TC Energy open to exceeding $3B asset divestiture target this year: CEO

Amanda Stephenson, The Canadian Press

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TC Energy Corp. is open to selling off more than its previously announced target of $3 billion in assets this year, the company said Friday, and is currently engaging with multiple interested buyers for what will likely be two to four separate transactions.

CEO François Poirier said the Calgary-based pipeline operator has several divestiture processes underway and hopes to be able to make at least one asset sale announcement in the first half of the year.

"We've got many conversations going on, and not only is there competition within processes, but there's competition between processes," Poirier told analysts on a conference call to discuss TC Energy's fourth-quarter earnings. 

"So to the extent we could see some compelling valuations, we would be open to considering exceeding the $3 billion target."

The $3 billion, which Poirier said the company is "steadfast" on achieving in 2024, comes on the heels of last fall's announcement by TC Energy that it had completed the sale of a 40 per cent stake in its Columbia Gas and Columbia Gulf systems to New York-based Global Infrastructure Partners for $5.3 billion.

While the deals the company hopes to strike in 2024 will not be as large, Poirier said they have generated significant interest from the market.

"Those smaller transaction sizes tend to widen the buyer universe because more people can write those cheque sizes," Poirier said.

"So we have seen good interest in the different processes that we have underway."

TC Energy has been seeking to sell assets in order to pay off debt. The company has been under significant scrutiny from investors and credit rating agencies for its heavy debt load as well as for the spiralling costs of Coastal GasLink, the 670-km pipeline project it completed last fall.

Coastal GasLink — which will transport natural gas from Western Canada to the Shell-led LNG Canada processing and export facility currently being built in Kitimat, B.C. — was one of the largest energy infrastructure projects in recent Canadian history and its successful completion is a significant accomplishment for TC Energy.

But the project has also put pressure on the company's balance sheet. Throughout the course of construction, the project's budget ballooned from an initial $6.2 billion to $11.2 billion and then increased again to $14.5 billion.

TC Energy continues to try to pursue potential recoveries from contractors to offset a portion of the rising costs.

Poirier also said Friday that TC Energy continues to make progress on its previously announced plan to split into two separate companies by spinning off its crude oil pipelines business.

The new pipeline business, which will be called South Bow Corp., will be headquartered in Calgary with an office in Houston, Texas. It will focus on enhancing the value of the company's existing 4,900 kilometres of crude oil pipelines, including the critical Keystone pipeline system which transports oil from Alberta to refining markets in the U.S. Midwest and U.S. Gulf Coast.

Poirier said plans remain on track to hold a shareholder vote on the spinoff proposal by mid-year.

On Friday, TC Energy raised its dividend as it reported a fourth-quarter profit of $1.46 billion. The pipeline operator said it will now pay a quarterly dividend of 96 cents per share, up from 93 cents per share.

The increased payment to shareholders came as TC Energy reported its profit amounted to $1.41 per share for the quarter ended Dec. 31.

The result compared with a loss of $1.45 billion or $1.42 per share in the last three months of 2022 when it took a large one-time charge related to rising cost at its Coastal GasLink project.

TC Energy says its comparable earnings per share came to $1.35 in its latest quarter, up from comparable earnings of $1.11 per share a year earlier.

Revenue for the quarter totalled $4.24 billion, up from $4.04 billion in the fourth quarter of 2022.

This report by The Canadian Press was first published Feb. 16, 2024.

 

Staffer severance payments reach $1.7M after Manitoba government changes hands

Steve Lambert , The Canadian Press

Severance payments to political staff following last year's Manitoba election have reached about $1.7 million, government figures show — and that does not include an undisclosed payout to the former chief executive officer of Manitoba Hydro.

Large-scale staff turnover is a regular occurrence after elections lead to a government changing hands. The Manitoba election on Oct. 3, which saw the NDP end seven years of Progressive Conservative rule, was no exception.

Unlike civil servants, political staff — ministerial chiefs of staff, policy advisers, cabinet press secretaries and more — are expected to be politically aligned with the party in power. Their employment comes and goes with changes in government.

