, to <mtirc<^depcr|^<^the provisions of Xisa Power Ooaa&i*- 
•ion ^.ot and has greatly extended trio period of repayment thereby do cross lag 
the annual chars** a entering into tho coot of power. 

for tho yfurpeso of illustrating in concrete fona tho component 
parts of the coot of power ah.ir£od to a lauiioip&l corporation which has en- 
tered, into a contract with tho Cosaisalon for a supply of electrical pewr or 
enercy, and to exhibit a aqaynriaott of tho total cost to each of two munici- 
palities of tho tats* ayatea at difforent distances fros* tho aoxirco of supply, 
oar Accountant a, under instructions, have prepared chart a which, with oorrwnts 
thsroon, are included la their report "Ssneral Accounting System". 

2*s clmrt inserted as pa£o 09 ef this report gives a graphic 
representation of the various olewenta entering into tho coat of pester to the 
municipal corporation of the "lorn of Oedorlch In the Kiugara tfyatera for tho 



.Electric Inquiry Commission 



oft Enclosure to 



87 



ye^r ending October 31et, ltfwi. '2he chart fomintf pa^o 89, ©dibits A 
oofcpaaison between the cost of po\sei» chargeable respectively to the rainlc- 
ip*l corporation* of Singer* italls and Windsor, the two furthost distant 
fro?a one another In the fltagara 3yst$a. 

5?hc Corsaiesion has adopted the convenient practice of fixing 
for each ssanioipal corporation, for portions or all of each year, an estlmted 
coat par horse-power to ba paid* Accounts arc rendered for each nonth of the 
year on the basis of such estimated coat* At the eviration of th*» fiscal 
year, the actual coat of such power, as determined ay the Cosssl salon. Is ad- 
justed and apportioned by the Gowaiaalon euongst the several amnio ipal corpor- 
ations of the different syttemaAiiT a ithirteenth Mil" rendered. Dependent 
upon the accuracy of the Coital anion's estimated cost or upon such esfclrmtcd 
cost baing greater or less then the finally determined actual cost, the 
"thirteenth bill" J&ay sheaf so balance due either way, or a balance In favour 
of or against the saniolpal corporation. If there bo a balance in favour of 
tile Corporation, interest thereon at the rate of four par cent. r>or araaaa is 
allowed it by the Corsnissica until the balance Is exhanated by charging against 
it subsequent poorer bills, sad if the balance be against the Corporation, in- 
terest thereon until j-aid at thi» rate of seven per cent* per annum is charged 
by the Ccuaaission. Siccept in the suae of jower bills incurred during" the first 
three years in which a nmrtolpa) ocrforation receives power fro® the Con?ni3sion, 
there is no authority for the doferaent of paynssnt of power bills, and it Is 



*"■■ 






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*S 


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•"ft 


^*; 


"ft! 


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*ft 


^F^a 


^ Cost of Power Purchased 


02 


24 


























Extra allotments 

Contingencies 

! Sundry Direct charges 


.19 


19 


























.17 


.11 


























73 


73 


























\ 


Conduit and Cable System and 
































12,000 VOLT CONNECTING LINES, ETC. 


21 


21 


























1 


Niagara Transformer Station 






























\ 


IZ,OO0VOLT EQUIPMENT 




68 


























i 


Niagara transformer Station 
iio.ooovglt equipment 
































a 




























■ 


Wood Pole Lines -NiagaraTransformer 
Sta.to Niagara Falls municipal Sta. 
































.59 




























1 
1 


Niagara Falls Municipal Station 

\ RIGMT-0F-WAY AND STEELTOWER LINES 


H.34 


14.36 






























1 08 






























Section "A'- Niagara to Dundas 




.57 






























< 

i Section "c"- Dundas to Brant (757^ 




60 






























\ < 


5ection"d"- Brant to woodstock(75°/) 
\section"e : Woodstock to London(757) 




79 


































.97 


































ySECTioN J- SI Marys to London 
\ (Plus 25/ of Loop) 








































129 






































Section "k" 










































v London to st.thomas 




5 49 












































Section!" 


















































s^T.THOMASTOKENT 




524 


























< 


SECT 


on "M"- 


Kent to Essex 












2 07 
































E 


55E 


:x 


TF 


•an 


Sr 


'OR 


ME 


^S 


TA 


TIC 


N 








5e 






















V 


vooc 


POLE 


.UN 


I I I 

:S-FR0MES 

to Win 


rr 

sex Transformer Station 
dsor Municipal 






14 34 


30 8< 


Cost Pes « P. 




















































It 


1 07 


Deduct Difference on account of 








iDJUSTr 


































1* 2/ 


.29 77 


Deferrei Sinking Fund Charges 

Cost Per^crse Power as Determined bt Annual / 


ient for Year Ending October 5ISJ I92I 


DOLLAR* 
PCR HP 


s: TZ rvj ro ch 
Oi O tn tn 



qro-Electric Inquiry Commission 

r F oa Enclosure to 

90 



the &1S7 of the Comission to insist upon proapt payrwnt of power accounts 
by iRUniolpal corporations, trUloh duty, as *ill bo MM by jsoruaal of our 
reports upon tovoral of tho systems, tsua nut fulfilled. Kaay outstanding 
accounts of this natura have, howore-r, boon wiped out, as has been herein- 
before indicated, by orodiis to rainicipul corporations of anouats transferred 
froa renewal roa^r^oa* 

la the course of era? inquiry a nanbor of those ax^poarlag before 
us havo advocated the astaJU*iWodtiof A uniform flat rata for posror through^ 
out tfc3 Province. Otter* Again hava expressed strong opposition to the 
proposal. It is not only a revolutionary subject, but a very lar&o subjeot, 
and ^?g should not venture to ttake any rtfconawm&ations in respect of it without 
going' into It usich further than \sa h&va and giving it vory full consideration. 
Shoes ^ho support the proposal urco that ua the right to use the water belongs 
to the irovince as a whole it should bo sold to all al iko. It la, of coarse, 
at the present tlre^, sold to all ali£o at tha point where it is produced. 
She fact that sojsio havo to p^'iy a larger price than others for ^oarsr produced 
at the saPO point is duo to the cost of transmitting lt» Coal is sold at the 
ssshj pries at the nines, but tLo coat of conveying it from the jalnos to the 
consumers varies vory groat ly. 



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2ho oupsportcra of a flat rat© qu<cte tho practice followed by 
tho £oat Office, which delivers a letter ten mllea away froa tho point where 
It la pcatod at t*.e sa«30 price aa It dolivera a letter to a point thoua&nda 
of &ilea away. 2hay porhapa ovorloott tho fact that for parcel post th« rata 
charged vuriea with tho distance that the parcel Is to bo carried. In tho 
ease of railroads, freight and poaaencor r&tea both vary as to diatanoo. 
?Ms is alec tho oaae, to a lar^c e:ctent, -with tho telegraph ayatea. On the 
other hand, the nddltioual coat of grades and cats on a railroad are not 
taken Into consideration whan fixing the ratoa, which are juat aa low oa 
that portion of a railroad whoro construction costs haw been high aa on 
that part built at scuch leaoo^slv. Qltors la no doubt that In tho larger 
centres and In thoaa points Boar the plaae whore tho paver la developed, 
tharo would bo strong oppoaltlon to a flat rate. A ilu.1 rate would rala> 
the coat of powar In such centres aa Toronto, Hamilton, Hlagara and Ctt&wa, 
It would alao bo noceaaary to rsnke a readjustment of tho Interest uhich 
mnlelpalitiea now have in the undertakings of tho Coarilaalon, although 
thla lntaroat no** aswunta to leaa than two per cent, of tho coat. 

Jnatancea have boon brought to our attention ^thera cranio Ipal- 
Itiea at an equal distance frow Ulagara, hay© been pat, son© on tho Jfi&fc'ara 
Syatoit, and cose on another system whero tho ratea are ganoh higher. It la 
not unnatural that tho Esiniaipalitloa that hare to pay tho higher rateo, 
object to being put at a dla&dvunt&go with rauniolpalltiaa a few iallea away 
which oonsaae ao nor© power, but which are pit on a system where power Is 



.• 



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theapor* £ht« la a difficult letter to deal with and hae to be left vita 
the Ccssalealon to ??oy& out la the KO*t equitable vay» 

In paying half the ooo t of rural lines, tlie Legislature ha* 
gen© a certain distance tn tho direction of a flat rate. Iflie queation of 
"wat&r rentala" also has a &e&rin& on this subject and Is dealt *?ith In a 
later j>art of this report* She whole question resolvea itself Into ono for 
consideration by tiie GovernEsat &nd the Legislature* 



COPY 



. 



. 



