Telus says no immediate plan to cut spending, raise rates as it monitors CRTC rulings

Sammy Hudes, The Canadian PressT

Telus Corp. has no plans to halt its own fibre network build in response to recent regulatory actions, but says the CRTC needs to strike a balance between promoting  competition and maintaining incentives for large carriers to invest in their networks.

Chief financial officer Doug French said Friday that the Vancouver-based telecommunications company agrees with some of its rivals that large providers are facing "a significant amount of challenges."

"You need to have a return on assets at some point," he said in an interview after the company reported fourth-quarter earnings.

"Giving away or getting access to an asset at discounted rates doesn't promote you to go and build more."

A day earlier, the parent company of Bell Canada announced it was slashing nine per cent of its workforce and warned it could further scale back network spending as it remains at odds with the CRTC over what it calls "predetermined" regulatory direction.

The CRTC announced last November it would temporarily require large telephone companies, namely Bell and Telus, to provide competitors with access to their fibre-to-the-home networks in Ontario and Quebec within six months. (The rule doesn't apply to Canada's other major carrier, Rogers Communications Inc., which uses a cable network.)

The decision was meant to stimulate competition for internet services, as the CRTC said at the time its review could potentially make that direction permanent and apply it to other provinces. The regulator is hold a hearing next week as part of that review.

Bell responded by reducing its network investment plans by $1.1 billion by 2025 including a minimum reduction of $500 million this year. It said Thursday that more cutbacks are possible if further unfavourable decisions are handed down by the regulator.

French said Telus would continue as scheduled with its own network investments but it is reviewing "economics and returns" on an ongoing basis.

"Depending on how things roll out over the next little bit, we may make some other choices," he said.

"But at the moment ... we've been able to execute very well in a dynamic market and we will proceed as planned, unless there are anything that would change how we look at economics and how we look at our ability to build that out on affordability."

Telus had announced its own 6,000 job cuts last August in order to adapt to a “rapidly transforming industry,” saying at the time that issues such as regulation and competition prompted the need to reduce its payroll. The company said the restructuring would cost $475 million in 2023, but lead to annual savings of more than $325 million.

French said Friday that those cuts were 75 to 80 per cent complete by the end of last year, however some restructuring costs would spill over to the first quarter of 2024.

Telus reported fourth-quarter net income attributable to common shares of $288 million, up from $248 million a year earlier. The company said the profit amounted to 20 cents per share for the quarter ended Dec. 31, up from 17 cents per share in the last three months of 2022.

Operating revenue and other income totalled $5.20 billion, up from $5.06 billion in the same quarter a year earlier. On an adjusted basis, Telus says it earned 24 cents per share for its fourth quarter, the same as its fourth quarter of 2022

In the fourth quarter, Telus said it saw a total of 404,000 net customer additions across its services.

The company's 126,000 net mobile phone subscriber additions in the quarter was up 13 per cent from the same quarter a year earlier. But Telus' monthly churn rate for mobile subscribers — a measure of subscribers who cancelled their service — was 1.40 per cent, up from 1.22 per cent during its previous fourth quarter, which it said was largely due to heightened seasonal promotional activity.

Telus’ mobile phone average revenue per user was $58.50, down 19 cents or 0.3 per cent from the fourth quarter of the prior year. The company attributed the decrease to lower overage revenues as customers continue to adopt larger or unlimited data and voice allotments in their rate plans.

French said Telus is "not banking on price increases" for 2024 in light of that decline in revenue per user.

"I don't expect the competitiveness to slow at all. If anything, it continues to be very intense and it's very difficult to increase prices in an intense competitive market," he said.

Recent price hikes by other telecoms have attracted attention from federal politicians and backlash from some customers.

Members of the Standing Committee on Industry and Technology discussed the topic last month after Rogers confirmed prices were going up by an average of $5 for wireless customers not on contract. Some Bell customers also received notices earlier this year informing them their wireless bills were set to increase.

Despite no immediate plans to follow suit, French said he hopes Ottawa and the CRTC will take note of Statistics Canada's inflation reports that suggest telecom prices have been coming down. 

Cellular costs have declined more than 47 per cent over the past five years in contrast to an overall inflation increase of 19 per cent for the same period, according to data compiled by the Canadian Telecommunications Association.

He said Telus is asking for "transparency and consistency" from the regulator as it makes its decisions.

"There's always a good time to, say, tout when we apparently are doing something wrong, but we don't get the credit we deserve for how we've helped fuel the economy and how prices are coming down," said French.

"The competitive nature of our industry is very, very intense and I think that's underestimated."

 This report by The Canadian Press was first published Feb. 9, 2024.

BARGAINING IN BAD FAITH

Local news cuts at Bell come after it was granted $40M in regulatory relief: St-Onge

Mickey Djuric, The Canadian Press

As Bell Media blamed regulators and policymakers for its decision to announce a fresh round of layoffs Thursday, federal and provincial politicians accused the company of unnecessarily killing off local journalism.