"Political jobs are a form of 'vulnerable employment' because there is a wholesale exodus of individuals serving the premier, cabinet and individual ministers when governments change," said Paul Thomas, professor emeritus of political studies at the University of Manitoba.

"Usually there is a formula used to calculate the severance payout for individual staffers based on the level of their former job, their previous salary and years of service."

A government web page that discloses payments for such employees lists dozens of staff that received severance payments in the weeks following the October election. 

Many received less than $10,000. A few received more than $50,000. One of the largest payments — $146,000 — went to a longtime Progressive Conservative who worked for caucus before the Tory election win in 2016 and rose to become chief of staff.

Some payments were given in two instalments — November of last year and January of this year. Employees had the option of spreading out the payments over two years for tax purposes.

So far, the government and Manitoba Hydro have not revealed the severance payment given to former CEO Jay Grewal, who was let go by the Crown corporation's board earlier this month.

Her total compensation in 2022 was $515,000, Manitoba Hydro's annual report from that year shows.

Given that, her severance could be substantial, Thomas said.

"The standard used to be 18 months of a continuing salary to allow the dismissed leader to land another job. Given her talent and experience, Grewal will have no difficulty finding a senior position," Thomas said.

Future annual reports are expected to show her total compensation for this year — a global figure that would include severance pay, a partial year's salary and possibly other items.

Grewal, whose previous experience includes time as chief financial officer at BC Hydro, was appointed head of Manitoba Hydro in 2019. After the NDP won the election, the government replaced the Crown corporation's board. The board dismissed Grewal on Feb. 13.

A rift between Grewal and the NDP government became apparent last month, after Grewal told a business audience that Manitoba Hydro could need new energy sources as early as 2029. 

She repeated earlier plans by the corporation to purchase wind power from private-sector partners. The minister responsible for Manitoba Hydro, Adrien Sala, said future hydro projects must be publicly owned. 

Sala said Grewal's dismissal was a board decision, and board chair Ben Graham said the board's assessment of senior leadership at the corporation had started months earlier.

Grewal did not respond to an interview request on her departure.

This report by The Canadian Press was first published Feb. 20, 2023.

 

Railway union warns work stoppage looms after CN, CPKC seek conciliation

Christopher Reynolds, The Canadian Press

The union representing 9,300 workers at Canada's two biggest railways says public safety is at stake after contract negotiations ground to a halt this month, with a potential strike on the horizon.

Teamsters Canada president François Laporte said demands by Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. are "non-negotiable."

“CN and CPKC aim to eliminate all safety-critical rest provisions from our collective agreements. These provisions are necessary to combat crew fatigue and ensure public safety," he said in a press release on Monday.

"We want to reach a negotiated settlement, but their demands are non-starters for the teamsters."

As a result, a "work stoppage looms," the union said.

CN and CPKC asked the federal labour minister Friday to appoint a conciliator for the bargaining process over a new collective agreement for train conductors, engineers and yard workers.

The notice of dispute starts the clock on a possible strike or lockout, which could occur as soon as 81 days after the request, in early May.

CN says recent regulatory changes to rest provisions have made it harder to find available crews.

"Our offer, which was refused by the union, guaranteed predictable schedules and consecutive days off for employees to specifically address work-rest balance, while keeping supply chains fluid," spokesman Jonathan Abecassis said in an email.

That proposal would see employees on a scheduled 40-hour work week, with at least 10 or 12 hours of rest between shifts — depending on whether they're at home or away — and either two or three consecutive days off each week, in compliance with federal rules.

Abecassis said the union's demands would place stress on supply chains and more costs on consumers.

CPKC spokesman Patrick Waldron says the company has offered wage hikes, quality of life improvements and predictable schedules with assigned days off, but that the railway and the union "remain far apart on the issues."

Federal conciliators have been involved in negotiating nine of the 10 collective agreements since 1993 between Canadian Pacific and the train and yard workers represented by the Teamsters Canada Rail Conference, the railway noted.