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Sh?/o distinct, but la a noaanre inter-related, classes of eafcUsatos 
In connection *?ith the operations of tho Casjaisaion have boon the subject of 
invest lotion fey uo» She tu-o classes uroi 

(a) Shoso estimates nado by tho Coanr-ilssioa of the capital cost 
of *sor*cs to be operated by the Ocfflnission* 

(b) *he estinateo isr-do by tho CoiirciaslGn of tho prion which \*111 
be payable annually by newly ineocins jsonloipal corporations 
to tho Cositaisaicn for electrical rower or ouop^y supplied 
nnder contracts, noh price being tho total annual ooat of 
such power to tte^cradUaXon* r 

C OP Y 

She total oost of power being lartftsly governed, aa «o have in- 
dicated in preceding aootiona, by the capital Investment, tho accuracy and 
value of estimates of olass (b), of course, depends in a largo measure upon 
those of olasa (a) boin& correct and reliable, Another factor to bo considered 
in estimating t e annual cost of power in any particular case to tho accuracy 
Of the estimate of the aneiint of po^sr that will bs» required* It will readily 
be realised that if th^ quantity of power oonsu&ed by a tsmicipal corporation 
be greater or lose than Its est teat ed rou;a I renent a, there will be a corres- 
ponding variation in tho j>rloo payable for power, beoanso to arrive at the 
estimated cost per horse-po^r the proportion of fixed charge arA othnr 
el its of ooatu aj.ortloned to nay Kinlcipal corporation i ; j divided by tho 
muaber of horse-power estimated to bo required* 



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In cur reports upon tho various syat^aa and other undertaking 
of the Cemlsslon, wo have dealt with certain ©stimtos of both classes Insofar 
as the/ relate to those Individual undertakings, llany estimates prepared by 
the CoEralssion have not been invest ij^tod by us, but those of both classes re- 
lating to the larger undertakings of the Costs I ©a ion have besn examined and 
considered by our Commit lag 3n&lnoer # Accountants and ourselves, and our 
conclusions in respect of several are aura-jar I sed in the follo\*ln# sections. 

amotion £8 

A^^r^J^Ut^flaUflaaaai JgteB&ag Bag , : fcrataEd. 

Our report €^tlt^o<\ EKtWIa Xieport on thunder Bay 3ystero M relates 
the olrcuastanoea under which the power development to servo the Cities' of 
Port Arthur and Fort Wllliaa w?va undertaken. She municipal corporations of 
these cities entered into RGroeiaents with tho Ccsnnisaion under which they assurssd 
liability for the coat of works to supply them with electrical power or energy, 
She representatives of the Connies ion, during negotiations with the municipal 
corporations which resulted la the agr«eisont8 9 and in public di3cusaion 9 had 
announced that a water pom? privilege at Dog Lake would be utilised and the 
power required developed there at an estiBiated capital coat of $3, 000, 033* 90 ■ 
She Dog La&« Development isaa not proceeded with, but without consulting the mni- 
oipal corporations interested and In total disregard of additional financial 
burdens to be c^t upon such nunlclpalitio3 f the Coe^jission aanmonoed the con- 

loa of a : .., I >r plmit at Caneron -'-,11a on the Eiplgoa Kirer, the 



t 



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, tor Enclosure to gg 



oat let of Lake Eipicon. So October 31st f !$>££, the expenditures by tho Coea- 
aission la connection with tho cost of the ffipigou Development (ftsrador Bay 
3ystcjs) amounted to $6 f 642,770. 13 and tho Chief Engineer of the* Cozaaissica 
has estiisated the additional capital expenditure required to complete the 
development at iy6,257,829.Q7, nakin& a total capital investment of vl3»030,000.00 
or over four time a the est lifted cost of the Dog Late* Development • TThllo It 
Is highly probable that Caisaron itolla was tho bottor site for the development 
thin doea not Juati^T the lac* of fr&nimesa on tho part of tho Gomisston 
In its dealing ^Ith the aiuiicipailties. 

She ja&nno? In ^ileh the wortc on tho Caaoron 2alls plant was 
accomplished and the eoonca^ or otherwise in expenditures we have not an 

phpy 

opportunity of investigate^ H&j}£ ffe e^rosa no opinion thereon, but our in- 
qulrios have disclosed tho fact that tho expenditure of a sua so greatly in 
excess of that stated to ths muioipal corporations, will oh wore assuming 
liability therefor, aa being necessary, haa oooasionod £reat dissatisfaction 
and has placed upon the Province a burden t&v&t contemplated by the Government* 
*hia burden has been annually increasing and -will continue to do so, until 
tho Cc-sraiaaicn ia able to find ouatojsors for tho po*?or available. I&e 
aanioipal corporation of Tort iirthor haa refused to pay "at cost' 1 for th>3 
powor supplied to it and tho Oowmisalon hsa bean unable to pay to the Irovince 
interest upon advunaea, the arrears of ^hich to tho end of 1923 we are in- 
foreed amounted to $S6d,$33.Q0« As stated In our report we have no doubt 
that thia devolopr&ont will eventually be able to pay its way. 



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A3 will be seen ay our report relating to the above combined 
railway syaters acquired and operated V the CcKarAiaaion on behalf of a group 
of EnuiiclpaUtl®3 f the OoGS3is3lG3i ©xpondod on rehabilitation up to October 
31at f 192E, tho can of vX#fc& ,233. S9, not including the amount of $£5,051.19 
expanded to that data upon couatruotiou satorial not then uoed. 2h® eatis&te 
prepared 07 the Corsaiasion, and subnitted to the rsunioipalitietj Interested 
and to tho Government of the coat of thia rehabilitation, was £093,83;). 00. 

She oleosa expenditure over estimated coat, was, therefore, 
*>140,&53.S9 and apparently t«rt of this amount una expanded prior to any 
authority having been given to tho Cgse»1 salon to expend on rehabilitation 

ropy 

mora than the proceed* msv tka/Rilo df h$00,030.00 of ita bonda, which had 
been guaranteed by the iTOvinoo. An over-run of li$ in \*ork of thia nature 
ia not an unusual occurrence aa there are many unoortaintlaa* 

Under the heading of r&teib ill tat ion ia our report entitled 
"import on Guelph ikidial hair^oy", we aho^ that in a report prepared by the 
engineers of the Coas2:ila.3ion in h'ove&ber, 1919 , the eatiraated expenditure re- 
quired for rehabilitation waa placed at viy7 ,(>}.)• iue actual expenditure for 
thia purpose up to January 31st t 19£«5, amounted to approximately v 2&5 f 7QQ so 
that the aetaal cost at th»t date exceeded the estimate by approximately $68 t ?{X) 
or So>. Shiie there la no doubt that in rohabii ita ting the railway , the Cosv* 
mission put the road in excellent shape resulting in a £re»a£ iraprcYcrsont in both 
road-bed and equipment, the large increase in cost thaa added considerably to 



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the annual oarrying charges of tho undertaking and these' costs rust neooss&rlly 
add to the deficit which has aoonsnlated* 

2ho J&genla Syatesa includes a large dcnrolopcHmt plant at ifogonla 

Falls which was constructed by the Caetlsaton to s^rre this sys^esu Vi'e imVa 

not had an opportunity of investigating tho sstirv\*t«s and ooatii of this ??orfc v 

bat It waa stated by witnofjsos **pi?earintf before us that tho sumner in which tho 

Cccrsisaion carried on the construction of certain of Its transmission lines was 

yery coatly and that t?» wo;ic could have been earriod out sruoh nora economically 

by tho mniolpalltlea theaaelvos* She fallowing la an extract frow our report 

en this system 

T2r« Legate's estiuksa aX/tic sajriuff that Bight bo effected If 
the work of erecting tr&nsnlsslon lines worn done under tho 
Buperyiaicn of local engineers was vigorously diaputed by tho 
representatives of tho Cosanlsalon, and we did not f»o Into tho 
matter at sufficient length to Justify as in n&fclng any findings 
on the isirticular quo 3 1 1 on o at Issue • In tho construction of 
transmission linos there should always bo fall and cordial co- 
operation between tho Cooedaslon and tho soToral nonloipal oox*- 
pc rat Ions interacted* In eases where tho Cooraission finds that 
tho voric of construct ln£ transmission linen can be done efficients 
and. economically by local engineers and their gangs. It would aoasa 
to be a wise policy to lai then do tho worU under tho direction of 
the Oomlssion* If this vara dona tho Rainlclpalltles would have 
no ground ior ootaplainte as to coats, such as were made before us, 
and It would soon be knf^m whether or not tho statements issue by 
l»r* Legato woro well founded*" 



She developesnt plant located at High i^ils on the h'laslaslpj i 
xilver was constructed by tho Oosanlsalon daring the post-war period* authority 
to proceed with this worlc was obtained froa the Go?ornRent on tho basis of a 



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let tor dated Juno £oth, 1913, addressed to Sir Killtim Hearat, by tho Chalraaa 

of tho Coemlseien in which 1 3 contained tho follow lag Infona&Uon re#&rdiz3g 

tho catfca&ted ooot of the High tfalla iteveUpaenti 

Hc ihe tforie eonteisplatcd oonalsta of tho oomploto development of 
the High i'alla tor 3 t Q30 horae-power, and 22 ratios of high 
tonalon lino to Perth at a total eetlia&ted cost of ^340 v 000* ( * 

Cur report on tho Jildoau liyg torn shows that tho imreat&ent in the 
High Falll itovtflopKQiit ae at October Slat, 1922, amounted to £696 9 9&&« 2he 
Actual coot of this vor"*, therefore, e,xcooaed tho eatls&ate for It and tho high 
toast on line by core tlian IQOJa. 

