Suncor reverses workplace injury trend, reports 2023 was company's safest year ever

Amanda Stephenson, The Canadian Press

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Oilsands giant Suncor Energy Inc., which has been heavily criticized in recent years for an abnormally high number of workplace deaths at its sites, reported that 2023 was its best year ever in terms of worker safety.

CEO Rich Kruger told analysts on a conference call that Suncor achieved its best overall employee and contractor safety performance in the company's history last year.

"We had no life-altering or life-threatening injuries for the first time since 2015," Kruger said on Thursday. 

"We had a nearly 50 per cent reduction in lost-time incidents year-over-year and we had our best-ever recordable incident rate in the downstream and our second-best-ever in the upstream."

The news marks a major turnaround for the Calgary-based energy company, which between 2014 and 2022 had at least 12 workplace deaths at its sites, more than the rest of its oilsands peers combined.

Suncor's safety record was so poor that it attracted the attention of U.S.-based activist investor Elliott Investment Management, who in 2022 made a public case for an overhaul of the company's board and management.

Kruger himself, the former CEO of ExxonMobil's Canadian subsidiary Imperial Oil Ltd., was lured out of retirement last year to lead a restructuring at Suncor in the wake of a spate of high-profile operational and financial challenges at the company.

He replaced interim CEO Kris Smith, who temporarily held down the fort following the 2022 resignation of Mark Little, who stepped down as chief executive one day after the death of a worker at Suncor's Base Mine near Fort McMurray, Alta.

Kruger has implemented a number of changes at Suncor during his approximately one year on the job, including reducing the company's employee head count by 20 per cent, or 1,500 people, in order to eliminate unnecessary or "unaffordable" work.

That move, which cost the company $275 million in severance, was worth $450 million in annual savings, Kruger said.

With what Kruger defined as an "overall urgency to improve performance," Suncor has also restructured its site teams, introduced a new performance evaluation system for employees and managers, and worked to improve asset reliability.

The result of all of these initiatives is that the company met its external financial guidance for the first time in six years in 2023, he said.

But Kruger said there is still room for improvement, including at its Terra Nova offshore oil platform off the coast of Newfoundland, where startup of production was delayed longer than expected.

“Despite overall strong financial and operating performance in 2023, I look at it as we also left some on the table," he said.

One area Suncor will focus on in 2024 is cutting costs in the oilsands to keep pace with some of its more cost-efficient peers. The company is investing in driverless, or autonomous, mining trucks in order to cut down on operating costs, and expects to double its autonomous fleet to 91 vehicles this year. 

By the end of the year, all of the ore at Suncor's Base Mine will be moved autonomously, Kruger said, adding the switch to driverless technology is expected to save the company about $1 million per truck per year.

Suncor earned $2.82 billion in the fourth quarter of 2023, up from $2.74 billion in the same period of 2022, the company reported after the close of markets Wednesday.

The company said its net earnings for the three months ended Dec. 31 work out to $2.18 per common share, and included a $1.13 billion non-cash gain as a result of the company's acquisition of TotalEnergies' Canadian oilsands operations.

On an adjusted basis, Suncor said its operating earnings were $1.64 billion, or $1.26 per common share, in the fourth quarter, compared with $2.43 billion in the prior year's quarter.

The company said the decrease was primarily due to lower crude oil prices and a weaker business environment.

Suncor's total upstream production in the quarter was 808,100 barrels of oil equivalent per day, the second-highest quarter in the company's history, while its oilsands production hit an all-time record of 757,400 boe/d.

RBC Capital Markets analyst Greg Pardy called the results "impressive" and said in a note that he is reaffirming his "outperform" rating on the stock.

"As a turnaround story, Suncor’s strong fourth-quarter results reinforced our confidence in the company’s improving operating/financial momentum — which we think will translate into relative share price appreciation over time," Pardy wrote.

Suncor also announced Wednesday that its board chair Michael Wilson will retire. He will be replaced by Russ Girling, a former CEO of TC Energy Corp. who has served on Suncor's board since 2021, effective March 15.

This report by The Canadian Press was first published Feb. 22, 2024.

INDIGENOUS CAPITALI$M

Indigenous firms, First Nation to create investment dealer with Scotiabank

The Canadian Press

Two Indigenous development corporations and one First Nation have partnered with Scotiabank to create a new Indigenous-owned investment dealer. 

