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' "'Our study of the load conditions now existing on the Niagara System shows that. under the conditions, as above set out. the plants on the Niagara River operated in conjunction with the (total) Chats Falls plant have (sufficient capacity to supply the loads, under present power sale agreements of the Commission. The cutting oft of interruptibie power (87.000 horse- power) " the time ot peak load. will increase the load factor of the iirm peak load, and within two years " conditions (commercial) improve. it my be necessary to cut oft part at the power now being applied to operate e1eetrierteamttoi1ers.'rhiawilinottte may. homer. until the system load has increased by " least 100,000 1 horsepower " there is a margin " present based on November load con- ditions. spare capacity ct 160,000 horsepower, plus 40.000 horsepower already being paid for under the Me- Laren Purchase Agreement. and we are advised that the balance of the power to be supplied under this agree- ment can be supplied on short notice. making a working margin of .npare capacity of 285.000 horsepower. "The DeCrw Falls plant. it recon" structed. will be a low load-factor development. and can only be ot u may " per cent. No tor Intro generating capacity. and this PM ot the proposition will have to be considered in connection with ar- rangements for future power supply tor this system. maximum service to the Niagara Sys- tsm when operated as a peak load plant, and. it appears that the next development to be proceeded with to meet the requirements ot the Niagara System should be a high load-factor development at some point on the Ottawa River. on the Niagara River or the St. Lawrence Development. the final decision In regard to this mat- ter wilt depend on the status of anterprovincial or International rele- Mons. "'We wish to call your attention particularly to the fact that in the estimates, as set out herein. no allow- ance has been made tor reserve plant capacity. and without such adequate reserve. a major accident might very seriously reduce the generating capac- ity of the system and cause reduc- tions in iirm power loads over a con- siderable period of time. "atesDecttuly submitted. a. T. Jef- "Summarizing the situation as tt presents itself. to us. we find that at no time during the year 1934 did the demand for uninterruptibie power ex- ceed the Commission's resources. ex- elusive of power purchased trom Gstirxeau. Betutharnois and Mac- Larens. and at no time, in order to supply our physical wants. was it necessary to can for a single horse. power from these three companies. Notwithstanding this fact. we paid to these three ocmpanies during this last year the sum of M,452,'20lr.i8 for unwanted power. tery. '1'. H. H.ogg Adequate Sum"? "We lumber tind ma quence ot these payment mission suffered in its h tem u deficit ct 32,869,828 that it depleted its r amount. and that its cant obsolescence reserves. wh 1931 at 'i4.6lti.T26.M, dee sum of 86,526,237. "We tind that with an increased cost of purchased power ot $1.196.- 554.82. it is not likely that increased sales and reduced expenses this year Will reduce the loss tor 1935 to less than that ot 1934. thus mmpietciy wiping out the Commission's contin- gency reserves. and making it neces- sary to either can further increase gates to the municipalities or to still further deplete the capital ot the commission. _ - "We and that. based en the expen- dlmres and receipts ot 1934, the deficit in 1988 and tjuttsequent years will mount to the high sum ot 37.081623 per annum. It is confidently hoped that with vigorous management the deficit: Will not be so great. but the mm is by no means Cheerful." will be a low load-t: at. and can only b service to the Niagara operated as a peak u it smears that the ct 82,869,828 (193-1) ' mysical wants. was it all for a single hone. base three companies. tt this fact. we paid companies during this um ot MA52,'206.i8 tor its Canungeney and was. which stood In 5.88. decreased to the receded with to ot the Niagara igh load-factor point on the Niagara River serves that ngzncy and the Com- mara Sys- in conse- the Com- and media: to a consideration of the lantern mum, bounded by Lake Ontario. the St. Lawrence River. the Province of Quebec. the Ottawa River and the Niagara System, Mr. Roebuck statsd that there was no serious pow- _er surplus in this district such as ex- ,isted in the Niagara System. 2 "The system." he said. "has sui- ; feted from acts of gross incompetence. or Worse. but . notwithstanding the Iburden imposed. the finances ot the :systcm have not been ruined, though 'ratcs have been made unnecessarily Eastern System. "The system," he said. "has sut-i tered tram acts ot gross incompetence, l or worse, but . notwithstanding the burden imposed. the tinaneea ot the system have not been ruined, though rates have been made unnecessarily high. and the system suffered a deficit as of Oct. 31. 1933, et $31,313.61. "Thanks, however. to a vigorous- policy on the part of the new Com-k mission. a decided improvement is to be observed in the finances of 1934.' Owing to further deliveries. the cost ot power purchases has increased By $82,747.72 over last year. We paid all interest charges on all system capital. set up regular amounts for sinking fund. and in addition set up full charges tor renewals fund, as well as the regular charges for contingencies and obsolescence. We have reduced the cost ct operation, maintenance and administration expenses from $843.- 905.70 to $831,134.92. a saving ot $11,960.78. while we have increased grevenue trom t2dwt,49t.65 in 1933 to .83.181.107.23 in 1934." like": moiety. 