There Is no record of the CoaEitaalon evsr haying adviacd the 
GoTornnont that ita eatiisKA raajeJira tjxccodcd, nor la tharo any record of 

« 

tho Coveraaent having questlonod the see a a expenditure. 

She importance to mnlelpul corporations In the ayatoia of tho 
excodu expenditure npon tho High Falls plant will bo realised when It la con- 
sidered that tho rated oap&city of tho plant is 2800 horee-po^or and that an 
ezcena of coat of «3&$ 9 00d represents an increase of capital coat per horse- 
po*»s9r of ever £127*93, and an inoreaue In the animal oost of po^ror at tho 
point of generation of about ^10«i)0 por horsepower* 

2£* . Ontari o ggaejg JS'ffggMaC 

In our report on She Ontario Fever Coct^aoy of Kiugara ?alla ao- 
tailci roferenco la sodo to the eat lifted coat and actual coat of the construc- 
tion of tho 2hlrd I ipa Line ehloh was undertaken by tho Ccsanlsslon during the 



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or Enclosure to 



years 19X0 and 1919 » la that report, vo show, that, acsordintf to the ittnutf?a 
of tho noetiag of tho directors of '-2h# Ontario 2©wsr Company hold on Deocraber 
23th, 191? # tho Chief ^engineer submitted a report which stated that an eotiraated 
expenditure of vlt&0$ t 0J0 in th« construction of a wood stave pipe lino would 
provide an additional 60,00') horae-power. Construction woris was bosun early 
la 1916 and ooopleted in tho spring of 1919, £ho total coat of the work «at 
y3,614,6?S.o2, or an lnare&se ovor tho ostl&aatod cost of almost 100$. 

We sot out In the report above referred to a series of twolvo 
reasons given by tho eagiusera of the Cauzslaaion for the cause of the inoreasod 
expenditure* In our analysis *» point out that the original estimate was Bade 
before any detailed study of the project had been ssade* % f o farther show that 




the great difference feetuiu.' tKss/eJitliBdted coat and the actual coat was not 
alone due to changes in* end additions to, the design or to additions and oon- 
tlcgenoies that it waa impossible to foresee or provide for, but to a l&rfto 
extent to the osslnaioa of important items and failure to provide for conditions 
and contingencies which should have been tafcon into account* as we state in 
our report i "Shorn ^v-a no study of the coat audi as ^ould have been made by a 
contractor tendering to construct the work tor a iuap sub*'* We also show in 
our report, the percentage of overrun for the sialn iteme of tho wor«c. Amongst 
tfceao items io one in respect of engine vring expenses and interest v/hioh to- 
gether aiaount to over ^240,3)0, and union sere entirely omitted from tho 
estimates submitted* 

Under authority of an Order** in«-C©uno 11 dated February oth, 1913, 
tho Consaiasioa obtained a lean from tho San* of Montreal of *1, 250, 000 to neet 



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in part the coat of thla work. Instead of applying So the Gov«ra$aent for addi- 
tional foada to complete tho work, the Coanlaaion, as pointed out In our roport 
on the Central Ontario liyatoa and again In our report on ?he Ontario lower 
Company of Hiagara £alla, used an tuaount of ^1 ,700 1 000, which had been voted by 
tho Locjlal&turo for construction of workfl In tho Central Ontario tfyatesa and which 
was hold by tho Comal s.i ion ea tho A&mt of tho Govornnent for thla jurpOGe, to 
eomploto tho construction of the 2hird lip© Line. In addition to displaying 
incomplete and incorrect fcnov*le&£o of tho coat of this wor* an<X want of oandour 
in not informing tho Govenasrmt of the actual coat whoa' it was la a position 
to ascertain aacse, tho Qoanlaulon oemittad an ontlroly unwarranted act in 
diverting, for thla work, fends voted by tho Legislature for othor purposes 
entirely. COPY 

^neonston-Chlw^Tvti .rower aavolQiggeafe 

y 

► 

A dotailod account of all foaturoo of thla Itovolcptsent ia given 
in our report there on aubaitted to jfour Honour. In our investigations Into 
thla undertaking and our report thereon, apodal attention waa paid to ttttfij we 
considered a prominent, and vary important, feature of the DevelOf«aent , namely, 
the estlmatea of oosta prepared, at different atagoa of the worlc, by or for the 

j 

CctKslssion and ita course of procedure in respect thereof. $* ahall not here 
fisake any extended oosaaents upon tho subject ffo fully dealt isrith in the report 
mentioned, but desire to briefly suEEjarlso the conolusiona reached by us. 

After EaklnfT due allowance for the magnitude and unirpae character 
of the ^orfc designed and carried out, and tho v^r/ difficult war aixd after war 



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\ tor Enclosure to 



IQl 



conditions prevail tag at that tlwo, our invest l£&t Ions have led us to the eon- 
elusion that ths Coral ssleu and its saelaeora, in preparing the estlis&tes, were 
far too optimist io, and that the eat tastes ware in msuny resiioatg strikingly in- 
adequate* She management of the work: of construction should nover have been 
loft in the ha&&s of engineers already ovortaniensa with other writ, end without 
that T?ldo experience in oonstruaticn wurfc of great magnitude that votUd have 
Justified the Commission in pinning tho nuuutgesumt in their hands* 

Sot only were the estimates, wnioh were from tiiao to tine pre- 
pared and submitted or intimated to the Government, based upon unit coats which 
were far too ifl« for certain important parte of the wr;<, but they wore also 
baaed u^oa undo r-s 3 1 Imatod quantities* ^apla opportunity vm.9 afforded for 
correction of previous •silpai&9'4' ^4 -a-orfc progressed, and actual coots had 
been ascertained, but the Ccmrus&loa persisted in holding to it a original 
estimates in many particulars, i&xX in informing tho Go?ornm^ut on different 
occasions that tho estimated coat would not "bo exceeded, £o the end of the 
year 1913. the highest estimate ao&ao^leugod by the Cocsnission and submitted 
to the Government for the voric then contCfi$>iz*ted was &J84 t OOO ,000 to #£$,000,030 
*hich oost did not include tho intake, the addition of vhioh would briiif; the 
cost to between $£$,000,009 v.v<sl £27,000,000* Jarly In V)Z0 the Chief Engineer 
of the Carasiagiou informed Br* ClerJcaon, ^^ 1B&B thon eompletlng his audit 
of the accounts of the Ccnnlsaleji for the fiscal year ending Uotobor 31at t 
1919, that the cost wuuld be about £43,000,003, an inoreaeo in j)rosi>eatiV9 
©oat within a fe~J mouths of $1&,030,000* After the expiration of another 



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5 



I 
I 

six deaths, on the basis of a r»i>ort of Mr, Stuart and £r« K8rbsugh t the coat 
was fixed at about iS0 t OOO t OvK) # ft further increase of $19 t 033,&>3« The actual 
cost of the vrorfc for which these variola estimates 'sere given "?*aa ever #$4 f 030 f 9&)«i 

While wo find that at leiist $Ut f 000,030 of the difference between 
estimated and actual coat "was unjust; if labia, wo also find f as alrervly pots tad 
out la our report dealing with this subject, that aach of the riuealndor of the 
increase in expenditure was of a justifiable nature, brought oa entirely by the 
abnormal conditions prevailing during the construction period, and for which 
adequate provision had not and to soioe extent could not have boon made* About 
$7,033, 030 is Qooounted for by reason of increased quantities and changes in 
design. She original estimate was too low by an anount of about $4,000,000 
alsost entirely on aeooun\j>£V£i^ JTactjjthat a grave error was mads in aasT83ln& 
that the ehovol equipment could do more than twice "ssb^t it actually did. !&es9c 
scatters ware of a very serious character and failure to recognise and to openly 
ao'ener* ledge the ffilstafces thi-.t hud bo^n made had the offset of entirely misleading 
the Govemaent, tor ^s pointed out, the CoKr;ission continued to maintain to 
the end of 1019 that the original estimate submitted by it to the Ooverassnt 
was entirely adequate* 

It is quits clear that the ostiEiate for this «soric submitted to 
the Government in littV was unsound in eany respects, and It is clear that, 
aside altogether froia the Ratter of increased quantities and chances in design, 
the cost of the wqr-X would fcnva largely exceeded the ostinato even if war con- 
ditions had not continued so lon&* It ia unfortunate that the estiaate was 



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X03 



not submitted to consult lag ois&inoera at tho ti&o that It «?aa auUaltted to tho 
Goverasient, inaWsd of bolng uutaattted to thest yeura afterwards. tSfc have 
no doubt that If it had boon sutaiittod to then at that ttnxs, Its inadequacy 
sad tho extre&o optlaisn shotsu In Its preparation would fc&vs boon pointed out. 