Cedar Leaf Capital Inc., which still needs regulatory approval, will be majority-owned by Nch'kay Development Limited Partnership, Des Nedhe Financial LP and Chippewas of Rama First Nation.

Together they will own a 70 per cent stake, while Scotiabank will initially hold 30 per cent and control the investment dealer.

However, over time, Scotiabank intends to reduce its controlling stake so that Cedar Leaf will become a fully Indigenous owned and led investment dealer.

Cedar Leaf will offer Canadian institutional clients financial advisory services, with a focus on fixed income securities offerings.

The groups say it will foster greater Indigenous participation in the capital markets, create commercial opportunities for Indigenous communities, and partner with established market participants to help them in meeting their reconciliation commitments.

This report by The Canadian Press was first published Feb. 23, 2024.

An analyst believes Lynx Air’s sudden closure is a benefit to the major players in Canada, but is bad news for travellers looking to score a deal.

On Thursday evening, the low-cost carrier announced it would cease operations, effective Feb. 26, after filling for creditor protection. The airline cited “the compounding financial pressures associated with inflation, fuel costs, exchange rates, cost of capital, regulatory costs and competitive tension in the Canadian market” for its decision to close operations.

In a note to clients on Friday, Cameron Doerksen, an analyst with the National Bank of Canada, wrote that the Lynx network covered about a third of Air Canada’s domestic routes and about a fifth of its U.S. transborder routes, meaning the major player “could see some modest benefit” after Lynx shuts down.

“Despite its rapid growth, (Lynx Air) accounted for just 2.1 per cent of domestic seat capacity and 1.9 per cent of transborder capacity in Q1, so the immediate impact on the competitive environment will be limited,” Doerksen wrote in the report.

“However, Lynx had publicly outlined plans to eventually grow its fleet to 46 planes, so its failure eliminates a future competitive threat and significantly reduces future capacity growth in the market.”

Doerksen also believes Lynx’s shutdown could signal a warning to any future startup airlines looking to fly in Canada’s skies.

“One of the financial backers of Lynx was Indigo Partners, a successful private equity investor in numerous low-cost airlines globally,” he said. “The fact that even with the help of an experienced investor, Lynx Air was unable to have success … and was also unable to source additional capital to sustain its operations speaks to the challenges any startup airline faces in Canada.”

“In this context, we would not be surprised to see other rapidly growing airlines' growth plans scaled back.”

Airfare prices to climb

With Lynx out of the market, Doerksen believes airfares will climb.

“With Lynx's capacity exiting the market, we could see a modestly positive impact on pricing in the shorter term,” he wrote. “Lynx has been among the most aggressive on pricing on certain routes, both domestically and to the U.S.”

Earlier this week, Statistics Canada reported airfare prices had fallen 14 per cent in January compared to a year prior, but remained 10 per cent above 2019 prices.

Experts believe the drop in prices is largely due to a levelling off in demand following a post-pandemic surge.

With files from The Canadian Press

WORKERS CAPITAL

Quebec pension hit with real estate loss as 'hostile' market persists

Mathieu Dion, Bloomberg News  Feb 22, 2024 

The Caisse de Depot et Placement du Quebec (CDPQ) headquarters in Montreal, Quebec, Canada, on Thursday, Feb. 24, 2022. Caisse de Depot et Placement du Quebec posted the highest returns since 2010 last year, with growth boosted by its private equity holdings and public stock portfolio. , Bloomberg

Quebec’s public pension manager reported a 7.2 per cent return in 2023, as losses in real estate detracted from big gains in its credit and stock portfolios.

Caisse de Depot et Placement du Quebec has restructured its real estate business, shifting capital to apartments and industrial properties, but it wasn’t enough to offset problems in the office sector. The fund manager posted a 6.2 per cent loss on its $46 billion property portfolio — the only asset class for which it had a negative return last year. 

Nathalie Palladitcheff, the head of Ivanhoe Cambridge, CDPQ’s real estate arm, described last year’s environment as “hostile.” High interest rates and low occupancy have created a difficult outlook for office owners and their lenders, with more than $1 trillion in commercial real estate loans set to mature by the end of next year.

“The increase in rates impacts both the valuation and the cost of debt, and this resulted in a very significant drop in transactional volumes on a global scale,” Palladitcheff said, referring to the broader real estate market. “They have been halved in Europe, halved in the United States, even an 80 per cent drop in transactions in Germany, for example.”