Canadian Pacific and Kansas City Southern completed their deal to become Canadian Pacific Kansas City last year, creating a network that stretches from Halifax to Vancouver and the U.S. Gulf Coast down to southern Mexico.

Fatigue management remains a factor in safety concerns around freight rail, lingering on the Transportation Safety Board of Canada's "watchlist" since 2016.

New rules came into effect last May that cap freight workers’ maximum shift length at 12 hours, down from 16. They also raised the minimum rest period between shifts to 10 hours at home and 12 hours when away from home, versus the previous six hours and eight hours, respectively.

In June, a Federal Court judge found Canadian Pacific guilty of contempt of court for employees working excessively long hours in 2018 and 2019. The railway vowed to appeal.

The current collective agreements go beyond what regulations require for rest, Teamsters Canada spokesman Christopher Monette said. For example, engineers — who drive the train — and conductors who oversee schedules and communication can limit their shift to 10 hours rather than the 12-hour ceiling stipulated under federal rules.

"We plug holes in the regulations that we believe exist and we seek to to improve them to the benefit of our members and to the benefit of the public," Monette said in a phone interview.

The union is hoping for "incremental" gains on existing rest provisions, he added.

In March 2022, Canadian Pacific experienced a two-day work stoppage due to a dispute over pay, benefits and pensions before both sides agreed to enter binding arbitration.

In November 2019, a rail strike gripped the country for eight days until CN and 3,000 railroaders reached a tentative deal, ending a job action that halted shipments, triggered layoffs and disrupted industries across the country.

Several incidents this month have driven home the dangers of rail work.

On Friday, two crew members were injured when four CPKC locomotives slammed into a stopped train and derailed Friday night east of Revelstoke, B.C., sparking a fire.

The Transportation Safety Board also said officials were deployed to the scene of another Canadian Pacific derailment Saturday about 200 kilometres farther east in Field, B.C.

Several workers at major American railways were also killed in separate incidents since the start of the year.

This report by The Canadian Press was first published Feb. 19, 2024.

Industry players say the sector is withering as pension funds neglect domestic investment

In the past 20 years, Canada has lost almost all of its mining giants, according to industry players who warn that this poses economic challenges as the country attempts to adapt to a green future dependent on rare resources. 

Pierre Lassonde, co-founder and chair emeritus of Franco Nevada Mining and Frank Guistra, and chief executive officer of Fiore Group, say a solution can be found in preserving Canada’s mining sector and leaning on Canadian pension funds, which represent 35 per cent of all Canadian savings. 

“Our pension funds represent $2.7 trillion dollars of savings by Canadians,” Lassonde told BNN Bloomberg in a television interview on Tuesday. 

“It’s unconscionable that 75 per cent of that money leaves Canada, and goes overseas to create jobs and create employment in countries like China and Vietnam and everywhere else in the world and not in Canada.”

He added that less than three per cent of that money is invested in Canadian public equity. 

Lassonde said a “total hallowing out” has occurred in Canada’s mining industry, noting that a lack of focus on all Canadian industries is exacerbating the problem. 

“With such a poor investment track record, what are you going to do?” he said. 

Giustra compared Canada’s situation with Australia, which has 22 per cent of its assets under management invested in public equities. 

“We don’t have the same opportunity here in Canada,” he said in an interview with BNN Bloomberg on Tuesday. 

“Although it’s fair that these pension funds should have the opportunity to invest around the world, the fact that they have so little invested in their own country is just outrageous,” Giustra added. 

“It just to me seems like a failed opportunity for this country.”

For the rest of the interview with Lassonde and Giustra, watch the video above. 

 

Trudeau boosts B.C.'s housing plan with $2 billion in federal financing

Brenna Owen, The Canadian Press

The federal government is doubling the financing available for a British Columbia housing plan the prime minister called "transformative."

Justin Trudeau was in Vancouver on Tuesday to announce that his government was adding another $2 billion in financing to the province's BC Builds plan aimed at constructing more middle-income rental housing.

The prime minister called the plan, "ambitious and fundamentally practical," adding the additional federal financing will help create another 8,000 to 10,000 new homes.