Sha jsattorc Just r*>ferrod to are serious enough, but # r»y v«e havs 
shosm in our report, wore serious still was tho $*ral«ttmog of tho Gofarciasion 
in continuing to uso ao a e&3ia of ocn&zatlng thla t?ork f tho unsound arid In- 
correct aseueptloafl ulAq In tho original ©atinato, ovon though It rrast hare 
knoiwi during tho first year or two uf tho cons tract Ion porlod that Ha expecta- 
tions oauld never ba roallacd* Uo re for particularly to the mist&co saade In 
over-oat teat lag tho capacity of tho ahovola. fffca ahorola did loss than half 

OOP Y 

that cnloh It was antlaip;^*!!.^**/ t&o e&slniatea they would do. *hla led.to 
delays In tho vorls vnlda coald have boon alaoat entirely avoided )*ad tho Coss- 
mlsaloa purchased <uiiitional construct Ion plaat as aooa as it know of Its error, 
It was extraiaaly dilatory, and It \asa not until l&te In 1920 end during tho 
early part of 1921 ti:at the additional e<rulx<nwnt ma procured. &etra Btan were 
then wspioyed &sd tho *?orlc pat on a "rush schedule". Snob of tho additional 
equlptseat ?*as used for only a fo-* months. Che. rush schedule added auormoualy 
to tho coat of tho work without tiddly; anything to it a capacity* A conservative 
eatli&ate of the unjustifiable asoeas coat directly oh^rgaabl© to this jrooodnre 
and other factora is upproxfe&teXy t*X2 t Q0Q 9 0Q0, 

» 

For a detailed stateaent shoving how the additional cost wa» 
incurred wo mat refer you to our report thereon* 



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2Mb la & very striking example which showa the absolute nocaaaity 

for ©stimataa being prepared accurately, for Incorrect eatiisates may not only 
ba misleading na regards tha qua at Ion of finished coat, but inaccurate aasuiKp- 
tioaa.&ado In anah ©atimatea may load to a aosbinatloa of alrcomatatioea bringing 
about ©xoeas oost3 of a totally unwarranted character. 

In our report on tha Vlag&ra Syate«, s?o cosroentad upon tha dis- 
crepancy between tha eatfcs&ttfd &tvl actual ooat of a transmission Una to tha 
municipality of ihmnville* 2ho eraounta involved worn oorjparatlvely small, 
but the dlffaranoa bat^aoa an estimated cost of $3$ 9 03d and an actual coat of 
$46,033 warranted tha citUa^w^-a^ |to^l?lla In expraaalng diaaati a faction at 
the notion of tha GoE&iiaaiua'. 



fha increased capital cost of tha transmission Una increased 

greatly the ooat of po^ox to the 'iotrn of IXinnvllla, but tha Cotsralaalon ftpjaftara 

to have bean anything but frani: with the to^a. X»i darling with tho mattrr of 

increases, Kr« Jeffrey admits that the '1'oroi of Sunnvlllo was never advised of a 

chance that «u modo la plsss which in itsalf lar^oly increased the estin&to 

submitted. Er. Jeffrey as^rai 

w £e figured at that tfca> that the change in tha line fron tha 
pin t^ to tha auapeasion tyi>s would coat approximately 
vl7,0>3 and that of course would Inoreaae tha coat of the 
power to Dttnnvllle, cad I suppo'ss we should h-ivo tcone to 
Duanville and re-auteitted tho skitter and told that w© had to 
Change th> ty^.s of lina and that would increase the cost of 
power to ti^.*3.° 



1 



•jo-Electric Inquiry Commission 

for Enclosure to 



103 



It would appear, therefore, that Sonnvlllo had just asms© for 
complaint. Under the original ©ati£»t©, the rata waa v£7,50 per horoa-power. 
It w&a, for 19££, *37.23» It waa moil higher but tho rat© waa lowered owing 
to tho reduction In renewal ratea in December, 1922, to which reforence haa 
already boon jasdo. 2hia case of the dissatisfaction ©aqpresasd by tha *owa 
of Duanvllla regarding oatinatoa submitted to lt f ia tho old atory, told to 
ua ti^jo after ti&a by rofpreaontativoa of varioua Hydro l^unloipalitios, of 
low «8t3Lsiat0a t and a high coot as acmrpared with tho ostlrs&tea* 

2hat the nunlGipalitioa in the Xrovlnoe should have placed 
lap-Halt confidence la tho ability of tho GccMaaloa la not Btrange, for every 
assurance haa boon givon tap h:/ labile ntteranoea of the Chalraan of tha 

COPY 

Consaaiaalon and jaemb&ra of ui3 atarf thtt ataten:ant3 and figure 1 submitted 
by th&m can ba accepted at all timoa at th«>lr face value. 

y© ouoto hereunder a atato^ent nod© b* the Chalraan of the Cos- 
mission, aa reported In tho "Hail and i&iplre" of Eovarabor £Ut, 1907. Thta 
atatejsent was cade in the early days of the activities of the Comnla lion and 
is typical of others that have appeared from tiae to tlaa dovm to the present 



days 



"I do a lr« however, to point out and e&nrfiasisa tha f^sfc that 
there is absolutely no ris*, either to tho Irorlnoo or to 
the aunlcii ulitiea, that tha actual coat of power will ezooed 
the ajsounta set forth in the by-lawa, as no contract will be 
entered into by the Cotaalaaien for tho supplying of power 
until, frca tondora received for the cons tract Ion of the 



'• 



^o-Electric Inquiry Commission 

for Enclosure to 106 



transmission linoa, tranaforaora and other appliances, 
tho CcEsaisaion has aaeei'tvln<Kl that tho estiaatod <jost of 
the ^orSc will nut be exceeded." 

'•That the Chairman of tho Coranis»icn once had a vory high regard 
for tho necessity of tho Cessation oak lug accurate and roliablo estimates Is 
evidenced by hla caster to a delegate at tho mooting at Gait In July, 1906 f *<h©a 
ho vas promoting tho soheraet At this noctl&g ho ra^s asked *?hat would happen 
should a zsonioipulity accopt the Ooiasii onion's estimate and find feftorwarda 
that U.ore had boon a Rlstako ho fluid: 

"I think to vTould have to appoiiit another CoKKls3lon» M 

In tho caae of Dunnvilio not only «as tho estisiate wrong, but 
tho Cossmission knowing It yis wong, ^ failed to disologo tho Matter until tho 
to , »n was Irrevocably oarss&vt&l. 

« 

Wo hsve referred to tho Dunnvlllo cnoo because thoro was a special 
hearing In tho gilgo of that j&uii a ipulity and also because l!r. Jeffrey Is stftS e- 
ment, before quoted, seta forth in a few ^ords what ^o believe to bo tho general 
attitudo of tho Cccsaisaion in regard to estimtos* Cur investigation has sho<sn 
that eatisates aro a very wsfe& point in the administration of the Coeraission. 
Hza/ of the estira&tes submitted to both the Government and the Jnsnioip&litiea 
were ar^parontly prep^ed without any serine of responsibility on the part of the 
Cossnisaloa, and with tho object of securing authority to proceed with tho work 
rather than to give to tho Government or the nuni cipal it ios a clear ido* of 
•rob&blo coot* 






pro-Electric Inquiry Commission 

U for Enclosure to 



107 



§su&XmJk 

Wo have olroady X' s °l n *ed °^^ that the price ohartjeable .for poorer 
to nraaioipal corporations which have entered Into contracts with the OoKreisaloa 
for a supply ia f to a largo extent, dependent upon the fixed charges in aonnec- 
tloa with capital investment la works, oonaiatirift of proportionate payment a 
for interest, siojtlng ftuad and renewal reserves which together often total &$ 
each as eighty- five per cent, of the "cost of power** f payable by these r&nioi- 
pal corporation to the Ccssrciaslon. 

Ehe clear intention of Tho Power Cecsslaelon Act waa, and still 
ia, unloae aiaendmenta, to wMitfr^rrj^jr refer later, Indicate a change of 
Intention, that the electors of tin,/ municipality coutrarspl&tln£ na agreement 
with the Cora-iisslon tor a ta^ly of power ahnll hayo fail opportunity of 
ascertaining the price to to paid before voting upon u by-law authorising 
the execution of an egreerent. 2he Act provided a aiisple and wall-defined 
method of procedure. Any camiolpal corporation was* privileged to apply to 
the Gonsl salon for a supply to It of electrical power or energy* Ehe Qoascla- 
slon was thereupon required to furnish to the corporation a statement of the 
isaxlinuTa cost per borse-pewr at which tho power would be supplied at the 
point of development or of its delivery to the Ctfrarii salon, and an estir.&te 
of the cost of a tranwnl sales lino* S?he Council of the corporation Might then 
enter Into a provision.*} contract with the Cor^lasion, ishioh contract wua not 
to bo binding apon tho oorporatlon until a b. -law approving tho sarco huA 



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f for Enclosure to 



103 



received tho assent of qualified ©lectora. *h© ©stiiaatoa of the GoKssiasloa 
or a ausmary thereof and a copy of the provisional contract ware roquirod to bo 
published With or to fona part of the by-law. After assent of the fclootora to 
execution of the eontmot by the corporation and approval of the Lieutenant-* 
Governor in Council, the Oo&niaaion ma authorised to execute and carry out 
the contract, and to do all aota necoa s&ry for that purpose. 2he Province 
and the Commission were declared to bo free of any liability by reason of any 
error or osnieaion in any oatinatas, plans or opacifications pro-pared or fur- 
nished by the Conscii salon. 