Heritage Minister Pascale St-Onge decried the company for breaking its promise to invest in news after it was granted more than $40 million in annual regulatory relief.

That's the same amount the company said its news division, which includes CTV News and BNN Bloomberg, is losing annually.

Facing $40 million in annual operating losses, Bell Media's parent company, BCE Inc., announced it was cutting 4,800 jobs. BCE Inc. has an operating revenue totaling $6.7 billion, up from $6.44 billion a year earlier.

"They are not going bankrupt. They're still making billions of dollars. They're still a very profitable company," St-Onge said Thursday on Parliament Hill.

"And they still have the capacity and the means to hold their end of the bargain, which is to deliver news reports."

St-Onge said the government has worked to help the news industry, and at some point companies have to chip in, too.

The Liberals' update to broadcasting law, the Online Streaming Act, came into effect last April. It abolished certain licensing fees, which St-Onge said will save the company some $40 million a year.

Bell Media is also expected to receive money because of the Liberals' Online News Act, which came into effect late last year.

Broadcasters are expected to receive $30 million through a side deal the government struck with Google.

It agreed to pay news outlets $100 million a year to avoid being regulated under the new law, which requires tech giants to compensate news producers for content that is shared on their platforms, and from which they financially benefit.

Still, Bell Media is blaming its cuts on the federal government, saying Ottawa took too long to provide relief for media companies.

It also blames the Canadian Radio-television Commission, saying the regulator is too slow to react to a "crisis that is immediate."

The CRTC is expected to release final regulations aimed at helping the news industry in the coming months. Until then, St-Onge said, "we need everybody to hold strong."

Labour Minister Seamus O'Regan, a former journalist, said Thursday that the layoffs are "atrocious" and it's "hard seeing journalists being treated as rounding errors in what I think are healthy profit margins."

And British Columbia Premier David Eby said Bell Media has "overseen the 'en-crap-ification' of local news."

He said the layoffs — along with the sale of 45 of the company's 113 regional radio stations — is "catastrophic."

"Bell and corporations like Bell have overseen the assembly of local media assets that are treasures to local communities. They bought them up. Like corporate vampires, they sucked the life out of them, laying off journalists," Eby said Thursday.

The federal NDP said this should serve as a wake-up call for Ottawa and its relationship with corporations.

"The federal government needs to start showing leadership, first off, and any funding that is going to Bell or any other corporation needs to come with the key guarantees in terms of jobs and maintaining professional journalism," NDP House leader Peter Julian said.

When St-Onge was pressed on the cuts by the Bloc Québécois during question period, she stated in French that the Liberal government would not be giving any more money to billionaire companies.

Conservative Leader Pierre Poilievre responded to the cuts on Thursday by placing blame on Prime Minister Justin Trudeau.

He said high taxes, burdensome red tape and an uncompetitive business environment "is driving our jobs and our money out of the country to foreign nations that are prospering at our expense."

This report by The Canadian Press was first published Feb. 8, 2024.

BCE slashes 9% of workforce, puts blame at the feet of regulators and policymakers

Sammy Hudes, The Canadian Press

The parent company of Bell Canada announced it is slashing nine per cent of its workforce and could further scale back network spending as it remains at loggerheads with the CRTC over what it calls "predetermined" regulatory direction.

The cuts, which affect about 4,800 jobs including 750 contractors, were announced to employees Thursday morning in an open letter by chief executive Mirko Bibic. The company also reported its fourth-quarter profit fell compared with a year ago, but raised its quarterly dividend.

BCE said it earned net income attributable to common shareholders of $382 million or 42 cents per diluted share in its latest quarter compared with a profit of $528 million or 58 cents per diluted share a year earlier.

Operating revenue totalled $6.47 billion, up from $6.44 billion a year earlier. On an adjusted basis, BCE says it earned 76 cents per share in its fourth quarter of 2023, up from 71 cents per share in the last three months of 2022.

On Thursday, the company also announced plans to sell 45 of its 103 regional radio stations and close 107 The Source stores. It said the restructuring is expected to save Bell around $150 million to $200 million in 2024 and $250 million on an annual basis.

"Restructuring the business is never an easy decision, but it's what we need to do to simplify our organization and accelerate our transformation," Bibic told analysts on the company's earnings call.

Bibic said in his letter that Bell is moving away "from highly regulated parts of the business to new growth areas" while aligning costs to revenue potential in each business segment.

"We know these decisions are hardest on those leaving Bell."

The changes came as BCE said it would now pay a quarterly dividend of 99.75 cents per common share, up from 96.75 cents per share.

The job cuts follow the elimination of 1,300 positions last June, when Bell announced a restructuring and pinned the blame on untenable regulatory conditions.

