Ontario's financial watchdog says financing infrastructure projects through traditional debt would have cost the government less than privatizing part of Hydro One to raise the money.

The Financial Accountability Office says taxpayers would have saved $1.8 billion if the government had taken on traditional debt to fund the work.

Hydro One went public in November 2015, with the province saying it planned to use the sale of shares to fund transit and infrastructure projects.

The FAO says in the first three years after the partial privatization, the province shows a total profit of $3.8 billion on the deal.

But the FAO says there will be a loss of $1.1 billion in 2018-2019 because the province incurs one-time charges and no longer has income it would have received from its earlier stake in the company.

The FAO says as of December 2017, the province had raised an estimated $9.2 billion by selling off 53 per cent of its stake in company.