It has been observed in treating of the understanding, that the distinction, which we sometimes make betwixt a power and the exercise of it, is entirely frivolous, and that neither man nor any other being ought ever to be thought possest of any ability, unless it be exerted and put in action. But though this be strictly true in a just and philosophical way of thinking, it is certain it is not the philosophy of our passions; but that many things operate upon them by means of the idea and supposition of power, independent of its actual exercise. We are pleased when we acquire an ability of procuring pleasure, and are displeased when another acquires a power of giving pain. This is evident from experience; but in order to give a just explication of the matter, and account for this satisfaction and uneasiness, we must weigh the following reflections.
He then argues that this passional power/exercise distinction does not derive from philosophical accounts of free will (i.e., accounts that depend on a notion of power that can be contrasted with a general doctrine of necessity, which eliminates much of the need to talk about powers). Indeed, he thinks the common notion of power that's required for making sense of our passions is quite different: "according to common notions a man has no power, where very considerable motives lie betwixt him and the satisfaction of his desires, and determine him to forbear what he wishes to perform." As he notes, we don't think we are 'in someone's power' just because they happen to walk by with a sword; we know the magistrate would punish them for doing anything. But we do think we are in someone's power if they have power to reward and punish as they please.
On the basis of this, Hume draws from his discussion of causation and probability. In the first case, we expect on the basis of our past experience that he will not do anything to us; in the second case, we do not have this solid expectation, but find our expectations split among several ideas for what might come next, among which is the possibility that they might do something to us. He then concludes:
Since therefore we ascribe a power of performing an action to every one, who has no very powerful motive to forbear it, and refuse it to such as have; it may justly be concluded, that power has always a reference to its exercise, either actual or probable, and that we consider a person as endowed with any ability when we find from past experience, that it is probable, or at least possible he may exert it. And indeed, as our passions always regard the real existence of objects, and we always judge of this reality from past instances; nothing can be more likely of itself, without any farther reasoning, than that power consists in the possibility or probability of any action, as discovered by experience and the practice of the world.
Thus we get a deflation of the power/exercise distinction into a matter of uncertain expectation, and Hume can make use of it to handle the aspects of our passional life that seem to require a distinction between what we can do and what we do. It depends, of course, on Hume's account of causation. I'm still not sure that it's an adequate handling of the problem; there's no need to appeal to a full philosophical account of free will to suggest that something like it is at least a contributing factor, and we get cases like appealing to someone for mercy even when we don't expect it to be granted, for which a reduction to uncertain expectation alone would not be straightforward. But it is, in any case, an interesting example of how Hume's causal considerations affect his explanation of human life.