Dwayne Winseck, a professor at Carleton University's School of Journalism and Communication, said Bell's move is likely an attempt to try and sway the telecommunications regulator.

"You've got new leadership at the CRTC that are basically sending some tough signals," he said.

"I think Bell's engaged in a war right now with the CRTC to put them in line."

Bell chief legal and regulatory officer Robert Malcolmson acknowledged in an interview with The Canadian Press that the 6,000-plus jobs cut since last year was "a big number." 

"It's really the current regulatory and public policy environment that's causing profound structural change and that we have to mitigate through the measures we're announcing today," he said.

"We have to make tough decisions sometimes and hopefully these decisions will cause government and regulators to notice. Hopefully we can have a rational conversation about pivoting to public policy that supports investment and employment."

The latest job losses will be felt across the media and telecom company's various divisions, including some vacant positions that will go unfilled.

The company said fewer than 10 per cent of the total job cuts were at Bell Media specifically.

Some employees have already been notified or will be informed throughout the day Thursday of having been laid off. The balance will be told by the spring, the company said.

The move also comes ahead of hearings next week by the federal telecom regulator as part of a review into the rates smaller internet competitors pay the major carriers for network access.

"What Bell is doing, it's just saying, 'If you don't think we will sacrifice lambs on the way to get what we want on the regulatory front, here we go,'" said Winseck.

"This is the first killing on the platter." 

The CRTC announced last November it would temporarily require large telephone companies, namely Bell and Telus Corp., to provide competitors with access to their fibre-to-the-home networks in Ontario and Quebec within six months. (The rule doesn't apply to Canada's other major carrier, Rogers Communications Inc., which uses a cable network.)

The decision was meant to stimulate competition for internet services, as the CRTC said at the time its review could potentially make that direction permanent and apply it to other provinces.

Bell responded by announcing a plan to reduce its network investment by $1.1 billion by 2025 — "and counting," Malcolmson noted — including a minimum reduction of $500 million this year.

"We, needless to say, take a dim view of the decision because ... it reduces any incentive we have to continue building out our fibre network," he said. 

At the time, Bell also filed documents with the Federal Court of Appeal requesting permission to appeal the CRTC's temporary ruling, and for a stay of the decision pending the outcome of the court process. Last week, it asked the federal cabinet to review the regulatory decision.

Malcolmson said Bell would wait and see what the CRTC decides following the hearing before making further decisions on future network investment, but that "it seems like the outcome is predetermined."

Asked if that meant Bell was preparing to announce further scalebacks, he said "that's up to the CRTC and ultimately the government."

"We hope not. We're in the business of building networks," said Malcolmson. "That's what we want to do. That's what our shareholders invest in us for."

In a statement, the CRTC said it was concerned about the job losses.

"The CRTC does not determine how private companies allocate their profits," said spokeswoman Mirabella Salem.

"The CRTC is an independent, quasi-judicial tribunal that regulates the broadcasting and telecommunications industries in the public interest."

Malcolmson said before last November, Bell planned to reach nine million locations through its fibre network build by the end of 2025, which has been scaled back to 8.3 million.

"We can't justify investing that capital when we're just building a network for our competitors to resell," he said.

Bibic hinted at further cost reductions in the years to come if the company feels it has to stay ahead of regulatory decisions it finds unfavourable.

"The short answer is there could be more to come depending on where this goes," he told analysts.

"The question we have to ask ourselves is why continue to invest at the pace that we did in 2020, 2021, 2022 and 2023?"

This report by The Canadian Press was first published Feb. 8, 2024.

BNN Bloomberg is owned by Bell Media, which is a division of BCE.

Bell ends some CTV newscasts, sells radio stations in media shakeup amid layoffs

Sammy Hudes, The Canadian Press

Bell Media is ending multiple television newscasts and making other programming cuts after its parent company announced widespread layoffs and the sale of 45 of its 103 regional radio stations.

In an internal memo to Bell Media employees on Thursday, it said news stations such as CTV and BNN Bloomberg would be affected immediately.

The radio stations being sold are in British Columbia, Ontario, Quebec and Atlantic Canada.

The memo, signed by Dave Daigle, vice-president of local TV, radio and Bell Media Studios, and Richard Gray, vice-president of news at Bell Media, said weekday noon newscasts at all CTV stations except Toronto would end. It is also scrapping its 6 p.m. and 11 p.m. newscasts on weekends at all CTV and CTV2 stations except Toronto, Montreal and Ottawa.

Daigle and Gray said "multi-skilled journalists" would replace news correspondent and technician teams reporting to CTV National News in Alberta, Manitoba, Quebec and Atlantic Canada, while other correspondent changes would be made in Ottawa.

Earlier in the day, Bell Media's parent company BCE Inc. announced it was cutting nine per cent of its workforce.

