Citigroup selling maple bonds in first sizable deal since 2015

Chunzi Xu, Bloomberg News

Citigroup Inc. is selling a large debt offering in the Canadian-dollar bond market for the first time in nearly a decade as US banks seek to diversify funding after reporting earnings.

The bank is marketing $1 billion of fixed-to-floating rate notes that mature in four years and can be called after three, according to people with knowledge of the matter. The deal is expected to yield 1.07 percentage point above Canadian benchmarks, after initial discussions in the 1.07-1.10 percentage point range, said the people, who asked not to be identified as they are not authorized to speak about it. The initial offer included a floating-rate tranche, which was dropped.

A spokesperson from Citigroup didn’t immediately reply to a request for comment.

The planned deal marks Citigroup’s first large public offering in Canada since 2015, according to data compiled by Bloomberg. That $600 million deal has a 4.09 per cent coupon and will mature next year. The bank sold loonie-denominated debt in small pieces in 2021 and 2023, Bloomberg-compiled data show.

Monday’s deal comes after the bank reported better-than-expected earnings more than a week ago. It would be the second maple bond offering from a large US bank in the past week, following Wells Fargo & Co.’s $1.25 billion deal that drew orders twice its size.

The two deals have emerged at a time when many Canadian companies, including banks, are going overseas to sell debt, often for better pricing. That’s led to a slowdown in supply and thirsty investors looking to deploy cash.

 

Gildan taps ex-Goldman executive as chair in last stand against activist investor

Mathieu Dion, Bloomberg News

The former Goldman Sachs executive who’s taking over as board chair at Gildan Activewear Inc. called for an end to the shareholder rebellion that has left the clothing company’s future in limbo.

“We need the egos and the drama-seekers to get away so we can get on with creating value,” Tim Hodgson, who was announced as the new leader of Gildan’s board on Monday, said in an interview.  

Gildan is one of the world’s largest makers of cheap T-shirts, the owner of the American Apparel brand and a supplier to Walmart Inc. and Nike Inc. But the Canadian company has been embroiled for months in a bitter fight with several of its largest investors over who should be in charge in the boardroom and the chief executive officer’s suite. 

Hodgson will have to contend with Los Angeles-based investment firm Browning West LP, which is campaigning to install eight new directors and to bring back longtime CEO Glenn Chamandy, who was fired in December after disagreements about the company’s strategy. 

On Monday, Gildan’s board appeared to seek a way out of a battle it may be losing. The company announced that seven out of its 12 directors will leave on their own — including Chair Donald Berg, who will be replaced by Hodgson on May 1. 

However, Browning West said it’s continuing with its proxy fight and will try to elect its full slate of nominees to the board at a shareholder meeting next month. And the firm doesn’t want Vince Tyra, the former Fruit of the Loom executive who replaced Chamandy as CEO, to stay. 

‘End the Drama’

Hodgson, who ran Goldman’s Canadian unit until 2010, is now the chair at Hydro One Ltd., an electrical utility in Ontario that had its own governance turmoil when its CEO and board resigned in 2018, under pressure from the provincial government.

“This isn’t my first rodeo,” said Hodgson, who criticized Browning West’s activist campaigns as “burning through CEOs like knife through butter.” 

“What we need to do is get back to selling T-shirts and not selling newspapers. Let’s end the drama,” he said.  

The current fracas began last fall when the board terminated Chamandy, the only CEO many Gildan employees have ever known. Bloomberg News has reported that before being fired, Chamandy looked into acquiring two major apparel distributors valued at a total of more than US$3 billion — a strategy the board disagreed with. He also locked horns with Gildan directors over succession planning. 

Hodgson said he fully supports the board’s actions so far, and that Chamandy needed to go. “I’ve been through 10 CEO succession processes,” he said. “Founder successions are often really complicated because founders are tied up in an ego way like no other type of CEO. And quite frankly, I think it got in the way here.” Gildan was founded by Glenn Chamandy’s grandfather. 

Gildan’s board also launched a strategic review that could lead to a sale — and hired Goldman for advice — after receiving an expression of interest from a potential buyer. When asked if he’s there to sell or grow the company, Hodgson said he took the job to “create value for shareholders, whichever way is the best value-creation opportunity.” 

The company said Monday it doesn’t expect to give an update on the review before the May 28 investor meeting, and the shares fell 1.2 per cent in Toronto. 

“We believe that today’s announcement was likely triggered by the collapse of the board’s reactive sale process, which it is clearly trying to bury in the 2,500+ word press release,” Browning West’s Peter Lee and Usman Nabi said in a statement. 

 

Ottawa puts up $50M in federal budget to hedge against job-stealing AI

Anja Karadeglija, The Canadian Press

Worried artificial intelligence is coming for your job? So is the federal government — enough, at least, to set aside $50 million for skills retraining for workers. 

