Electricity in Quebec before nationalization

Most of my friends know that I am a proponent of privatizing Hydro-Quebec, the crown corporation in charge of electricity production and distribution in Quebec, and of liberalizing the energy market. When I make my case, many will argue that when we had a free markets (in the 1920s), corporations were gouging consumers since they had monopoly power. As a matter of fact, they do have some empirical evidence of higher prices in Quebec than in neighbouring Ontario.

However, that is a clear case of cherry-picking. Why? Because starting in 1903, the government of Ontario intervened in the energy market by buying electricity from private firm and selling it at cost to consumers in the municipalities who decided to participate in the scheme. The government covered the difference. Comparing a subsidized system with an unsubsidized one is clearly some cherry picking. Moreover, in the early 1920s, Ontario actually went a step further and nationalized its electricity grid (well, a part of it).

Meanwhile in Quebec, non-intervention was the rule up to 1935 and nationalization only occured in 1944. So how did Quebec compare with other places where the real cost of electricity wasn’t being passed on to taxpayers? Well, here is an index of different measures of electricity prices in the United States, the United Kingdom and Quebec. What I see is a clear decline in nominal prices, a decline which is in fact steeper than elsewhere!

Sources are from Statistical Archives of the Quebec and Canada Year Books, from the Historical Statistics of the United States and from Leslie Hannah’s Electricity before Nationalization: A study of the development of the electricity supply industry in Britain to 1948. As these data are being assembled for a research paper, they will not be published on this website until the peer-review process has been completed. But I do believe that this graph tells quite a story!


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