The company, in an open letter signed by chief executive Mirko Bibic, said 4,800 jobs "at all levels of the company" would be cut. Fewer than 10 per cent of the total job cuts are at Bell Media specifically.

Some employees have already been notified or were to be informed Thursday of being laid off, while the balance will be told by the spring. Bibic said the company will use vacancies and natural attrition to minimize layoffs as much as possible. 

Unifor said 800 members it represents were laid off in the Bell cuts, around 100 of which from the media sector and the balance from the telecom sector.

"Executives and shareholders are doing just fine while our members are being thrown out of work, including once again in the media," said Unifor national president Lana Payne.

"Our union does not accept the use of government policy changes as a smokescreen to justify the company’s actions."

Bell is also ending evening programs The Debate, This Hour and Top 3 Tonight on CTV News Channel, which will be replaced by a four-hour news broadcast on weeknights beginning at 6 p.m.

At BNN Bloomberg, weekday daytime programming is "being streamlined" to reduce the number of separate broadcasts. 

Daigle and Gray also said W5 will shift from a standalone documentary series to a "multi-platform investigative reporting unit" featured on CTV National News, CTVNews.ca and other news platforms.

The job cuts mark the second major layoff at the media and telecommunications giant since last spring, when six per cent of Bell Media jobs were eliminated and nine radio stations were either shuttered or sold.

In an emailed statement, a spokesperson for Corus Entertainment confirmed the company has also made changes this week across several stations, albeit small changes. They said the company has no plans to reduce its current program offerings. 

In a separate internal memo, Bell Media president Sean Cohan said the company intends to divest 45 radio stations to seven buyers: Vista Radio, Whiteoaks, Durham Radio, My Broadcasting Corp., ZoomerMedia, Arsenal Media and Maritime Broadcasting. The sales are subject to CRTC approval and other closing conditions.

"That's a significant divestiture and it's because it's not a viable business anymore," said Bell chief legal and regulatory officer Robert Malcolmson in an interview with The Canadian Press.

"We will continue to operate ones that are viable, but this is a business that is going in the wrong direction."

While the sales signal Bell's recent struggles, new ownership could be beneficial for the divested stations, said Dwayne Winseck, a professor at Carleton University's School of Journalism and Communication.

He pointed out the buyers are mostly "well-established, smaller, regional and local broadcasting stations."

"This might be OK. It could be not a bad thing," said Winseck.

"They're more connected to the communities. They don't have the punishing demand of the financial markets of Bay Street that Bell has."

Malcolmson said Bell Media is in the midst of a "digital transformation" for both entertainment and news.

But whether or not prioritizing digital growth is viable for the company in terms of generating profit remains to be determined.

"We're investing in it; we'll see," said Malcolmson. "Without some form of regulatory supports, it's tough."

He blamed the federal government for taking too long to provide relief for media companies as well as the CRTC for being too slow to react to a "crisis that is immediate."

That extends to two pieces of legislation intended to help Canada's struggling media sector: Bill C-18, also known as the Online News Act, meant to force tech giants to compensate Canadian news outlets for their content, and Bill C-11, which updates the Broadcasting Act to require digital platforms such as Netflix, YouTube and TikTok to contribute and promote Canadian content.

Ottawa remains in a standoff with Facebook parent company Meta over C-18, with the company continuing to block news links on its platforms. Meanwhile, the federal government capped the amount of money broadcast media can get from Google's $100 million annual payments at $30 million, with the remainder to go to print and digital news outlets.

"In practice, it's not going to do anything. It's underwhelming to say the least," said Malcolmson.

The federal government argues it has done a lot to help the news industry and accused the company of breaking its promise to invest in news after being granted more than $40 million in annual regulatory relief. 

"They are not going bankrupt. They’re still making billions of dollars," Heritage Minister Pascale St-Onge said on Parliament Hill on Thursday. 

"They’re still a very profitable company and they still have the capacity and the means to hold their end of the bargain, which is to deliver news reports." 

Thursday's job losses at Bell Media are also directly tied to regulator direction on Bill C-11, Malcolmson said.

The CRTC held a hearing late last year exploring whether streaming services should be asked to make an initial contribution to the Canadian content system to help level the playing field with local companies. The commission hopes to implement new rules in late 2024.

But the Bell executive said the company needs immediate relief, which could come from a fund it has proposed that would see streamers subsidize local or national news.

"We hope they do that but we can't wait two years for that to happen, so then you see actions like this today," he said.

Bell has fought other regulatory decisions over the past year that it says makes things harder for its struggling broadcast division.

That includes an October application to the Federal Court of Appeal seeking to overturn a CRTC decision that renewed its broadcast licences for three more years. It argued that decision was made without a public hearing and could result in the regulator prejudging its requests last June to waive local news and Canadian programming requirements for its television stations.

Bell Media's advertising revenues declined by $140 million in 2023 compared with the year before, and the company's news division is seeing more than $40 million in annual operating losses, Bibic stated in his letter.