In equity markets, Canada’s second-largest pension fund benefited from its high exposure to the technology sector with a 17.7 per cent gain. But CDPQ’s private equity portfolio recorded just a 1 per cent increase, as rising financing costs impacted private companies.

The fund’s net assets grew by $32 billion to end last year at $434 billion. It’s a shift from 2022’s results, when the firm posted its worst annual return since the global financial crisis.

CDPQ’s assets under management have grown by almost $100 billion since the beginning of 2020.

“We may reach a crossroads in the year ahead, with many central banks likely to pivot, but the scope and sequence remain unknown,” CDPQ Chief Executive Officer Charles Emond said in a statement. “With a backdrop of downward but persistent inflationary pressure combined with lingering volatility, our portfolio remains well-positioned to keep delivering the long-term returns our depositors need.”

Millennials in a pension pickle as they overtake boomers

By Dale Jackson

Millennials have officially overtaken baby boomers as the dominant generation in Canada. 

According to Statistics Canada, the generation born between 1981 and 1996 now outnumbers the reigning boomers born between 1946 and 1965.

But it’s a hollow victory for the throngs of young workers with little or no retirement pensions. With the fading of the post-Second World War generation, which made up 40 per cent of the Canadian population from the mid 1960s to the early 1970s, goes the defined benefit pension plan.

The defined benefit (DB) pension was the gold standard when boomers dominated the workforce. Worker and employer both paid into it, and regular income - most often tied to the rate of inflation - was guaranteed after retirement. Some included provisions for survivor benefits and other perks younger workers can only dream of today.   

According to StatCan, 48.4 per cent of employed men and 34.5 per cent of employed women were covered under a DB pension plan in 1977. As of 2000, the proportion of DB pensions had plunged to 21.4 per cent for men and 28.7 per cent for women; almost exclusively public sector employees.

The dawn of defined contribution pension

Defined benefit pensions became a huge liability for employers as boomers headed into retirement. Over time they have been replaced by defined contribution (DC) pensions, where workers and often employers contribute a fixed per cent of the worker’s salary to be invested by a third party. The amount the employee receives in retirement depends on how much is contributed and how well the investments perform; exposing them to the whims of broader markets.

One of those third party pension managers, Gren Austin from Wealthsimple Work, told BNNBloomberg.ca that group sponsored defined contribution pensions may be the last, best chance for working Canadians.  

“We know broadly that pension involvement is down over the decades. And so the onus becomes on the individual, on the Canadian, on the employee, to pay for their own retirement,” he said, adding that employer contributions are basically free money and the plans are better suited to more transient millennial workers.

Employers who sponsor group pension plans, however, are not required to make contributions. In addition to the overall decline in pension quality, research from Deloitte Canada last November found that only 24 per cent of private sector workers participated in any employer-sponsored pension plan.

Workers without pensions are on their own

That leaves a big chunk of today’s workforce having to take matters into their own hands through tax-friendly, government-sponsored initiatives including the registered retirement savings plan (RRSP). The deadline to deduct RRSP contributions from 2023 income is February 29 but contributions can be made any time.

A tax free savings account (TFSA) could be a more suitable pension savings vehicle for lower income earners who won’t benefit as much from an RRSP deduction. Contributions are not tax deductible in a TFSA but gains on investments are not taxed (RRSP withdrawals are fully taxed).

The challenge is finding investments for those RRSP and TFSA contributions that will grow to retirement. Professional management requires fees that tend to consume a disproportionately large portion of investable assets in smaller portfolios.

While debt-burdened Canadians struggle under higher borrowing rates, fixed income such as bonds and guaranteed investment certificates (GICs) are delivering safe, strong rates of return for those with their debt in check.

Millennials also have the advantage of a wide assortment of index-linked exchange traded funds (ETFs) tracking every major global market and sector for a fraction of the cost of professionally managed funds. 

CPP and OAS as retirement supplements

On the bright side, there’s still the Canada Pension Plan (CPP) for working Canadians and Old Age Security (OAS) for everyone. Both are safe and secure - at least for the foreseeable future. 

They don’t provide enough income for most people to live on but are significant retirement supplements that - as a last vestige of defined benefit pensions - are linked to inflation. 

CPP payment amounts are determined by how much is contributed by workers over the years but the current annual maximum at 65 years old is $16,375.