"What you're doing here is transformative," Trudeau said while on a rooftop of a condominium at the University of B.C. 

"And I am hoping that other provinces take careful note of the leadership that you've shown," he said. "These are the things we need right across the country."

The money comes on top of $2 billion in low-cost provincial financing for developers to fast-track affordable rental housing on government-, community- or non-profit-owned and underused land

The province is also committing $950 million to build rental homes under the program.

B.C. Premier David Eby was also at the announcement and said the model of funding will allow the government to "change the direction of housing."

"What the prime minister has announced today, $2 billion in additional funding for the BC Builds program, will be transformational for thousands of families in British Columbia that are desperate for housing," he said.

"They can afford housing, they just need it to be available. This money will make it available for them."

The BC Builds program promises to use lower government borrowing rates to offer lower-cost financing and grants to bring down construction costs and have projects completed within 12 to 18 months.

Renters in the buildings will be income tested so they spend no more than about 30 per cent of their wages on rent.

The province has so far identified 20 sites for possible construction. On Tuesday, Eby announced plans for a new 112-unit co-op in the Yaletown neighbourhood, with construction starting this summer. 

After the announcement, Trudeau is scheduled to visit a high school and meet students before an event at a community centre with seniors in the afternoon. 

Trudeau's announcement comes as provincial policymakers return to the legislature for the throne speech to begin the spring legislative session. 

This report by The Canadian Press was first published Feb. 20, 2024.

 

Federal government scales back carbon price rebates for small businesses

Mia Rabson, The Canadian Press

The federal government is cutting the amount of financial relief small businesses will receive from carbon pricing revenues so it can increase the size of the rebate it is providing to rural families.

That's despite the fact the government still owes businesses more than $2.5 billion in promised carbon pricing revenues from the first five years of the program — and refuses to say when that money will flow.

Small businesses were already paying more than they were getting back, and the change will make that shortfall even worse, said Dan Kelly, the president of the Canadian Federation of Independent Business. 

"It is deeply unfair," Kelly said.

"I expect the outrage level among small businesses toward this tax to rise once business owners find out about the bad tax being even a bigger ripoff."

The CFIB estimates small businesses contribute as much as 40 per cent of the government's overall carbon price revenues. Clean Prosperity, an economic and climate change think tank, puts it closer to 25 per cent.

But they were never set to receive more than seven per cent of the revenues back, and now that amount is dropping to five per cent.

Information posted to the federal government website last week shows Ottawa intends to return $623 million in carbon pricing revenues to businesses for the 2024-25 year.

In 2023-24, the government allocated almost $935 million for small business, which is 50 per cent more than it was when the carbon price itself was $15 less per tonne.

That is happening as the federal government increases the rebates paid to rural households, which initially were getting a 10 per cent top-up to the household carbon rebate. As of April 1, that goes up to 20 per cent.

Prime Minister Justin Trudeau announced the move last fall at the same time as he promised a three-year exemption from carbon pricing for heating oil.

He said the government has and will continue to help small businesses "transform" their operations to save energy, but acknowledged the extra funds for rural rebates had to come from somewhere.

"In every policy we have to make choices," Trudeau said last October.

Questions to Environment and Climate Change Canada and Finance Canada about the change have thus far gone unanswered.

The change also comes as Ottawa has paid out only a small fraction of what it already promised small businesses to begin with.

The carbon price was designed so that 90 per cent of the money collected from consumers and smaller businesses would be provided to individual households in the form of a rebate. 

Small and medium-sized businesses — those without major carbon footprints of their own — were to get about seven per cent back through various grant programs designed to encourage investments in more energy-efficient equipment, appliances or building retrofits.

The rest was to be shared between Indigenous communities, municipalities, hospitals and schools, again through a myriad of programs to contribute to energy efficiency upgrades.

The carbon rebates have flowed as promised to households, but various problems, including the COVID-19 pandemic, caused the other programs to stumble out of the starting gate.

Just over $100 million has been returned through the programs so far, including $35 million to small business, $60 million to schools and about $6 million to Indigenous communities.