"hia course of procedure still forma part of 'Xho Power CocKitiSiiion 
Act and ia got forth in Suba^c^Voisd-JiL) Jto (6) inclusive, of Coot ton 13 • In 
1914, however, iktbsectioa \T) v?rds iadocfaa an a&ondE&ent to Section 13* She 
history and effect of thia manmtooitt has boon reviewed by our Legal Advlaera 
In a report to ua on "Legislation Affect tag ftmar Undertakings of the Hydro- 
electric Power Cocaiaaion of Ontario", which ha a been tr&nar.ittod by ua to Your 
Honour, It appears that a aection of Shi Power Cotarsission Act, 1909, was passed 
to coot special oiromaatanoea which bad arisen in connection \?lth the contract 
befseen the Copraiasloa and the Corporations of Toronto, lies ilWa and other 
naniolpalltiea for the supply of power from Slagara i'allo. 3?ho object in view 
appears to have been to penal t othftr municipal corporations in wontom Ontario, 
not parties to the contract but the electora of which had voted favourably upon 
a question submitted to t'.-sn pursuant to the l&nlotpal Atxmdnent Act, 1933, ao 
to the supply of electrical power Iron the Coeaaisaiou, to enter into contracts 
with the OoDsstaalon in the fora act forth in the schedule to too axound&ng Act, 
without subaittin^ a by-law approving the •ami for the assent of the electors. 



.Electric Inquiry Commission 

>r enclosure to 



109 



la 1914, the section of the *\ct of 1903, redrafted Into a fora 
to mako It of general application was added as Subsection (7) to !5ectlon 18 
of the general Act* 'I'ho Intention of the Ccensriisaicn, If not of the Legislature, 
ia absolutely oloar In procuring the •n&ctroent of this Subsection (7), It 
provided a simpler and noro effective procedure for validation of contracts 
with Kwnicli<al corporations, and avoided the necessity of publishing estimates 
of costs of power to there. It is not surprising that, as stated to us by &r. 
lope, decretory of the Ociaalaslon, the Corarclaalon adopted the polioy of not 
publishing the estimator* with the by-laws on the advice of Counsel. Although 
the Act relieved the Comisslon frora liability for all error or omissions ia 
its estimates, the removal of all causes of complaint on account of errors 
or emissions would oowaendfitsilfltjsAj^Cofaalseion. Xt la, howovor, anomalous 
that there aro two distinct courses of procedure in relation to contracts for 
the supply of power to ranlcipul corporations in The Power CcsKiission Act, one 
of which has beoorso obsolete frcsn non-use. It ia to bo noted also that An the 
opinion of our Legal advisers, it is questionable if the laothod, now universally 
foUowed, is authorized. 

JProa one point of view. It ia iwraterlal whether or not the 
eetiraatoa of the Cors^iarjian are brought to the icnowlodf:o cf the electors of 
cualcipal corporations through publication thereof, as parts of by-laws, or 
as appears to be now usually done by infernal and at tirce tnlsleadinfl or 
isl sunders tood statements by officors of the CoEsalsssiou. itomal contracts in 
which the znaslcMn ooat of ipowor at point of delivery to the ConKisaion is 
fitted are ov>oa to ■wndnsnta by the Legislature on request of the Cojxdoi^ion, 



.so-Electric Inquiry Commission 

f0 R Enclosure to 



no 



aa ma tho contract of ISay* IW8« vlth cranio ipal corporations of tho JTiagara 
System, \Jhen,by *ho Ontario i*iu@ara ttevelopoumt ACt of 1917, tho provision 
in that contract dotemiains tho rsaxinun cost S3 froja nine to ton dsll&re 
per horso-power per annua according to the total quantity supplied, m* 
eae&dod and tho Kuaioipal corporations x?ere directed to pay the average coat 
to tho Coeiaiaaicn of povmr generated or purchased by it troti plauta at 
£la$ara tfalla or its vicinity, 

Tho atatomuta ando by the Chalitaan of tho Commission and <]aotod 
on pages 105 and 106 of this report* are far frgs3 bo lug in accord with re salt a • 
In cur roj>orta on all system, ttc have included tables giving comparisons of 
estirsafcea of oost of pQWaKa^^l^tM p tho CotSKaiasion to tho reunicipalitios, 
with the actual coat to tho Kunioipalltlea* In a mjority of the systems tho 
actual coat haa exceeded tho oatizaated coat. In all but one of tho cranio l~ 
politics oonpoaing tho Eugenia Oyatem, tho yearly average sotual cost, bo for o 
giving effect to the reduction in renewal charges, exooeaed the ©etiisated 
cost in varying dofpreea run£l"{* fron l£ to 187^. 2he actual cost to till 
xaonioiT/iil corporations of the i*t« L&svrenee Syatets, before reduoiiig renewal 
ohjirees, exceeded the ostteatod cost by from 3i£ to lil>. 2h© excess in the 
case of the Shonder Say iJysteia was groat » In the Severn suvl tfas&all'a Systesm 
the excess vaa not as great aa in other3, but s*aa apj 'rocl&tolcs 

2he situation of tho asuilolpal corporations in the Niagara Systera 
has boon indicated in our report thareon, and an analysis of eatimatea and 
act i.l sosts shows that ab^ut frjfi of the runiolp&lltles in the syoton are 
receiving their power at a rate equal to, or lens than, estimated cost and 



r o-Electric Inquiry Commission 

por Enclosure to 



111 



sJbout CO> are paying esq ro then oat banted coat. r *!ho differences in this 
system are not nearly so great, hoover, aa thoao encountered elsewhere and 
lt3 situation in comparison with others Bii«y he con3idcu*c*d a satisfactory one 
as the present ti&o. 

As before in&ioavod, errors in eatlwatos of fch« coat of po^ar 
to a prospective eustoraer pwy arioe from a variety of osusas* chief wiong 
these »ay bo aoutianed orrora caused by inaorreat estimates of capital coat 
of woriea, and incorrect assumptions with regard to the load that will bo taicun. 
9a havs definitely deoonstroted that tho Cosrila3lon haa frequently reado 
aerious errora in ita e<}tJbaatea of capital coat, and thla haa resulted in 
inoorreot estimates koine antral t tod to isuni dualities covering thalr coat of 

rnpv 

power. The second cans* s^p w^p&icj^ n«jply f that of inoorroat assumption as 
to poxjor loada # ia also a aoat important Kattor. £0 find that the Gets.", io a ion 
haa again and again fcrautly over-eat Imat ad the amount of po^or to bo telcen by 
fe nanloipallty, and aa tho pow«r laid regulates to a largo extant the unit 
cost per horsa-pever, tho giuniolp-'iiltifja In many oasos have been totally 
dialed regarding tho price that they would have to pay, 

2he Cess ice Ion kus stated to ua that oiia of the main reasons 
leading to the error sonde ia assumed poorer loads, «?aa on account of mulii- 
palltle* being or er— optimist ia aa to tho assount of power thoy could oonatuse* 
Thla in no ^sray rellereu the Commission uf responsibility in the iaatter v for 
the sujority of sunioUkMlitiea throughout Ontario fcne* llttlo of such setters, 
aa.1 place entlro reliance upon the guidance and Jn&ftjsent of tho CqeejIssIcu 



Lro-Electric Inquiry Commission 



f or Enclosure to XI S 



and Iti officials. We believo that it la the duty of the Coxataisaion to see 
that its eatijaatoa to the Kunicipalitioa are based upon loads that any too 
definitely expected to obtain whan the sarvieo la installed, and in aotual 
operation* It la little or no contort to a municipality to bo told by the 
Cosasisslcn, as Bony nuniclpalltloa In Ontario have bo«?a told, that, if their 
load were three ticooa as great aa It actually la, the coat of power to the® 
would not be fire&tor than the ostUaated rate. It la th© duty of the Oosw 
alsalcn to see that all municipalities are dealt with frankly and supplied 
with actual facta, and not with information baaed upon hypothetical oondltlona* 

After a thorough Inspection and examination of the several 
porta of many of the worica controlled end operated by the Cctsnisnlou, "®e came 
to the conclusion that in the design and construction of those erected by it 
or under Ita direction, the Caaalasion had la view as It a main objective, 
the installation of plant and oqulptaent of such character and efficiency that 
operating difficulties would bo reduced to a d in ten and the durability and 
usefulness of the wortei for an extended period assured* 

Shis tsus forcibly tiapresaed upon us In comparing the development 
worics at Usame^ Falls with other plants In the Central Ontario district, which 
had been constructed by the company operating thest prior to the purchase "by 
the irovlnce* 2he oo&Eaents on thla subject of our Consulting Engineer, frosj 



:o-Electric Inquiry Commission 

for Enclosure to 



113 



which w© quote* oxproea hia 9 uc ??oll aa our 9 vlowcn 

H i"rora a oouiuariaon of qonaltlono at the varloua nltoa 9 and 
jBn&lng allowance for the diffortfncA'? In head und In the con- 
structional features, and for tho dates of count ruction. It 
cii-vy bo stated Uiut t('0 ., annoy i'Viiis plant could have boon 
built at a somewhat walor oo»t per horwo-po^wr than wa3 
actually tho ease* 2he i^annoy i'ulla plant ha a fo;».taroa of 
do3lga whlou undoubtedly tiro moro expensive In capital coat 
than at many of tho other plant a • 'i!he reinforce! oonaroto 
p€>natoo*c3 % &ho elaborate reinforced ooroll oases for tho 
turblnos 9 and tho reinforced oonoroto draft tubes, together 
with a number of tho electrical features have nil been doalgno& 
arid constructed having In mind very hi(;h grade oonot ration and 
hi en efficiency In operating condition!. She policy of tho 
engineers of (he hydro— loo fc.vio iower Commission apparently 
h^o boon to develop this alto for tho maximum of/lolonoy In 
operation and to pluoo In tho plant every feature making for 
absence of operating difficulties and tending to lonf: useful 
life. 