In 2024 the maximum annual OAS payment for individuals between the ages of 65 to 74 rose to $8,560.

'Surprising' home sales increase challenging BoC's efforts to bring inflation down: economist

Daniel Johnson , BNN Bloomberg

One economist says that accelerating momentum in Canada’s housing market ahead of potential interest rate cuts could have spillover effects for the broader economy. 

Scotiabank Senior Economist Farah Omran said in an interview with BNN Bloomberg on Friday that rising home sales in December were a “surprising jump for everybody” and the trend continued into January. She noted that rises in home sales have taken place ahead of any moves by the Bank of Canada to lower interest rates. 

“House prices have not started increasing with the increase in sales that we've seen, but that is typical. Typically prices lag, the increase in sales, or the decline in sales,” Omran said adding that price increases could occur in the next few months. 

The Canadian Real Estate Association said in January that December was characterized by “surprise” gains in home sales, rising 3.7 per cent compared with the same month a year earlier. 

In the Greater Toronto Area, home sales rose 11.5 per cent in December compared to the previous year, according to the Toronto Regional Real Estate Board. Home sales rose to a lesser degree in Vancouver during December, with annual gains coming in at 3.2 per cent, according to the Real Estate Board of Greater Vancouver. 

Omran also highlighted that the increase in buying activity could cause unintended inflationary pressures, and complicate efforts by the central bank to bring inflation back to its two per cent target. 

“The other part of how housing impacts the Bank of Canada’s mission is that it increases economic activity. Once sales increase, there are spillover effects on other sectors in the economy that are related to housing, like furniture and renovation,” she said. 

“Therefore, when home sales pick up, economic activity also picks up. And we are in an environment where the Bank of Canada is actively trying to slow down economic activity to create an excess supply and bring inflation back to target.” 

Trudeau announces funding for affordable housing construction in Cape Breton

Michael Tutton, The Canadian Press

Prime Minister Justin Trudeau travelled to Nova Scotia on Thursday to announce $13.3 million in funding to fast-track construction of 367 housing units over the next three years.

Trudeau made the announcement from a snow-covered housing development inside the Membertou First Nation, a mostly urban community south of Sydney, the largest city in Cape Breton.

"People right across the country are facing tremendous pressures on housing, on rents on mortgages — on a range of things that are really top of mind," Trudeau told a news conference that featured massive snowdrifts in the background, the result of a historic nor'easter earlier this month that dumped up to 150 centimetres of snow on parts of the region.

"As a government, we've stepped … back into the housing business after previous Conservative governments in Ottawa stepped away from housing."

The prime minister said a $1.9-million agreement reached with Membertou and an $11-million agreement with the surrounding Cape Breton Regional Municipality could help spur the construction of more than 3,200 homes over the next 10 years.

The money is coming from the federal government's $4-billion Housing Accelerator Fund, which was announced in March 2023. It's aimed at encouraging municipalities to make changes to bylaws and regulations that will increase housing construction. 

"We needed a way to change the speed housing was built in this country," Trudeau said. "We're looking at the tools that municipalities … have to unlock even more housing faster in their communities."

The program encourages municipalities to adopt denser zoning rules, speed up approvals for building permits and increase the use of public and underutilized lands. It also provides incentives for non-profit and private homebuilders to develop affordable housing projects.

The agreement with the regional municipality, for example, involves pre-approved building plans to fast-track construction and streamline the permitting process. As well, the municipality plans to cut construction time by providing financial incentives to developers for affordable housing.

Under the Membertou agreement, the First Nation will recruit housing administration staff and construction managers to hasten the building process. The funds will also be used to improve access to bridges, water and sewer services.

"It's going to put a big dent in our housing needs," said Terry Paul, chief of the Membertou First Nation. "It's going to provide what we call 'forever homes' for a lot of people here in Membertou."

As of Thursday, the federal government has signed 52 similar agreements since the launch of the fund. 

"Housing is a challenge right now, right across the country," the prime minister said. "But it's a challenge we've been able to solve before as a country. And we're going to solve it again."

His announcement in Cape Breton followed housing pledges he made earlier in the week in Alberta and British Columbia.

On Wednesday, Trudeau announced $175 million in housing accelerator funding for the construction of 5,200 housing units in Edmonton over the next three years. And on Tuesday, he was at the University of British Columbia in Vancouver where he said Ottawa would add $2 billion to the province’s new BC Builds initiative aimed at fast-tracking the construction of middle-income rental housing. Earlier this week, six Alberta communities signed deals with Ottawa that provide nearly $14 million to help build 400 new homes over the next three years.