3 Tracing the history cf the Eastern) issstem. the Attorney-General re? called the signing. in 1927, of the con- tract for the purchase of 100,000 horsepower trom the Gatineau Power Company. "The contract." he commented in passing, "was contrary to good prin- .ciple. and ill-advised. in view of the Ziact that the Commission had avail- 'able potential developments else- where. "It was little short of criminal to tie up the system for forty years to a Quebec private development. And yet the agreement is in marked contrast to Mill worse deals which were to fol- low. The deliveries were not greatly , in excess of the system's powers or: absorption. The deliveries commenc-l ed on Oct. l, 1928. and are to be in- creased by 6,000 each year, so that in October last, at the end of its. seventh year, the Commission was tttttif/ m an, and could absorb. 42,000 "In June, 1929, the former com- 'mission purchased what is known as the Madawaska System. formerly own- ed by Mr. M. J. O'Brien. The prop- 'erty acquired included two small -plants. known. one as the Galena and the other the Calebogie. The former has a capacity of 1.100 horse- gamer and is now closed. The second. .the Calabcgie, has a capacity ot yea. the Commission was 4 to take, and could absorl horsepower. _ -- ., "Standing by itself. the first Gauneau contract may possibly be defended. though certainly not Justi- fied, but taken in conjunction yith '5500 horsepower. The total develop- tment horsepower is accordingly 6,500. _At; the cost of the purchase included, I however. M,000 horsepower which was 1 then and is still undeveloped, and as "he power taken from Gatineau by I the Eastern System increases 6,000 per year, and is now only 42,000, it is obvious that 85.000 undeveloped and 6,500 horsepower developed. or 91,500 horsepower in all, was sufficient to have supplied the needs of the district to the present time and for many years to come. Had the. purchase ot the Madawaska power sites preceded the Gatineau contract it might have lbeen justified as required. but coming as it did after the needs of the sys- tem had been supplied, it is inde- fensible. As I say. one ot the plants, the Galetta, is closed, the 85.000 horsepower sites are undeveloped. and the interest charges on the $i,800,000 price is $108,000 per year, amounting iiiii, -taoiarit Is indeed terrible. Other Contracts. but the put the years in interest charges to $564,781. rebra '"h an 1929, the former Com- "Notwithstanding the errors toe which the former Commission and the former Government are responsible, the Eastern System has grown to great I proportions, and has now balanced its 'i budget." iGeorgian Bay System. ; Proceeding to discuss the Georgian i Bay System, Mr. Roebuck pointed out i that the area involved was 9,600 (square miles, served by eleven gener- lating plants with a normal capacity 'of 26,100 horsepower. tn 1933 there was delivered by the Georgian Bay {System 27,859 horsepower, distributed among 149 municipalities. He sub- 'mitted the following, revealing the (present condition of the system: given to the whole affair by a. my- ment at $50,000 by the Hydro Com- mission, approved by order in Council. to a promoter named John Aim Jr.. for no apparent consideration in re- turn. It is to be noted that these un- necessary purchases took place in an election year. "The consolidated systems show . [ financial status of considerable pro-' portions. As ot Oct. l, 1933. that portion of the system vested in thei l Hydro-Electric Power Commission', ishowed a capital expenditure on plant hot 88,427.2'T8.77. Its renewals, cow. I tingency and sinking fund have been , maintained at the Commission's usual l, standard so that the Commission's ' system shows reserves and surplus ot _ $3,149,976.57. The municipal systems as of Dec. 31. 1933. show a capital gexpendiiure of $2,726,804.74, with re- l serves and surplus of $2,373,556.77. l That is to say, the grand total ot the assets of both Commission and municipal systems is the consider- able sum of 816,6Tt,616.85. The total I expense of operation for the year end- I ing Oct. 31. 1933, was $977,890.93. and I the total revenue. $1,033.863.50, show- i ing a surplus of $55,972.57. --_ _ "In the year ending Oct. M. 1934, there were increased deliveries of power. Our expenses Were, however, somewhat decreased, while our rev- enue was slightly increased. The total expenses tar the year were $946,088.03. while our revenue was $1,041,783.14. leaving the system with a surplus of $95,695.11. No disastrous power com- mitment has effected the tinaneial standing of the Georgian Bay System. We buy no power. except from the Niagara System. and the consequence has been the healthy growth in the has been the healthy growth in the pasc, and a bright and satisfactory outlook for the future. When the consolidation of the system took place in 1925, the combined systems served seventy-tour municipalities. In 1933 it served 148 municipalities." Thunder Bay System. Of the Thunder Bay System the Attorney-General said that power sources had been developed at Cam- crcn Falls, on the Nipigon River. and ttJ Alexander Landing. the two plants having a capacity of 123.500 horse- "The load on the system was, how.. ever." continued Mr. Roebuck, "only 90.450 horsepower. In consequence the system has a, considerable excess of power. and until this can be ah- sorbed is not in first-class financial condition. The Commission's prob- lem. therefore. is the sale of power. The revival of the pulp and paper business would solve the problems ot the financial operation of this sys- um. From Oct. 31, 1932. to Oct. 31. 1933. the system had a deficit of $95,683.25, and in the following year the deficit was $53,745.45. "Prom the Commission's point of view this is not particularly serious, for the loss is split three ways in ac- cordance with the amount of power purchased between the three munici- palities of Port Arthur, Port William and the Village of Nipigon, a small amount only coming trom the sys- tem's contingency reserves. There is a considerable mining development taking place on the north shore ot Lake Superior, in the Sturgeon River district. and the Gomntisaiaet't' load is steadily increasing. The Northern Empire Mines and the Little m power.