On Thursday, Bell said it could also further scale back network investments on its telecom side as it remains at odds with the CRTC over what it calls "predetermined" regulatory direction.

Asked about the company's image in light of continued cuts, Malcolmson noted the size of Bell's executive team has been reduced in recent years and executive salaries remain frozen.

"We have a duty both to our shareholders and to our employees to make sure we manage the business in a rational way," he said.

List of divested Bell Media radio stations (New owner)

• CHOR, Summerland, B.C. (Vista Radio)
• CJAT, Trail, B.C. (Vista Radio)
• CKKC, Nelson, B.C. (Vista Radio)
• CKGR, Golden, B.C. (Vista Radio)
• CKXR, Salmon Arm, B.C. (Vista Radio)
• CKCR, Revelstoke, B.C. (Vista Radio)
• CJMG, Penticton, B.C. (Vista Radio)
• CKOR, Penticton, B.C. (Vista Radio)
• CJOR, Osoyoos, B.C. (Vista Radio)
• CICF, Vernon, B.C. (Vista Radio)
• CHSU, Kelowna, B.C. (Vista Radio)
• CILK, Kelowna, B.C. (Vista Radio)
• CKFR, Kelowna, B.C. (Vista Radio)
• CKNL, Fort St. John, B.C. (Vista Radio)
• CHRX, Fort St. John, B.C. (Vista Radio)
• CJDC, Dawson Creek, B.C. (Vista Radio)
• CKRX, Fort Nelson, B.C. (Vista Radio)
• CFTK, Terrace, B.C. (Vista Radio)
• CJFW, Terrace, B.C. (Vista Radio)
• CHTK, Prince Rupert, B.C. (Vista Radio)
• CKTK, Kitimat, B.C. (Vista Radio)
• CKLH, Hamilton, Ont. (Whiteoaks)
• CHRE, St. Catharines, Ont. (Whiteoaks)
• CHTZ, St. Catharines, Ont. (Whiteoaks)
• CKTB, St. Catharines, Ont. (Whiteoaks)
• CKLY, Lindsay, Ont. (Durham Radio)
• CKPT, Peterborough, Ont. (Durham Radio)
• CKQM, Peterborough, Ont. (Durham Radio)
• CFJR, Brockville, Ont. (My Broadcasting Corporation)
• CJPT, Brockville, Ont. (My Broadcasting Corporation)
• CFLY, Kingston, Ont. (My Broadcasting Corporation)
• CKLC, Kingston, Ont. (My Broadcasting Corporation)
• CJOS, Owen Sound, Ont. (ZoomerMedia)
• CHRD, Drummondville, Que. (Arsenal Media)
• CJDM, Drummondville, Que. (Arsenal Media)
• CFEI, St-Hyacinthe, Que. (Arsenal Media)
• CFZZ, St-Jean-Sur-Richelieu, Que. (Arsenal Media)
• CIKI, Rimouski, Que. (Arsenal Media)
• CJOI, Rimouski, Que. (Arsenal Media)
• CFVM, Amqui, Que. (Arsenal Media)
• CIKX, Grand Falls, N.B. (Maritime Broadcasting)
• CJCJ, Woodstock, N.B. (Maritime Broadcasting)
• CKBC, Bathurst, N.B. (Maritime Broadcasting)
• CKTO, Truro, N.S. (Maritime Broadcasting)
• CKTY, Truro, N.S. (Maritime Broadcasting)

— With a file from Mickey Djuric in Ottawa.

This report by The Canadian Press was first published Feb. 8, 2024.

BNN Bloomberg is owned by Bell Media, which is a division of BCE.

LINE 5

Enbridge appeals to vacate an order that would shut down its pipeline

Todd Richmond, The Associated Press

MADISON, Wis. — An attorney for the energy company Enbridge tried to persuade a federal appellate court Thursday to vacate an order that would shut down part of a pipeline running through a Wisconsin tribal reservation.

About 12 miles (19 km) of Enbridge's Line 5 pipeline runs across the Bad River Band of Lake Superior Chippewa's reservation. The company contends that U.S. District Judge William Conley improperly ordered Enbridge last summer to shut down a section of the pipeline on the reservation within three years. Conley also ordered the company to pay the tribe millions of dollars in trespassing fees, Enbridge attorney Alice Loughran told a three-judge panel at the 7th U.S. Circuit Court of Appeals in Chicago.

She said Conley's order violates a 1977 treaty between the United States and Canada that states no authority in either country shall impede the flow of oil and natural gas through pipelines between the two nations. Enbridge wants to reroute the pipeline around the reservation, but needs more time to secure permits from multiple government agencies, Loughran said.

“The court's shut-down order is prohibited,” she said.