Trudeau's most recent trip to Atlantic Canada was on Jan. 18, when he travelled to Saint John, N.B., to announce $9.1 million in accelerator funding for 285 housing units over the next three years.

Before his announcement Thursday in Membertou, Trudeau visited a long-term care home under construction in the Eskasoni First Nation, about 40 kilometres southwest of Membertou. Norm Sylliboy, chief of the Mi’kmaq Grand Council, greeted the prime minister in the foyer, where large trees run up and through the concrete ceiling, evoking the structure of a traditional wigwam. Ottawa contributed $19.7 million to the project.

“A lot of work has been done, and there’s still more to be done," Sylliboy said. 

The prime minister was then shown one of the 48 individual bedrooms, slated to be occupied in April 2024. 

Leroy Denny, chief of Eskasoni First Nation, said his mother, who has dementia, will be one of the first residents. 

“This place is special to me,” the chief said. "It's happy for me that she’ll have a home here."

This report by The Canadian Press was first published Feb. 22, 2024.

With files from Michael MacDonald in Halifax.

Trudeau announces $175 million for Edmonton to help build affordable housing

Bob Weber, The Canadian Pres

Prime Minister Justin Trudeau announced Wednesday $175 million in funding to fast-track more than 5,200 new housing units in Edmonton over the next three years. 

"We're changing the way housing gets built in this country," Trudeau said at an apartment complex construction site in southwest Edmonton. 

The money is to flow through the federal Housing Accelerator program and be used to eliminate barriers to getting the homes built. 

Trudeau said the funds would create more housing options in the city, including more rentals, affordable apartments, and housing near university and college campuses.

"One of the challenges we're facing right now with this housing crisis is over the past decades the federal governments of different stripes stepped back from the business of ensuring that housing was properly built right across the country in affordable ways, meeting the supply needs, meeting the growth of the country," Trudeau said.

Before announcing the agreement, Trudeau toured a project in the city's southwest corner that is to provide 334 housing units by the summer — with 60 per cent of them classified as affordable.

Walking through half-built hallways hanging with conduit, heavy with drywall dust and the smell of industrial adhesives, a hard-hatted Trudeau spoke with a number of tradespeople. 

"Work's been picking up," said James Cameron, a plumber working on the apartment project. About 80 workers were on the site Wednesday.

"I think I speak for all of us when I say how it's good to make changes," Cameron's co-worker Joey Boelhouwer told the prime minister.

Trudeau listened as David Mitton, president of builder Leston Holdings, described Edmonton-created wood framing technology that is speeding construction of the units. Cellphone apps and other technological tools also help workers communicate faster and more efficiently, he said.

"We keep trying to find ways to build homes quicker," Trudeau responded.  

Trudeau appeared at the news conference with Edmonton member of Parliament and cabinet minister Randy Boissonnault and Edmonton Mayor Amarjeet Sohi.

The city passed a motion last month declaring a homelessness and housing emergency. 

"This city council has been committed to ensuring that everyone living in this city has a decent place to call home," Sohi said Wednesday. "We're very appreciative of how federal investments have been able to build more supportive housing.

"Our city has been leading the charge in removing barriers to housing by overhauling the zoning regulations, making it easier for people to build."

Trudeau spoke about the need for different levels of government to work together on the issue. But unlike a housing announcement Trudeau made Tuesday in British Columbia, no representatives from the Alberta government were on hand.

In a social media post, Alberta Seniors, Community and Social Services Minister Jason Nixon demanded Trudeau provide per capita housing funding and "end his attacks on the men and women in our oil and gas sector." 

"The prime minister must stop hiding from Alberta’s government and come to the table to talk about these important issues," Nixon posted.

Trudeau said he's happy to meet with provinces "whenever they ask me to meet."

He said the federal-provincial program announced earlier in B.C. sees Ottawa match financing with that province to build affordable rental units. Trudeau and Premier David Eby appeared together to announce $2 billion in federal funding to expand the BC Builds program.

"I would love to be here with the province in the coming months announcing an Alberta Builds program," Trudeau said. "We would like to see the province sit down with us in trilateral meetings on countering homelessness."

