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Hydro's Savings (Go to Consumers In Lower Rates That statement, Mr. Roebuck re-- iterated, had been received "in still more emphatic terms from sources which could not be disregardod." Shut Off Credit. The alleged threat number two he saw in a despatch from Ottawa of April 4, 1935. It was that Ottawa "saw no problem in Premier Hep-- burn's query, "What are they going to invoke to make us pay, > under the power contracts entered into by the Ontario Commission with the Quebeec Power Companiss? The banks will simply shut off credit and Ontario will become a new Chicago." Mr. Geoffrion, director and legal adviser for the Beauharnois Corpora-- tion, was quoted as saying in May last: "Premier Taschereau will prob-- ably take a very definite stand for a continuance of the present agree-- ments in modified form or no power at all from Quebec. That may seem a very unneighborly attitude, because if Quebec power is shut off all Ottawa and most of Eastern Ontario will be plunged into darkness and in many citlies the wheeis of industries will be The threats, he alleged, were two-- fold--first, a reported statement by Aime Geoffrion on May 9, 1935, "in which that gentleman publicly states the threat which this Government had already received on a number of previous occasions from other sources which it is not my privilege to dis-- 'A HITTING POSITION' Faced With Suggestion of Plunging East in Dark-- ness, Government Bought Frequency Changer ROCLAIMING _ anew Hydro's "Back to Ni-- agara'"' and "Freedom From P ow er Barons" policies, Attorney--General Arthur W. Roebuck in the Legislature last night an-- nounced that annual sav-- ing of more than $6,000,-- 000 effected by the rewrit-- ing of two of the contracts would be passed on to con-- sumers in the form of "substantial" Hydro rate reductions in the very near future. Threats of Reprisals. PFor the first time he revealed the reason for the delay in the cancel-- lation of what he repeatedly termed the "nefarious" power contracts----the gelay was dictated by "threats of re-- pwisals which we received from cer-- tain persons in the Province of Que-- bec--should we dare to interfere with the stranglehold of the eastern gen-- erating companies and in the fact that in the eastern system we were at that time vulnerable." The total revenue derived by the Commission from the sale of power in this system in the ycear ending Oct. 31, 1935, amcunted to $22,100,070.12, he said. This represented an in-- crease in revenue over last year of $684,055.32, or a 3.2 per cent. increase over 1934. *"*This would seem to indicate a con-- dition of health and vigor, but un-- fortunately I have to inform you that the cost of operation was considerably greater than the revenue derived. The total expenses of the Niagara System aggregated $24,972,940.42, leaving a deficit of $2,870,870.20. Power Commission now face are the results of the mistaken policies of our predecessors, and it is with these re-- sults that I shall be chiefly concern-- ed," Mr. Roebuck said. Dealing first with the Niagara Sys-- tem, the Attorney--General told the Legislature that that district included the most important industrial arsa in @ll Canada, with a population of over 2,100,000 people. Last year, he said, the Niagara System had a capital in-- vestment of $210,000,000. & period of stalemate, it was really putting Premier Hepburn in a "hit-- ting position." And on Oct. 21 the Commission commenced pulling its switches. "It is not my intention to repeat on this cccasion--at least not at any great length, the history of a series of power doals that well--nigh ruined this magnificent public enterprise. That astory has been told, and its sordid de-- tails are written indelibly into the history of this Province. What the Government and the Hydro--Electric The Attorney--Gencral reminded the House that the publicly--owned Hydro-- Electric System of Ontario was the third largest commercial institution in Canada and was surpassed in amount of investment by only the Canadian National Railway and the Canadian Pacific Railway. The capital investment in the com-- bined Commission and municipal plants, inventories, cash and other assets was over $400,000,000 and served with power and light some 877 municipalities and companies, and supplied the light and power wants of approximately 630,000 cus-- tomers. "For the year ending the 3ist of October, 1935, the total revenues of wre Commission amounted to the im-- pressive sum of $30,901,500.29," he said. ready had taken steps to parry the thrust. The Commission had learned of the great frequency changer