The Bad River tribe's attorney, Paul Clement, implored the judges to go beyond Conley's order. He urged them to shut down the pipeline immediately to protect the environment from a potential spill and increase the financial penalties Conley imposed on Enbridge for trespassing on the reservation.

“Enbridge wants to continue business as usual,” Clement said.

Line 5 transports up to about 87 million litres of oil and liquid natural gas daily. The pipeline runs about 1,038 kilometres from the city of Superior, Wisconsin, through northern Wisconsin and Michigan to Sarnia, Ontario.

The tribe sued Enbridge in 2019 to force the company to remove the portion of Line 5 that crosses its reservation, saying the 71-year-old pipeline is dangerous and land easements allowing Enbridge to operate on the reservation expired in 2013. Enbridge has proposed removing the pipeline from the reservation and rerouting it, but the project depends largely on obtaining permits from multiple government agencies.

Bad River members told Conley in May that erosion around a 3.7 kilometres section of Line 5 has created an immediate risk of rupture and contamination and asked him to immediately shut down that section. The company says there haven't been any spills from Line 5 in Wisconsin since 2002, when a leak was contained at its Superior terminal.

Conley in June ordered Enbridge to shut down that portion of the pipeline but gave the company until June 2026 to do it, saying he wanted to give the energy industry time to prepare for the disruption to oil and natural gas supplies. He also ordered the company to pay the tribe more than US$5.2 million for trespassing and to keep paying as long as the pipeline keeps operating on tribal land.

The appellate judges questioned why government agencies haven't moved faster to grant Enbridge permits to reroute the pipeline. They also chastised the tribe for not taking preemptive steps to protect the area from a possible spill, such as placing sandbags around it.

Loughran said the tribe hasn't allowed Enbridge to take protective steps, while Clement countered that the tribe shouldn't have to do anything since Enbridge is trespassing.

The judges sounded frustrated with the two sides refusing to work together. “The parties have mutually declared war against each other,” Judge Michael Scudder said.

Judge Frank Easterbrook said the panel likely won't issue a ruling for at least several months.

Enbridge has been under scrutiny since 2010, when its Line 6B pipeline ruptured in southern Michigan, releasing 800,000 gallons of oil into the Kalamazoo River system.

Michigan’s Democratic attorney general, Dana Nessel, filed a lawsuit in 2019 seeking to shut down twin portions of Line 5 that run beneath the Straits of Mackinac, the narrow waterways that connect Lake Michigan and Lake Huron. Nessel argued that anchor strikes could rupture the line, resulting in a devastating spill. That lawsuit is still pending in a federal appellate court.

Michigan regulators in December approved the company's $500 million plan to encase the portion of the pipeline beneath the straits in a tunnel to mitigate risk. The plan is awaiting approval from the U.S. Army Corps of Engineers.

Enbridge sees 'tailwind' for its Mainline system as Trans Mountain faces delays

Amanda Stephenson, The Canadian Press

Enbridge Inc. could benefit from increased volumes on its Mainline oil pipeline network if the startup of the Trans Mountain pipeline expansion is significantly delayed, the Calgary-based energy infrastructure firm said Friday.

Enbridge, like the rest of Canada's energy sector, has been closely watching the latest developments with the Trans Mountain project. The high-profile pipeline expansion will increase Trans Mountain's capacity from 590,000 barrels per day to a total of 890,000 barrels per day, creating new oil shipping competition for Enbridge and its Mainline system, but the project has been marred by delays and construction cost increases.

Most recently, Trans Mountain Corp. announced it has run into new construction challenges in B.C. that will delay the pipeline's expected first quarter startup until sometime in the second quarter of this year. 

Colin Gruending, president of Enbridge's liquids pipelines business, said Friday the company has been assuming an April 1 in-service date for Trans Mountain. He said if that date is pushed back, Enbridge will likely see a small boost in shipping volumes.

"To the extent it (Trans Mountain) is delayed, that's a slight tailwind," Gruending told a conference call to discuss Enbridge's fourth-quarter earnings. 

"We believe we're going to be substantially full anyway, so a slight delay doesn't provide a massive increase for us. But there is some upside to that."

Enbridge's Mainline network is Canada's largest oil pipeline system, providing about 70 per cent of the total oil pipeline transportation capacity out of Western Canada. Demand for shipping on the Mainline — which moves oil to markets in Eastern Canada and the U.S. Midwest — has exceeded capacity over the past few years. However, the network has long been expected to lose barrels to Trans Mountain once the expansion project comes online.

But Gruending said that picture has changed due to Trans Mountain's delays. The pipeline project was originally supposed to be finished in 2022, and the construction delays have meant more time for Canadian oil producers to ramp up production in anticipation of the additional export capacity.

"I think this notion that the Mainline is going to lose a bunch of volume when (Trans Mountain) comes on is a bit of a stale concept. It might have been valid a view years ago, but it's been delayed materially," Gruending said.