Using provincial and federal money, the B.C. program is to use government, non-profit, community-owned, and underused land and fast-track development approval to build an estimated 8,000 to 10,000 new homes.

Also Tuesday, six smaller Alberta communities signed deals with Ottawa that provide nearly $14 million to help build 400 new homes over the next three years in Banff, Sylvan Lake, Bow Island, Westlock, Smoky Lake and Duchess.

This report by The Canadian Press was first published Feb. 21, 2024.

Canadians eager for homeownership, but down payments present another hurdle: report

Ben Cousins, BNN Bloomberg

A new survey suggests economic challenges have not dampened Canadians' enthusiasm for the housing market.

NerdWallet Canada’s 2024 Canadian Home Buyer Report, released Wednesday, found 49 per cent of Canadians plan on buying a home within the next five years, though most appear willing to wait out the high interest rates, as only 11 per cent plan on buying in the next 12 months.

“Though it’s not entirely realistic, the strong desire to buy speaks to how much Canadians value owning their own home,” Clay Jarvis, NerdWallet’s mortgage and real estate expert in Canada, wrote in the report.

Though high real estate prices and interest rates present significant barriers to homeownership, the survey shows down payments may also be an issue.

The report found that just 16 per cent of Canadians planning to buy a home with a down payment have begun saving for it. 

“Saving any money in the current economic climate is a cause for celebration, but many home buyers will need to greatly increase their down payment savings if they hope to get approved for a mortgage,” the report states. “This is especially true for Canadians aged 18-34 who plan to buy a home in the next five years, with 21 per cent of this cohort saying they have not started saving.”

Under Canadian guidelines, home purchases require a five per cent down payment at minimum, while homes sold for more than $500,000 require a minimum payment of five per cent for the first $500,000, and 10 per cent for the remainder.

Under these guidelines, Canadian Real Estate Association’s average home price for December -- $657,145 – would require a down payment of $40,715.

Canadians also looking to sell

While nearly half of Canadians are looking to buy, it appears Canadian homeowners are equally eager to sell.

The survey found 42 per cent of Canadian homeowners plan to sell within the next five years, which would still shut millions of expected home buyers out of the market, excluding new builds and immigration.

For those considering selling their home, the current economy is less of a concern, as 31 per cent said they plan to downsize, while 24 per cent are looking for a change of scenery and 20 per cent are looking to upsize.

Methodology

This survey was conducted online within Canada by The Harris Poll on behalf of NerdWallet from Jan. 17 – 19, 2024 among 1,015 adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval.  For this study, the sample data is accurate to within +/- 3.8 percentage points using a 95 per cent confidence level.

 

More red ink at Manitoba Hydro as need for new power generation looms

Steve Lambert, The Canadian Press

After ruling out more private-sector wind farms, Manitoba's NDP government said it will come up with a plan to fund new energy projects while also freezing hydroelectric rates and keeping its Crown-owned energy utility's debt load in check.

"We know we need new generation. We want that new generation to be publicly owned, and we have confidence in the (Manitoba Hydro) board and their ability to help deliver on that," Finance Minister Adrien Sala, who is responsible for Manitoba Hydro, told a legislature committee Thursday.

Sala's comments came the same day Manitoba Hydro reported more red ink in a quarterly fiscal update. 

The Crown utility is forecasting a $190-million net loss for the fiscal year that will end in March. That is $29 million higher than the loss predicted in the last quarterly update, and a big change from an original prediction of $450 million in net income last spring.

The change is due largely to drought conditions that have reduced water levels used to general power, along with other factors such as lower export prices and a warm autumn that reduced demand for heat.

The new numbers come at a time of turnover for Manitoba Hydro. The NDP government replaced the corporation’s board after defeating the former Progressive Conservative government in the Oct. 3 election.

The NDP-appointed board then dismissed chief executive officer Jay Grewal, who had promoted a plan to use wind power from independent providers as a way to quickly meet growing energy demand. 

The idea was not new. It had been mentioned by the previous board, and a former NDP government signed deals with two private wind farms more than a decade ago that continue to supply power to the province.

Grewal had said Manitoba will need new energy production as early as 2029, and new Manitoba Hydro dams would not be built quickly enough or be as cost-effective as wind farms.

The Opposition Progressive Conservatives accused the NDP of rejecting the private wind-farm plan with no backup strategy.

"(The year) 2029 is only a few years away," Tory Obby Khan told the committee.