M The other plants on 12*9 wtflteHk^flre all designed by a prlv 
company, and boar omdeinejof^ae| fact that tho designers 
primarily in clad a rV£urn oh the Invested capital In tho 



vote 
hisd 
form 

of dividends, aa well ae giving; a Rood service to tho customers 
served • 



"The above construction policy of the oni,'l»eora of the hydro- 
Electric lo^or Couulaelou of Ontario seems alao to have boon 
applied In building tho transformer stations and hitfh tension 
transmission lias*»" 

Tho Itannay la in Development, bolnft part of the Central Ontario 
System t wai, of course, n Provincial undertaking, for th© aost of vhioh no isuni- 
olpal corporations hivd assumed any liability and It tma to be expected that, as 
Is usual with undo rtuklnKs distinctly of a public character In vshioh no olaaa 
of the ccmERinlty lo particularly concerned, tlxo aar;:e regard vas not paid to 
capital coat aa night have beon paid, wore oondltloaa different • She governing 
factor In thla plant was the nooeaelty of oonaervlng to the ful est extent tho 
water supply and man expenditure was made to attain thla end. 



Iydro-Electric Inquiry Commission 

&p y for Enclosure to 



ffifco design and construction of other works of tho Comissioa 
and notably the aioonatoa-Chlppa^a i-otroy Devoloph-teat, diaplay a nieety and por- 
foot ion beyond orltlalsKU ©mi dovolopEont wor&a at Caiaoron jails, £hundsr Bay 
Syaten, aro of tho highest order. '4ho high standard aot la tho afortsaont lonod 
caaea «m not Maintained to tho aawo dogroo In tho oases of tho davoloxft&oxit at 
High ia.Ha, SttgoalA itolls and tfasdeil 9 s jfclla, but evon thoao conpare favourably 
aa to design and oonatruotion with plants of -private corporations or otltora* 
In tho rehabilitation of tho ihmd^ioh, Windsor and Amherst barg liaiiway, and tho 
windsor and Seouiasefi Electric Railway, and tho Quelph radial iuUl^'ay, tho *A>rk- 
Hanahlp and material war® of tho highest class and oon&uoiva to penooaance and 
to facility of operation. 




Bo r9a3on?iblG\iii5,iko«U5:i cm bo node to tho Cojsfsisaion providing 
works of a standard of offiaioncy and pornumence not cr.pl oyed olsoKhore, but 
thor* la a point at "which extra coat for elaborate design and W)ri<a<inahip becomes 
extravagance and lr* unjustifiable* 



55io Cossalsaion h&a constructed practically all tha nore important 
development woriea with its own construction staff. V.o have, in forc»r reports 
and particularly in that upon tho tiaoonaton-Chippftwa tower Dovelopaont, ex- 
pressed oar opinion that tho Province and contracting cxiniclpal corporations 
would bo batter served wore tho CoEsaia^lon to dsvpto ita pro •< eat organisation 9 <i 
tUae and energies to duties othor than thoao relating to construction work: of 
tfci£nltudo» 



ydro-Electric Inquiry Commission 

, P Y for Enclosure to j^0 



l 






In that part of our report oa the .ueonotoa-Chlp-j a'&a Power 
Development dealing with construction ^roooaure and Eana^ejiient , wo have not 
adversely criticised the Ccsualaslon for deciding to conduct directly, con- 
starvation operations* i%% wo hay© pointed oat, It would havo boon l?s7>03sibXe 
to obtain a fira bid fro« any contracting organization for doing this work, 
and had the *ork been loft under any form of contract other than the straight 
coat plus a percentage basis, the enormous increase in labour and material 
oosto during 1919 and 1920 might have resulted In financial ruin to tho con- 
tractor, with tho result that tho Comics Ion would have had to fiaiah the 
woric with Its can force* Bs are f however, f Lraly of tho opinion that haying 
decided to construct tho wotfc lfcaolf, the Coitraisfjlon ^3 seriously at fault 
la not creating a separata aoxr.iriucit^iJ^fpartaent under tho direst ten of a 
qualified manager of construction* She facts supporting our view In this 









eouneotloa will bo found in our detailed report on tho Cnecnston-Chlppawu 
lower Ziovelojeeut, imA It sould be taboos ibio at this place to glwe even 
the briefest susrsary of the salient features* 

She forego ins review leads na turally to the question as to 
what procedure should bo followed by the Corliss ion in the? future in reference 
to the method of constructive its wer&a. Share is mxch to bs said in favour 
cf the view held by those in a position to teaow that ;.-ubllc or softl^-publlc 
work is subject to inherent handicaps m& difficulties alKost irpoeslble to 
overcome when eenotruotion is don© on a force account basis, instead of on a 
co-tr: st basis. Certainly v .YAv is so, whoa the work i'j not nrdar the menage- 



fDR o-ELECTRic Inquiry Commission 

py for Enclosure to ^ g 



mont and control of rccm ©socially qualified in such is&ttora. Syeu undo? 
normal conditions, oircuisstftnoos W& bo auoh as to snJce It doHrablo and 
expc&iont that ^oric bo conducted on ft force Account basis, tut in ouch 
an crent wo bollevo that OUT r»coer*mdatien3 with rospoot to a soparatft 
construction organisation would bring tho boat remalta. 

Sine© tho mmoys necessary in tho construction of l&rg« 
devolorsjents cast bo adyusood by tho Province* tho intorosts of tho Province 
Kttst bo protected to tho gre&tojJt extent possible. xhsn there is such to 
bo said in favour of haying future \?orka const meted on a contract basis. 
If this wer© do no, tho flortrnaont would know as nearly as possible! whsn 
authorising a werfc what tha cost would be* Tn& Cera ins ion would then 
assume tho rolo of super? iJLr, wtr/ufca tijfo &£*ncy of it 3 engineering staff. 



; R O.Electric Inquiry Commission 

, F0R Enclosure to 



117 



In order that the Coexsltalon Knight hav© ftm&a to moot tho cost 
Of vorko and other outlays to bo nado by It In connection with tho supply of 
elaotrioal power or energy to cmnloipal corporations sjoX othora, tho orl&inal 
rowar Cotsai88lon Act of 1905 provide*! that tlw Lieutenant-Governor in Council 
might froia tieo to tino raiso by woy o£ loan la tho nanner provided by tho 
irovinoial I*©ana act ouch auw:.i a;i tho aioutoaant-Oovoraor In Couiioll Might 
doom requisite for tho purpoaea of the Act, and that each au&s alghfc bo paid 
over to tho Coaaisnlon fmd/Se^u^ E)atk^inted for and audited in tho jaannor 

provided with rospeot to the isanjigcnEent of tho public revenue nn& public ' 

< 
aeoounta* 

2hia source of supply of funds la still available under tho 
Aet aa it la at present, and prior to 1316 waa tho sol* aouroe fron which 
moneys could bo obtained for puri'oaoa of tho Ot.*Brsiaaion. la 1917, and sub- 
sequent year a aE*-mde:&nta to tho act and tho enactment of other Statutes 
author isod other neana of financing tho undertakings of th© Coraaioalon. 