"And in that multi-year period of delay, supply has structurally and permanently grown . . . That demand is there. It's basically insatiable."

Statistics Canada data shows oil production in Alberta rose to a new record of 3.82 million barrels per day in 2023. In December alone, Alberta produced 4.19 million barrels per day, a 10 per cent year-over-year increase.

A report released in October by Deloitte Canada said Canadian oil production is expected to grow by about 375,000 barrels a day over the next two years, greater than the total amount added to Canada's production levels over the past five years combined.

Enbridge is forecasting its Mainline system will run essentially at capacity for most of 2024, averaging three million barrels per day.

In December, Enbridge filed an application with the Canada Energy Regulator for approval of its new tolling deal for the Mainline system. Tolls are the fees oil companies pay to ship their product on a pipeline, and are how pipeline operators make money.

Enbridge had been negotiating a new tolling framework with its oil industry customers for a year and a half. Once finalized and approved by the regulator, the new tolling deal will be in place through 2028.

On Friday, Enbridge reported a profit of $1.73 billion or 81 cents per share in its fourth quarter compared with loss a year earlier when it took a large non-cash goodwill impairment charge.

The result compared with a loss of $1.07 billion or 53 cents per share in the last three months of 2022 when the company took at $2.5-billion charge relate to its gas transmission business.

On an adjusted basis, Enbridge said it earned 64 cents per share in the quarter ended Dec. 31 compared with an adjusted profit of 63 cents per share a year earlier.

The company said last month it was cutting its workforce by 650 positions due to what it called "increasingly challenging business conditions" related to geopolitical instability, persistent inflation and rising interest rates.

This report by The Canadian Press was first published Feb. 9, 2024.

Honda talks test Canada’s desire to move away from blockbuster EV subsidies

Brian Platt and Mathieu Dion, Bloomberg News

Canada’s strategy to lure electric vehicle manufacturing is shifting away from multibillion-dollar production subsidies. But that transition will be put to the test as Prime Minister Justin Trudeau’s government negotiates with Honda Motor Co. over a potential new EV battery plant in Canada.

Last year, Trudeau’s government signed three unprecedented contracts to match production subsidies being offered to companies in the U.S. The numbers were big: as much as $15 billion for Stellantis NV, $13 billion for Volkswagen AG and $4.6 billion for battery-maker Northvolt AB. Provincial governments in Ontario and Quebec are picking up part of the cost. 

Subsidies of this kind will become less central to Canada’s EV manufacturing strategy, the industry minister promises. Having secured so-called “anchor investments,” Canada is turning its attention to building out a broader EV supply chain, said Industry Minister Francois-Philippe Champagne, using tax credits as an incentive to lure investment. 

“What we did in 2023 was to seize the moment,” Champagne said in an interview with Bloomberg News. “There’s only going to be one Volkswagen gigafactory in North America. There’s only going to be one Northvolt factory in North America.”

But he said there’s a difference between what Canada had to do initially to keep pace with the U.S., and what it needs to do over the longer term.

“Over time, because the ecosystem is getting stronger and stronger with each of these investments, you could transition the type of support you’ve provided more to something akin to a tax credit,” Champagne said.

The battery plant deals were highly unusual for Canada because in order to match the U.S. Inflation Reduction Act, they subsidize the actual production of the factories — essentially offering money for each battery the plant makes. They were a departure from Canada’s usual practice of offering money to auto companies for capital spending projects — though last year’s subsidy packages included those, too.

The price tags of the subsidies have been criticized by some, especially with signs consumer demand for EVs is flagging. In Germany, for example, EV sales are expected to decline in 2024.

Yet those deals have also boosted Canada’s global standing in the industry, with BloombergNEF now ranking Canada in first place in battery supply chain manufacturing, surpassing China. 

Going forward, Canada plans to offer manufacturers tax credits, unveiled in last year’s budget. They have yet to be finalized, but include a “clean technology manufacturing” credit that would equal 30% of the capital cost of eligible property.

“There are still a few big decisions to be made by major manufacturers, but you’ve seen already pretty much where people are going to put their assets to serve the North American market,” Champagne said. “So it just makes sense to transition to an investment tax credit, which is then available to people who want to come to Canada.”

Champagne did not comment directly on the talks with Honda, which were first reported by Japanese news outlet Nikkei earlier this year. Canadian Finance Minister Chrystia Freeland and other government officials met with Honda in January.

Honda’s plans for Canada, according to people familiar with the issue, may include not just an expansion of their existing manufacturing facilities in the province of Ontario, but potentially a new battery assembly plant and larger supply chain that stretches into neighboring Quebec. But there’s no assurance a deal will be done. 

Government officials said Honda’s interest in Canada is focused on the country’s critical mineral deposits and low-emissions electricity grid. Still, industrial subsidies will no doubt play a role — raising the question of whether Canada can land the investment without signing another rich production subsidy contract.