Sala said a plan will be drawn up.

"We are a new government. We're just getting started in developing the plans that need to be put forward," Sala said. He said the former Tory government did nothing to build generating capacity during its seven years in power.

Manitoba Hydro has appointed an interim chief executive officer, Hal Turner, while it seeks a replacement for Grewal. Turner told the committee no decisions have been made yet on new energy production, and Manitoba Hydro is also looking to ease the rise in demand.

"I am confident that when we work with this new board, we will find the appropriate path forward that will allow us to meet Manitobans' energy needs safely and affordably," Turner said.

The NDP campaigned on a promise to freeze rates for consumers for one year. Sala said that promise remains, and will be done sometime before the next election, scheduled for 2027.

"That's a commitment that we're planning on delivering on," he said.

This report by The Canadian Press was first published Feb. 22, 2024.

TransAlta reports $84M Q4 loss compared

with $163M loss a year earlier



TransAlta Corp. reported a loss attributable to common shareholders of $84 million compared with a loss of $163 million a year earlier.

The power utility says the loss amounted to 27 cents per diluted share for the quarter ended Dec. 31 compared with a loss of 61 cents per diluted share a year earlier.

Free cash flow per share for the quarter amounted to 39 cents, down from $1.17 in the fourth quarter of 2022.

Revenue totalled $624 million, down from $854 million in the last three months of 2022.

Production for the quarter was 5,783 gigawatt hours compared with 6,005 gigawatt hours a year earlier.

In its outlook for 2024, TransAlta says it expects adjusted earnings before interest, taxes, depreciation and amortization of $1.15 billion to $1.30 billion for the year and free cash flow of $1.47 to $1.96 per share.

This report by The Canadian Press was first published Feb. 23, 2024.

CAPITAL STRIKE

Canadian firms are delaying climate investments, Trudeau is warned

SOCIALISM FOR THE RICH

Brian Platt, Bloomberg News 

Feb 22, 2024

Canada faces a “critical problem” in meeting its 2030 emissions target because businesses are delaying building low-carbon projects due to uncertainty over the future of the country’s climate policies, a new report warns.

To fix it, Prime Minister Justin Trudeau’s government should expand a program that backstops carbon trading markets with public money, according to the report from Clean Prosperity, a group that advocates for market-based climate policy.

“Firms and investors lack confidence that provincial carbon markets will deliver the revenue they need to justify big, long-term investments in low-carbon projects,” Brendan Frank, policy director for Clean Prosperity, said in the report.

One of Trudeau’s signature environmental policies is a carbon tax that rises over time — giving consumers and businesses a financial nudge to switch to cleaner energy or spend money on technology that reduces emissions. But there’s political uncertainty about whether the carbon price will stay. The Conservative Party holds a large lead in polls over Trudeau’s Liberals and has pledged to cancel the carbon tax on consumer fuels if it wins the next election, though Leader Pierre Poilievre has been vague about his plan for industrial emitters.

To reduce financial risk, Trudeau’s government has earmarked $7 billion for so-called “carbon contracts for difference.” The contracts provide a form of insurance for companies that invest in projects to reduce emissions — compensating them if the carbon price doesn’t rise as planned, or if the value of carbon credits falls too low on trading markets. 

The government is currently negotiating one-by-one with companies building specific projects, such as carbon-capture systems.

But the Clean Prosperity report called on the government to expand its contracts-for-differences program and make it broadly accessible to any company building a qualifying project. That could unlock another 33 megatons in industrial emissions reductions by 2030, it said — though at a potential cost of tens of billions of dollars in future government liabilities if carbon trading markets should falter.

Without those heavy industry reductions, Canada faces a much tougher path to its 2030 climate target, which is to reduce emissions by at least 40 per cent below 2005 levels.

“We wanted to see what the downside is if the private sector doesn’t really believe that the government is capable of following through on its promises,” said Frank in a phone interview. 

Government risk-taking

The Canadian government has only recently started to lock in carbon contracts with heavy industry. It signed the first one in December, a contract worth as much as $1 billion with an Alberta-based carbon capture firm called Entropy. 

That deal starts with an agreement to buy credits associated with a carbon-capture system at a natural gas plant, but can scale up with other projects later. If the system works as planned, the government will sell those credits on carbon trading markets, possibly even at a profit. But if not, the government takes the financial risk, not the company.