Sfco procedure laid down by tho iiot of 1906, and still applicable, 
h&a ne^or been strictly followed. It hao not been tho practice for tho 
Lieutenant-Governor la Counoil froa tir^e to tirae to raise by «ay of loan 
epeciflo suss for the purposes of tJ»> Act and to pay suoh soma ovor to tho 
CooRisalon. iram:*! appropri&t ioaa were voted by the I^egialature for purposes 



{ydro-Electric Inquiry Commission 

•opy for Enclosure to - - q 



of tho Act and those ha^o boon droon upon 1)/ the OosEaisoion ua required, and 
paid oat of funds in the hands of tho Irovinoo obtained fron the proceeds o£ 
Provincial loans for gouoral purposes. Prior to 1917 f tho Coranlaalon furnished 
to tho Government a ataterasat of the Bsxmnt requirod for Ita purposes for tho 
ensuing year wtthotrt furnishing particulars of tho astounta required for Ita 
dlfforont uadartaJctnfta, and tho stus caked for was voted by tho Legislature. 
In 1917 and subsequent years when appropriations wore voted, definite amounts 
were allocated to the several purposes for fcfcioh they wore asfc&d by the Cassis* 
sion. Sae Ontario Siagara D**volopB»at Act, 1915, shows tho first departure 
fron tho original ttsthod of providing funds for any undertaking under the 
control of the Oossslsaion, and definitely provided that the cost of the works 
oonstruatod or acquired undoxJl xjsAcfcld ie jaot by appropriations by tho Legis- 
lature* 

In 1917. 1918 and 1923, substantial ohan&ea wore &ado in tho 
provisions of 2h* icwr OofflKisaion Act relating to financial trana&otiona 
of tho Cc2anl3sion« Under the unending Acts of these years and under The 
Ontario Niagara ^ovolopnont *>ot, 1317, tho Ccsrrdasicn obtained greatly ex- 
tended powers, and there was east upon tho irovince responsibility and 
liability. United, not by tho will oxiA vote of tho Legislature, but at the 
discretion of the Lieutenant-Governor in Council. By She Power Ccsriasion 
Act, 19 17, end by 'Xhe Ontario Iiin£ura itovoloprftont lot, 1917, the Coaraisslon 
'was authorised, upon the aathority of tho Lieutenant-Governor In Council, to 
iss^e bonds or other securities for any purpose within ita jusis&iction, asid 
to enter into &>?*/ contract or afproereont In connection \*ith th« acquisition of 



RO 



-Electric Inquiry Commission 



. r Enclosure to 

119 



any shares of &?& ccrcpany and assure the obligations of each oonpany* ?he 
Lieutenant-Governor la Connoll vas authorised to passant 99 the bonds and 
perforates of th3 cor onants of the Coraalsalon. 

By 2ho Power Connies Ion Act, 1513 1 the CocKlsaion ^fas authorised, 
upon the authority of the Lieutenant-Governor In Council, to borrow riou^y for 
ita purposes and Issue Its bonds, debentures and othor eeourltloa therofor and 
the aleatonant-'Govornor lu Council wao author i»e& to gaaranteo the repayment 
of loans nesotl&ted by the Comisslan from banks, or so? othor Indebtedness 
incurred by the Ceeni salon to any extent. 

*S>o lower Co®al salon ;.ot of 19£0 authorises the Lieutenant-Governor 
In Couasil to issuG speoiAwjfcrants far pa?»nnt of stoneya to tha Cosnlaaioa 
vhero an appropriation raade by she Legislature for any iserte of the Cos^laslon 
has booQce exhausted In any fiscal year, jmd the Chaimaa reports that It is 
necessary and expedient that such <#oric ahall be proceeded ^Ith, &xvl that an 
additional osount Is required for I hat purpose* 

Aa has been previously stated by ua this aasan&iflont of 1^£0 to 
The Pofc'or Oocsjalsalcn Act mi not expresaly rmoe applicable to vrorfta being con- 
structed under The Ontario Niagara Development ^st, but it waa so applied and 
advances isade for ths siteenaten-Ohippaws Power Devolovoont tfsioh were not 
covered by appropriations voted by the legislature. 

la effect, under present conditions, aj j.roprlatlcnc voted by the 
legislature for purposes of tiie Oonsralaaloa are no India* of tho otaeuat ti^t will 
be exvonded by the Cosrsission or a&v&aaed by the jrrovinas, nor of the liabilities 



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f0R Enclosure to 



120 



that will bd mwvmA V the Cucstiitslon and guaranteed by tho rrovlnoa in 
tho wrrtafc or oaauing flaenl yo.^r. ±i*s legislature and the peoplo of the 
irovlnoo OQi»t roly on tho aaimrsnoea of tho OoKsralaalon that sono day in »©&© 
my ircvlusi&l advances will bo repaid and Irovlnoial llo/oilitlea released. 
Statutory aaoadironta ro&arding the Rethode of obtaining funda for tho purposes 
of the GcsnUaiou have resulted la a vory *?ide departuro frora the pr&no lj>le of 
Logialative oontrol of, and responsibility for, all expenditures of irovinol&l 
»oneya» 

i&J ^^^^LM^jM^M^iSm 

Slnco lS17 t Wi >s*<rl(prlAlon3 of tho Legislature irvve not been 
voted In a lump sure, tat have be*m eaimrtesrd for specific Dorics pursuant to 
estiiratoa cubsitted \y tho Conraiaalon. It appears frow tho report of our 
Accountants that the Conmlsalon haa never considered it a matter of spscial 
importance that tho annuiil expenditures on a epeaifio vrorte should not exceed 
tho appropriations or tho advances in respect of tho appropriations for tho 
purroEea of that trottc* for example, an appropriation has besn votol by tho 
.legislature for the -*uoenGtcn~0hippa7ra fever Sevolcptwmt In each year a lace 
1917, yot prior to 1222 the expenditures &a&o by the fioaalteion for (fcteenston- 
Chlpp&^R6 r&guiarly sxeosded the ndvauoos* Full detail a of the Ksrner In -fchieh 
&dvancoa Ters exceeded ts&y be obtaln«>& by referring to our report on the 
iiueenatcn-Chippawa lover Developnent, bat we ^ould here polr*: .- J iin cf 

the outataa&irg f<*ota i:i oor.ru; ot Ion tuarovLtlu 



.-.-Electric Inquiry Commission 

.-,r Enclosure to 

123. 









Curing the flYe~y«ar period ending October CJlst, 1981, the 

irovinoo had advanced la reaped; of appropriations, *53, 04,0, 674, stnd the Goes- 

mission expended over *03 ,003,000 upon the Quoenaton-Chippami Power Development • 

2ho ftalanoe of aee-.it <*5, 000,003 wua, In the «>ords of l r r. Clarfcsonj 

"applied out of taonoya advanced by the Province to tho Ooa- 
Kiiflslon for the purpose of other svatens to the extent of 
v*, 003, £16 &jii out oi' renewal anl ra serve funds belonging 
to tho Hia&ira Syatea to the o At oat of <,1?1,4?>»00«" 



Ag at Oat after SlSt, 1922, the advances totalled #>1,£73,645«00 
and the $jq>endlturesj totalled y05,f>3,2,01&.00. 



Although expenditure have excaoaed advuncoa la respect of appro- 
priations for nsiay othiar ww^ve^ t^^opsttiasion, the ^aeeaatcn>*Ohlpp£am Tarnr 
Development has ftson used as an illustration fcocnaoo it is being constructed 
undsr tho provl3ion of the Developnont Acts, or la other ^ords She Ontario 
2?la£ara OevolopRiont Acta of l»l»J tm<l 1917, which spool floally provide that 
"the cost of tho contract loa.«. of tho wor»ca..» shall bo defrayed out of such 
sonov aa ma/, frcn; tirso to tine, "oo appropriated hv the legislature for that 
purpose"* 

Xa cur report upon "he Ontario tower Company, wo huvo described 
the Banner In vhlch tho OeoRisai'.?i financed tho construction of the -hird Pipe 
Llna. 2Io appropriation la respect of this worie was voted, fecit under authority 
of an Order-ln-CouncU, a lens of vl, 253, 030 w^a obtained frosi the Bank of 
Montreal. The ©stinatod coat T -?ita yl, 80S, 030, tho actual coat exceeded 
^3,500,033, She CoKni salon did not apply to tho Legislature for any apprcprla- 



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^ fo r Enclosure to 



122 



tlon or to tho GovorBEtent for a (gaorantea of en additional losa. la ear 

report on 2ho Ontario Power CGegxiuy* *?e ea/t 

"... there waa lying lu tho hand* of tha Cccsnlgglon 
vl,703,OJO which lied boon voted hy tho Le£;islataro for 
oenstruatien oi wortca lu t.'w Central Ontario :>y3tca and 
which Y&;a held try tho Com 1 3 3 ion ao the ©rent of tho C-overu- 
Qont« Without wxy authority frua tho Covrns^nt or tho 
Legislature tho Coming ion took tola own and uiwd it to 
complete tho oonatruotion of tho third pips llr.o t 2hia 
waa lajcr pa.id baol* out of appropriatUno for tho Biegarft 
Syetoa." 

59}i» setter la referred to In aevor&l of &r« Olarkwm'a rep-arts 

and wo draw attention to hlo eoixrioat In our report entitled ^^OBai&atloa of 

.Audit or* a jstoporta for period 191 £-1921 Inclusive". In that report "so srtsto; 

"It la clear that tha^opt^Jron f^-^ 1 /^ th& Cccselaaion in 
diverting faula vot<^^v^^4^vr.'*.Y Ontario, for vcrlsa In 
ayatema operated by it under She *'owor Cccr.'iaalon *et f 
waa wholly uirrarmntod, and tho Auditor waa folly justi- 
fied la bringing the Matter ye^r after year to tho 
attention of the g o ve rnm ent of the day. She aotlsn. 
tc-ucon by tho Cacniaaien In diverting funds w&a never 
approved by tho Lrf?c;i£iutv.re. M 

Again in our report on tho Contr&l Ontario Syatos, «e point oat 
that the aoney votGd tt^ tho Lo&islaturo for this ayatas, waa diverted by t^j 
Co22Gl83lon and ozpoaaed* sot on property dlraotly purohaaed by tho Irovlnoe, 
but oa planta throughout Ontario that v*ore oonat rooted or acquired and vara 
beiisg operated by the CosKiaaloa uitder tho provialona of tho i'owar Cossslasloa, 
lot* 

la hla 1¥X9 report, SUr« Cl&fitaoa shows that for tho f local peer 
ending October 31st, 1919, the Cased 33 ion rasde requisition upon, and obt^U&£ 



IoElectric Inquiry Commission 

oB Enclosure to ^gg 



from, the £rovina# the Steele of tfea noney* Included in the estimate voted 
for that period, and that after expenditures of portions thereof for the 
speaii'io purposes for which they were voted, there rexaiined In ita hands a 
total of over $S ,000 ,030 uhlan It expoaded ou othar system In exeeaa of 
appropriations provided therefor. 