Champagne did not rule anything out, but he said it’s always been clear the government has a “limited capacity” to match U.S. green-manufacturing spending. Trudeau’s government is also trying to restrain spending to keep inflation in check and allow for the Bank of Canada to start cutting rates later this year.

Some government officials believe the production subsidies offered to Volkswagen, Stellantis and Northvolt will ultimately cost much less than the sensational headline figures, since those are based on the assumption the plants will have no construction delays and operate at full capacity throughout the contract.

Champagne agreed the contracts will likely be less expensive in the end. But the larger point, he said, is that those plants will ensure that a large EV supply chain exists in Canada, which is why other automakers are looking at investing here.

“Canada is going to be one of the very few jurisdictions in the west where you have basically the full value chain around the battery ecosystem, and that is not lost on investors,” he said.

 

Ontarians have already gambled $1.4 billion on football as industry grows

Ben Cousins, BNN Bloomberg

In advance of Super Bowl LVIII, Ontario sportsbooks have already seen record wagers.

According to data released to BNNBloomberg.ca from iGaming Ontario, Ontario gamblers have already wagered $1.4 billion on football since April 1, 2023, across the 50 legal operators in the province. This represents a 50-per-cent hike from the fiscal year prior and with the Super Bowl still to come this weekend.

These figures are not limited to NFL football, however, and can include wagers on the Canadian Football League, the college ranks and other leagues.

iGaming Ontario said in a statement on Friday the growth in popularity is “a testament to Ontarians being drawn from the unregulated market to sites where their play is protected and from which Ontario’s economy benefits.”

In a statement Wednesday, a spokesperson for FanDuel Canada, one of the major players in online sports betting, said it too expects to see record numbers at this year’s Super Bowl.

“We’re continuing to see interest in the Super Bowl and we’re expecting the game to be the biggest event of the year at FanDuel,” the statement reads. “Unfortunately, we can’t provide actual numbers on bets/handle due to our operating agreement with (iGaming Ontario), but we expect to see year-over-year growth.”

A spokesperson for DraftKings, another major player in the industry, declined to comment.

Online gambling became legal in Ontario in April 2022 and the industry has exploded since. iGaming Ontario’s latest quarterly figures show total wagers amounting to $17.2 billion between October and December 2023, a 22-per-cent increase from the prior quarter. It remains the only province where the industry is legal.

Since legalization, the majority of sports betting has shifted online. A recent survey from the Responsible Gambling Council (RGC) found that 41 per cent of Ontario sports bettors plan to bet on the Super Bowl and 80 per cent plan to use online platforms.

“With most of Ontario’s Super Bowl betting happening online, it’s encouraging to see the majority of bettors using responsible gambling features on regulated sports book websites,” Shelley White, CEO of the Responsible Gambling Council, said in a news release.

The industry has grown even faster in the U.S., where online gambling is legal in more than 30 states. A record 67.8 million people are expected to bet on Super Bowl LVIII, with total wagers amounting to US$23.1 billion, according to research from the American Gaming Association.

These figures include online wagering, bets made with a bookie and casual bets among friends.

Helpline calls spike around big events

The growth in gambling’s popularity is also raising some concerns, as big sporting events like the Super Bowl can be especially troublesome for those with difficulty controlling their wagers. 

Nigel Turner, a scientist with the Institute for Mental Health Policy Research at the Centre for Addiction and Mental Health (CAMH) who specializes in gambling addiction, said issues with gambling can arise more frequently this time of year.

“In the United States, the Super Bowl in particular is a huge draw for who gamble and there's always a spike in the number of people who call in having crises related to gambling around the time of the Super Bowl,” he told BNNBloomberg.ca in a phone interview Thursday.

Turner said while he doesn’t see the same February spike in helpline data here in Canada, helpline calls have increased 20 per cent since online gambling was legalized, with an uptick in November, the month of the CFL’s Grey Cup.

For what it’s worth, the Ontario government is cracking down on gambling advertising, as celebrities will be banned from online gambling endorsements on Feb. 24.

“I'm really happy that the government put the ban on celebrities because they're frequently people who appeal to youth, especially sports heroes like Wayne Gretzky was in a lot of the early advertisements,” Turner said.

Turner also applauded the gambling companies themselves for promoting responsible betting but hopes more can be done in the future.

“I think they could make that message stronger,” he said. “The fact is that gambling can be a lot of fun, but if you're spending money you can't afford to lose, then you are going to suffer consequences of that.”

The RGC suggests people understand that knowledge won’t them help beat the odds, setting spending limits and keeping to them, only gambling money you can afford to lose, and avoiding alcohol or drugs while making bets.

“Whether betting on or offline, perceived knowledge of the game, being with friends and family, and substance use can all influence how we play,” White said. “Staying within a pre-set limit and not risking more than you can afford to lose is always a good game plan.”