The government faces a trickier issue in the oil sector. A coalition of oilsands firms known as the Pathways Alliance is looking at a massive carbon capture system, a project that’s critical to Canada’s climate goals. But Pathways wants a carbon contract in place before proceeding. 

Such a contract has the potential to cost the government many billions of dollars, given the scope of the plans and the large carbon footprint of the oil sector. 

Regardless, negotiating each contract individually will not get Canada where it needs to be on emissions reductions, Frank said. “We need something more systematic,” he said. 

The report estimates that under Canada’s current approach, about 5 to 10 megatons in emissions reductions will be achieved by 2030. That implies the government would need to commit much larger amounts — somewhere between $20 billion and $50 billion — to see the full environmental impact from industrial carbon pricing.

But Frank argued the actual cost to the public treasury would be much lower, as long as the carbon trading markets function properly and the carbon price escalates as planned.

“What is really important here is that everyone believes that the government is going to enforce its own policies, that it has issued enough contracts for difference; that it will follow through on its commitments,” Frank said.

 

McGill, Concordia universities sue Quebec government over 30 per cent tuition hike

The Canadian Press

McGill University is seen Friday, Oct. 13, 2023, in Montreal. The Quebec government is raising tuition rates for out-of-province and international students beginning in 2024. (THE CANADIAN PRESS/Ryan Remiorz)

McGill University and Concordia University are suing the Quebec government over its decision to hike tuition for out-of-province students by about 30 per cent.

In separate lawsuits, the two Montreal universities say the government's decision constitutes discrimination under the Charter of Rights and Freedoms and that the hikes have damaged the schools' reputations.

Tuition is set to rise to roughly $12,000 from about $9,000 for out-of-province students next fall, except for Quebec's only other English university — Bishop's — which was exempted it is outside Montreal.

The Quebec government has defended the tuition hikes, saying that they were imposed, in part, because there are too many people who speak English in Montreal.

Both Concordia and McGill have said they’ve recorded significant drops in applications since Quebec announced the tuition hike in October and have warned it could trigger a steep drop in enrolment and devastate their finances.

The lawsuits are also challenging the government's new funding model for international students, under which the schools will be charged $20,000 for every foreign student admitted, with the money going to French-language universities.

This report by The Canadian Press was first published Feb. 23, 2024.

WHY CANADA IS NOT 'PRODUCTIVE'

Business investment per worker fell 20% in 15 years amid weaker competition: StatCan

Nojoud Al Mallees, The Canadian Press

Canadian business investment per worker plummeted by 20 per cent over a 15-year stretch, according to new Statistics Canada research that suggests weaker competition is partly to blame.

The report finds for every worker, businesses invested $628.80 less in their companies in 2021 than they did in 2006.

The decline was more significant in large and medium-sized companies and foreign-controlled businesses, though it's unclear why that was the case.

The report attributes nearly one-third of the drop to declining entry rates, or the number of new companies starting up by industry.

"Economists always believe that competition promotes investment. When you look at our data, there's a decline in the share of new firms," said Wulong Gu, the study's author.

Canada is struggling to increase labour productivity amid low business investment, an issue that has been raised frequently by business groups and economists in recent years.

Capital investment, which refers to spending on everything from real estate to machinery, helps businesses grow and make their employees more productive.

That's why economists argue capital investment is critical to growing the economy and improving living standards.

The report says the slowdown in investment coincided with a shift toward intangible assets such as brand equity and patents, which national statistical agencies don't record as investments.

However, that shift doesn't explain why business investment in Canada lags that in other countries, said Wu, because intangible assets are not recorded as investments elsewhere, either.

The study also found no relationship between profitability and business investment, which Wu said was "surprising."

Canada's competition watchdog released a report in the fall that found competition weakened over the previous two decades as profits and markups rose.

The Liberal government recently introduced several changes to the Competition Act after pledging to modernize the country's competition law.

The Competition Bureau welcomed the amendments, which were inspired by its recommendations, but it's hoping for even more ambitious changes.

In a news conference earlier this month, Finance Minister Chrystia Freeland weighed in on the issue of business investment and made a plea directly to CEOs to spend more on their businesses.

"We believe in you. We want strong Canadian-headquartered companies in this country," Freeland said. "We need you to be investing in the productive capacity of this country, whatever sector you're in."

This report by The Canadian Press was first published Feb. 22, 2024.