In October 1998, the provincial legislature passed the Energy Competition Act which restructured Ontario Hydro into separate entities responsible for electrical generation, transmission/delivery, and price management with a final goal of total privatization.

A report released on December 2, 2015, by the Auditor General of Ontario raised concern with the sale, indicating that power outages are increasing and that Hydro One's equipment is aging and "at very high risk of failing".

[9] Ontario's electricity grid is made up of a 29,000 km high-voltage transmission network that delivers electricity to large industrial customers and municipal utilities and 123,000 km low-voltage distribution system that serves about 1.3 million end use customers mainly in rural service areas and smaller municipal communities in the province.

While Hydro One has connected thousands of small projects to the grid it is approaching their technical limits of the wires and equipment in some rural locations.

This can create an unsafe condition called islanding, which can put at risk customers, employees, and the equipment drawing power from that line.

By using the company's existing network and working with customers, Hydro One is exploring new ways to deliver the cleaner electricity which Ontarians are helping to generate.

[10] Hydro One was created out of the Hydro-Electric Power Commission of Ontario (HEPC or Ontario Hydro), which was established in 1906 by the provincial Power Commission Act to build transmission lines to supply municipal utilities with electricity generated by private companies already operating at Niagara Falls.

HEPC bought the generation and transmission assets of the Electrical Development Corporation, which was the last remaining private power company.

In 1998, the Progressive Conservative Party (PC) government of Mike Harris passed the Energy Competition Act which authorized the establishment of a market in electricity.

The two commercial companies, Ontario Power Generation and Hydro One, were intended to operate as private businesses rather than as crown corporations.

[13] In 2018, the annual CA$6.2 million compensation paid to CEO Mayo Schmidt became a campaign issue in the 2018 Ontario election.

[14] The government and other major shareholders in Hydro One then began the process of appointing an entirely new board of directors after accepting the resignation of all previous members.

[16] In December 2018 the Washington Utilities and Transportation Commission blocked the purchase of Avista, citing concerns about the independence of Hydro One from the provincial government.

[22] Some of the proceeds from the sale of shares would be used to begin financing of Premier Wynne's 10-year plan for public transit and infrastructure projects in addition to reducing the provincial deficit.

LeClair warned that the sale of an entity that generated a $750 million profit[27] in 2014[28] would lead to a long term negative financial impact for the province.

The sale will certainly provide short term benefits, generating an estimated total of $9 billion[26] at a time when the provincial government is "desperate for money" (according to The Globe and Mail), with one of the largest subsovereign debts in the world.

[25] The balance of the revenue from the Hydro One sale would help meet the targets laid out by the provincial Liberal government in its April 2015 budget.

[30] This promise was made in spite of increasing demand for government services due to an aging population, at a time when "... a slowing domestic economy are putting downward pressure on its revenue streams," according to Ed Clark, Wynne's chief advisor on government assets, as quoted in The Globe and Mail.

[29] On November 5, 2015, the province began the first phase of the process, with an initial public offering (IPO) of 81.1 million shares (equivalent to 13.6% of Hydro One) on the Toronto Stock Exchange.

[26] Finance Minister Sousa stated on November 4, 2015, that the Hydro One IPO was already "oversubscribed" at that time, with more advance orders than the shares that would be available.

"[33] Some consumer advocacy groups and some analysts have raised red flags, concerned with the risk of increasing electricity costs under a privatized Hydro One.

[34][35] "Internal polling done for the Wynne government — released under Access to Information — found that 73 per cent of Ontarians oppose the government's plans to privatize Hydro One, the key transmission arm of the original public utility," noted Linda McQuaig in a 2016 Toronto Star opinion article.

[36] On the other hand, Brady Yauch, executive director of the Consumer Policy Institute[37] discussed the potential benefits in an opinion piece in the Financial Post, including "lower rates for ratepayers".

[citation needed] A secondary offering of 72.4 million Hydro One shares, equivalent to 14.5%, in April 2016 generated $1.7 billion in revenue for the provincial government.

[40] As part of the partial privatization of Hydro One, the provincial government announced it would sell up to 15 million shares (2.5%) to the indigenous and Métis nations of Ontario for "their collective benefit".

[41] In January 2018 the Ontario government announced it had sold over 14 million shares of Hydro One to OFN Power Holdings, a partnership controlled by 129 First Nations around the province.