Does this sound familiar? The government of Ontario announces a program to purchase clean energy from a group of power consortiums outside the province. A provincial election comes along and the new premier says he will cancel those contracts, and in addition will pass legislation making the cancellations lawsuit-proof. Doug Ford 2018? No, in this instance it is Mitchell Hepburn in 1934.
By way of background it was the late 1920’s and Ontario was ruled by a Conservative government led by G. Howard Ferguson. Ferguson, it was whispered had engaged in some fishy deals with timber companies years earlier as Minister of Natural Resources. Ontario’s economy was booming and there was a need for more electrical power. Rather than pursue an expansion of Ontario’s power generation capacity, the Ferguson government entered into several agreements with power barons in Quebec who were promoting schemes to tap the St Lawrence and Ottawa Rivers. Then the Depression hit and with it industrial activity ground to a halt and the Province was stuck with a glut of expensive power that it no longer needed.
Like Doug Ford, when Hepburn took power he vowed to launch a series of investigations into the spending of the previous government. A commission was set up to investigate the Quebec Hydro contracts. Hamilton’s Thomas Baker McQuesten was a member of the Hepburn Cabinet and a member of the Hydro-Electric Power Commission. In his maiden speech in the legislature he charged that, as in the Ferguson timber deals, the former premier had received political contributions in exchange for granting the Quebec power contracts.. Said McQuesten, “I refuse to believe in the honesty of the commission which approved of these contracts.”
Following the repudiation of the hydro contracts there was a short term dip on Canadian stock exchanges. In the end, the Power companies sued the government and eventually the Privy Council in London, which was Canada’s highest court at the time, ruled against the province. But in the meantime the power companies had come back to the table and renegotiated the deals at lower costs. By the time it was all over, the economy had rebounded and there was a need for the extra power.
Some legal scholars believe the Privy Council went too far in ruling that the province had no right to pass legislation repudiating the hydro contracts. Fast forward to today where the Ford government plans to cancel hundreds of wind and solar contracts and in addition says it will pass legislation making the government immune from law suits. It could end up being a case of “déjà vu all over again”