machine being built at Hamilton for the Maclaren Quebec Company, for which the contract had been can-- celled. This machine would enable Hydro to send its 25--cycle Niagara power into the 60--cycle Eastern On-- tario area. Its purchase was ar-- ranged. While to outward appear-- ances the Government was permitting Unfortunately, however, for Mr. Geoffrion, said the Attorney--General, when his statement was made the Commission and. the Government al-- St. James Street and Bay Street had "conspired" to descipline the Gov-- ernment, he charged, by threatening to cut off sources of credit. He named the time that the Government had attempted to float a $15,000,000 bond issue, and quoted Premicr Hepburn as stating that "collusion" had been entered into by the banks to keep interest rates high. Frequency Changer. March A "In the four years ending Oct. 31, 1935," he continued, "there were deficits totalling $12.521,952. There is no charge for contingencies or ob-- solesconce in these figures, and no sinking fund on the Chats Falls and Decew Falls developments, and the Hamilton Steam Plant. A continuing deficit of nearly $3,000,000 last year and an aggregate deficit of over $12,-- 500,000 in four years is a condition of affairs much too serious to be viewed with anything but concern in a busi-- ness community." "A deficit of something less than $3,000,000 on the operations of 1935 might not appear serious to an insti-- tution with a capital investment as of this year of $210,272,000, but un-- fortunately this is but the most re-- cent of a serics of deficits," he said. "The explanation is simple. It es in the improvident and outrageous contracts concluded by the former Commission and the former Govern-- ment with the Eastern power com-- panies. All that has been gained in increased business activity and ad-- vancing revenue due to & vigorous sales policy, and to reduced expenses due to economies of management, has been absorbed by the ever--mounting been absorbed by the ever--moununs exactions under these nefarious agree-- ments with the owners of Eastern sources of power. In 1931 the obsolescence and con-- tingencies reserves amounted to $14,-- 631,.725 88, but all that now remained of that reserve was $3,848,843.66. "Should the rate of loss be continued during 1936 this reserve would be ex-- hausted at the end of the year," he "It would be a heartless Govern-- ment indeed, which countenanced further burdens on the hard--pressed industrialists and home--owners of the Province by running up the bill for power and light," he said. "The in--= dustrial and commercial interests of our people preclude the possibility of additional advances. Increase d charges are out of the question, and unthinkable. This being the case, the Commission has not charged to its customers the true cost of power sold, but has drawn upon its reserves. For Mr. Rocbuck continued: "I have al-- ready prepounded the question as to why these losses, if the explanation | does not lie in the extravagance of | management or undue reduction of | rates. And I now advance another ! question. With an increase in revenue | uver 1934 of $684,055.32 and a re-- duction in expense over 1934 of $675,-- 077,65, or a total gain of $1,360,174.91, why is the deficit in 1935 of $2,870,-- 870, within one thousand gollars of the deficit of 1934? t"Fine numlomnatinn is «imile, It lies Had such deficits resulted from in-- ordinately low charges for power and light which the system had sold there would have been corresponding ad-- vantages. But such was not the case at all. The average cost of power sold by the Commission to all users in the Niagara System increased by almost $10 per horsepower per year in the past five years. of executive officers and Commission-- ers by $134.607 per year; and total reductions in salaries by reason of decreases and staff changes of $208,-- 028; legal expenses were reduced from $114,632 to $46,300; auditing fees were reduced from $51,.292 to $14,265; in-- surance costs from $158,020 to $65,-- 055; interest rates were decreased $560,587; a total saving on expense account of ncarly $1.000,000 per year has been recorded, despite increased each horsepower which we sold in the Niagara System. to all customers during 1935, we drew from the obso-i lescence and contingency resorves, on an average, the sum of $3.40, and we | sold our power at an average rate of | $26.20. This method of financing | Listing economies effected by his Government the Attorney--General said operating expenses had been cut $410,896.40 over the previous year; the Commission had reduced salaries business. been followed for the past four