In the saese report, Kr» Clr 4 ricaon ttateea a state&ont which shows 
that the Cojxaisaiun waa lax In not exercising definite control over expendi- 
tures, for he aayst 

"It Is apparent that the rar.bers of tho Coc&lsslon - of thost- 
seires - *?ore not fully soiled of tho extent s fey which appro- 
priations were bolatJ exceeded or nonoya being expended for 
parpoaea other than thosn for which appropriations had been 
&a&ed* With tho matter drf>."wn to their attention, steps 
have been taiom to keep eauctt&is^rpa within appropriations." 

Ptrhaps tho sjost glaring Instance of fclsappropriatlcn of fundo 
Is found In the notion tatesm ly tho Coaalaaion when, la the year 1320, the 
sua of over $1,039,0$), tEfclch had been obtained for expenditures on systeraa 
and ether daly authorized «arp03ea, was expended by tho Cose 1 salon In conns op- 
tion with Kydro-^lsotrle Radial Railways, for which no appropriations whatsoever 
had ever been tsado* 

Soring the period frcis 1918 to October 3iat, lS)£a, the Province 
advanced the Ccssaisalon $&,4&2«69fi»27 for tho Jhunder Bay System, while during 
the a?-rie period the Costal s-s ion expended on this systvn §6, 633, 331 #93 or 
$1,9£9 ,369*81 leaa than the anount advanced by tho X'rovlnoe* S9» difference 
between these two stuns was tised by the Coaniaaion without authority, end 
apparently without the knowledge of tho Govomment, on other nndart takings la 



.qro-Electric Inquiry Commission 

w for Enclosure to 



m 



©SL9G33 of tho arjcnnta advanced thorofor fcy tho /.'rovtnso. Shit diversion ^^3 
oaiy on# of rss«Vt an(i 9ha&a how little control tho Government had over the 
oapondltnroa of tho Cotsslaaion and how little regard tho Cuswisalon pold to 
the spooled trust a ui<m afcioh it received tho isuaaya. 

jfaLlo'f-?*** of ^ao.ryo^ oii J CapL^l,,AQooiml. 

9ho Coiaralsslon has not oaly nla&pplled specific advances from 
the lTG7imo t but it has employed Its rtms^al and other roa«rvo funds oa 
capital account, often ^poa ^orlca of aystosia other than thoae in roapeot of 
which tfcoy «ore established* For ez&Mplo, tho i«s803C ^yatem m3 purchased 
by tho Ccnzaiasicn with tho a-.^proval of tho flovorrcvent la I91fl* It la not a 
ayateia within the Kenning jrlN ^0^*13 f\to?a is. ilea Act* 5?o quote fro© tho 
15f£l roport of Kr. Cl&rtcaon, at jw*g« 63 i 

*2o October 31, 1983, the COHrslealon hod artv&nc*d £>149,&lo'«33 

to the Ssaex iiyatom out of renewal &n& other ronorvo funds 
hold by it to tho orr-ait of other power ay a tone j la tho fiscal 
year ending October 31, 19£l t such advances wro reduced by 
*££,37&*&* leaving a balance still owing as of date October 31, 
1921, of $12?,HX*84»* 

2he renewal reusjrvoa of tho Coercl salon have* aloe boon employed 
froai time to tire ia tho construction of tho : jieeaaton-Ohlx^a«ti lou^r Stevelop* 
coat* 

So <ntoto the concluding paragraph of our report oa tho ftsvora 
Syetem 

"She expend Iturea wade by the Cosrdffiitoa la purchase of she 
properties of tho f5l?wc* ikllw^r & lower 3o»pany and upon 
extenaica of the #ig Chute pl^ait and for transr.il as Ion lines 
do aot appear to hare been provided for by appropriation* 
specifically ra^de tterafor or in general appropriations 
applicable thereto, &ad were presuaably »fido frori the 'general 



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f0R Enclosure to 



125 



fend* of the CoHRiaaioa and i&oncys therein dertv&d from 
aourSoa and for purposes unoonnacted with the :;0V3j»n 
System. She diversion of glands In tho h*>n4a of tho Ooes- 
Ein.iion for one purpose, frea that to another la, la our 
opinion, not only ens! so, but also Icpropor and unwarranted. ** 

Ptyorfrlca qfi fan&a f ay Pjanntfesrlaed luraoaaa 

Sot only has the Cos-uloaion frequently expended softs ©a spool flo 
worses la ©access of the auvaucoo In respect of appropriations therefor, either 
by way of employee? at of funda expropriated for other purposes or tho reserve 
or other funds of tho CouBlssLon not properly applied on capital account, but 
It has frequently ineurrod heavy expenditures In reaped of works for ^hioh 
there was not and novo? had boon any appropriation or advance by tho Province. 
We have subnlttod a speel<£ repot' try ttjfled "]fydro«31eotrl6 hadial Salleqgrs" 
which serves as aa assailant illustration of tho diversion of funds to 
unauthorised sxpandltares, 

Tm total diversion for l^rdro-Jleotrlo .aadlal Hallway purposes 
to the ©nd of tho fiscal year, 1S22, was approximately *1, 109, 000. Although 
this re-presented tho greatest diversion, nuns reus other eauttoplas night bo 
sited; $11,903 *g : a disbars od to finance ehut Is properly known hh the Be41ftl 
Cazopalga prior to tho annual Esunicipal ale ot ions of January ID 25; a very 
considerable sua was used la connection with tenting operations on land pur- 
chase for the purpose of the : h ueeii6ton-»Chlppa.wa lower D&velop&ont; tho use 
of lower CofssiisslQa funds temporarily In the construction of the London and 
Port Stanley Railway waa aaso lately unauthoriso&i and all the preliminary 
expenses Incurred la the purchase of the Sandwich, Windsor and .aaheratburg 
hallway wore oat out of tl» General i?und of the Corani salon without a shadow 
Of authority. 



?o- 



Electric Inquiry Commission 



F0R ENCLOSURE TO ^ 



Speoi&l attention la dlreotod to Exhibit IIXo to Iltf, Inolu- 
slve, of Price, Watarhouse & Co.'s report entitled "<tonoral iieport on Inves- 
tigation of financial aocoanta% dated January 26th, 1923. i*h«so exhibits 
show appropriations, ansa advances, expenditure a, the amounts ovor or undar- 
txpendod, and funds borrowd frou out a Ida sources for each of tha years from 
1313 to 19£1, inclusive. In these i&hlblta, the geuemi practice of the 
Coot lsslon to employ jfouds appropriated by the Legislature for specific 
purposes oa works other than in respect of which they warn appropriated la 
olearly shows, 



2ise practice of the tenia a ion In exceeding the Loglslntlvo 
appropriations, diverting ftitfiV^Je ideally voted for ona purpose sad am- 
ploying thea for another purpose, and usln^ funds specially Intended and 
votad for ona purpose on wholly unauthorised wori;, shows a total disregard 
of it 3 duties anil obligations. It has aeon elalcted m-jty tic* a that war oon~ 
dltlon3 justified this pztostlee* Sney did not Juatify it, bat, as we have 
already pointed oat la Another report, diversions, in twny instances, ssore 
Eoda to a greater extent after the war than during ita progress. 

She Occuiasicn and especially the Choi man of the CgheiIssIcu 
has habitually shewn aa b^atlaaaoo of Statutory restraints and a disregard 
of Statutory eallfiatloas* If the Gcvorattont did not give the Comlssloa what 
It wanted, waaa It r«autod it, the ConBlsslcn did not hesitate to use for an<oh 
pourposea as It saw fit, any non-jya en which it oonld lay Its hand 3* It has 



bo-Electric Inquiry Commission 

,• for Enclosure to 



1Z! 



thus disregarded tlio oonditionrs issposed fcy tho Log! a latere vhm It votod 
tha tooney. It la not oaay to raodorafcand how it nu that tlio Cossaiaoion 
«&a poiiaitted for euoii a loa& porlod to h&cdl© Us 3mds that own into 
its haul a %ith sack inorodibla looaosffas* 

la effoot, tho tagiel&tttre hna ©noouragod tho CGB&l&siaa In 
suoh x>r*>otiooa for It h&a votod your after your iteia sufficient to ooyoy 
ovorwo^poadituroa made ^y tho OoBKissian, without e&zlng it to fcoooaut for 
It a «23?arrantad sofc.lsi\a» 



COPY 



- P*S5d O* VolftBO 1 -