That failure to launch prompted Finance Minister Chrystia Freeland to promise a new system to distribute the $2.5 billion owed to small businesses for the first five years of carbon pricing.

That plan, announced in 2022, was to target businesses in "emissions-intensive and trade-exposed sectors," but those have yet to be defined. Beyond the shrinking share of the pie, no additional details have been released.

Environment Canada would provide no details when asked about the $2.5 billion promise earlier this month.

"The government of Canada is working hard to launch these fuel charge return programs," the department said in an emailed statement.

Not only is the change unfair, it's undermining the whole purpose of carbon pricing, Kelly said. 

"The whole principle of a carbon tax is you tax carbon-based activities and you give the money back so that then people make decisions to use those dollars in lower-carbon activities," he said. 

"The whole concept doesn't work if you don't give the money back."

Michael Bernstein, the executive director of Clean Prosperity, said he doesn't think the reduction is justified.

"I do think there's a legitimate concern there."

Bernstein said he has advised the government to offer businesses a tax credit to offset what they pay in carbon pricing.

This report by The Canadian Press was first published Feb. 20, 2024.

 

MPs 'running out of patience' amid fight with grocers even as price pressures ease: expert

Jordan Fleguel, BNN Bloomberg

Growth in the price of groceries slowed in January in tandem with a drop in the headline inflation rate, according to Statistics Canada, but a food expert says the fight between parliament and the country’s largest grocers is far from over.

The growth in prices for food purchased from stores last month declined to 3.4 per cent year-over-year, compared to 4.7 per cent in December, according to StatCan’s latest Consumer Price Index (CPI) reading.

“Things are easing for sure,” Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University told BNN Bloomberg in a Tuesday interview following the CPI release on Tuesday.

“If you talk to food companies, they are seeing the same thing; supply chains are much easier to manage right now, and margins are more predictable, so it's not surprising that we're seeing consumers benefiting.”

A number of other CPI categories also saw subdued price growth as Canada’s headline inflation rate fell to 2.9 per cent in January from 3.4 per cent the month before.

StatCan said that while grocery prices remain “elevated,” there was a broad-based easing in price growth across many categories including meat, dairy and fresh fruit, while some food items, such as soup and bacon, saw price declines last month.

Grocery code of conduct

Despite Tuesday’s encouraging CPI release, Charlebois said the dispute between parliament and Canadian grocers over high prices is likely to continue, adding that MPs are “running out of patience.”

In the latest development, a House of Commons committee tasked with examining food prices in Canada urged major grocers Loblaw and Walmart to sign on to a voluntary code of conduct on Friday, or risk having it made mandatory.

Both companies have said they wouldn’t sign the code as currently written, saying it could lead to higher prices at their stores. 

“Everyone agrees that a code of conduct would actually help to increase competition overall, and we all know now that both Loblaw and Walmart are not necessarily adhering to a voluntary code,” Charlebois said.

“Without the two big players, I don't think a code would actually work in Canada, which is why MPs are really pressuring those two companies.”

The code, written by industry stakeholders, was drafted with the aim of creating a set of rules for fair dealings in negotiations between suppliers and grocers.

The code’s proponents say it would level the playing field both for suppliers and smaller grocery companies, as large grocers like Loblaw and Walmart currently hold too much negotiating power.

“A lot of people think that the code is about government intervention – it is not,” Charlebois noted.

“It is not about price fixing, it's really more about creating a level playing field and giving a chance for suppliers to survive and to have a shot at the market.”

Consumer habits

Charlebois said that most Canadian consumers remain “desperate” for grocery savings, and that shoppers have increased their trips to the store and expanded the number of grocers they visit in search of better affordability.

“People are going to the grocery store way more often. The frequency rate for grocery businesses has gone up 32 per cent in the last six years,” he said.

“What that means is that people are just bargain hunting a lot more – they're visiting more grocery stores.”

Charlebois said that as shoppers “expand their portfolio” of stores that they frequent, grocers will need to offer more generous loyalty programs and deals to entice consumers to stick around.

With files from The Canadian Press