One of the centrepiece promises in the federal budget released Tuesday was $2.3 billion in investments aiming to boost adoption of the technology and the artificial intelligence industry in Canada.

But tucked alongside that was a promise to invest $50 million over four years "to support workers who may be impacted by AI." Workers in "potentially disrupted sectors and communities" will receive new skills training through the Sectoral Workforce Solutions Program.

"There is a significant transformation of the economy and society on the horizon around artificial intelligence," said Joel Blit, an associate professor of economics at the University of Waterloo.

Some jobs will be lost, others will be created, "but there's going to be a transition period that could be somewhat chaotic."

While jokes about robots coming to take jobs predate the emergence of generative AI systems in late 2022, the widespread availability of systems like ChatGPT made those fears real for many, even as workers across industries began integrating the technology into their workday.

In June 2023, a briefing note for Finance Minister Chrystia Freeland warned the impact of generative AI "will be felt across all industries and around 40 per cent of all working hours could be impacted."

"Banking, insurance and energy appear to have higher potential for automation compared to other sectors," says the note, obtained through access to information and citing information from Accenture. 

"This could have substantial impacts on jobs and skills requirements."

The budget only singles out "creative industries" as an affected sector that will be covered by the program. In February, the Canadian TV, film, and music industries asked MPs for protection against AI, saying the tech threatens their livelihood and reputations.

Finance Canada did not respond to questions asking what other sectors or types of jobs would be covered under the program. 

"The creative industries was used as an illustrative example, and not intended as an exclusion of other affected areas," deputy Finance spokesperson Caroline Thériault said in a statement. 

In an interview earlier this year, Bea Bruske, president of the Canadian Labour Congress, said unions representing actors and directors have been very worried about how their likenesses or their work could be used by AI systems. But the "reality is that we have to look at the implication of AI in all jobs," she said. 

Blit explained large language models and other generative AI can write, come up with new ideas and then test those ideas, analyze data, as well as generate computer programming code, music, images, and video.

Those set to be affected are individuals in white-collar professions, like people working in marketing, health care, law and accounting.

In the longer run, "it's actually quite hard to predict who is going to be impacted," he said. "What’s going to happen is that entire industries, entire processes are going to be reimagined around this new technology."

AI is an issue "across sectors, but certainly clerical and customer service jobs are more vulnerable," Hugh Pouliot, a spokesperson for the Canadian Union of Public Employees, said in an email.

The federal government has used AI in nearly 300 projects and initiatives, new research published earlier this month revealed.

According to Viet Vu, manager of economic research at Toronto Metropolitan University’s the Dais, the impact of AI on workers in a sector like the creative industry doesn’t have to be negative. 

"That's only the case if you adopt it irresponsibly," he said, pointing out creative professionals have been adopting new digital tools in their work for years. 

He noted only four per cent of Canadian businesses are using any kind of artificial intelligence or machine learning. "And so we're really not there yet for these frontier models and frontier technologies" to be making an impact. 

When it comes to the question of how AI will affect the labour market, it’s more useful to think about what types of tasks technology can do better, as opposed to whether it will replace entire jobs, Vu said. 

"A job is composed of so many different tasks that sometimes even if a new technology comes along and 20, 30 per cent of your job can be done using AI, you still have that 60, 70 per cent left," he said.

"So it's rare that (an) entire occupation is actually sort of erased out of existence because of technology."

Finance Canada also did not respond to questions about what new skills the workers would be learning.

Vu said there are two types of skills it makes sense to focus on in retraining — computational thinking, or understanding how computers operate and make decisions, and skills dealing with data. 

There is no AI system in the world that does not use data, he said. "And so being able to actually understand how data is curated, how data is used, even some basic data analytics skills, will go a really long way."

But given the scope of the change the AI technology is set to trigger, critics say a lot more than $50 million will be necessary.

Blit said the money is a good first step but won’t be "close to enough" when it comes to the scale of the coming transformation, which will be comparable to globalization or the adoption of computers.

Valerio De Stefano, Canada research chair in innovation law and society at York University, agreed more resources will be necessary. 

"Jobs may be reduced to an extent that reskilling may be insufficient," and the government should look at "forms of unconditional income support such as basic income," he said. 

The government should also consider demanding AI companies "contribute directly to pay for any social initiative that takes care of people who lose their jobs to technology" and asking "employers who reduce payrolls and increase profits thanks to AI to do the same."

"Otherwise, society will end up subsidizing tech businesses and other companies as they increase profit without giving back enough for technology to benefit us all."

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

 

First Nations on cusp of more self-sustaining project financing

Ian Bickis, The Canadian Press

First Nations are set to increasingly become equity partners in major projects, a shift that could lead to self-sustaining financial independence, said the chair of the First Nations Major Projects Coalition.

Speaking at the coalition's annual conference Monday, chair Sharleen Gale, chief of the Fort Nelson First Nation, said it's all part of a move toward consent and community involvement being at the forefront of project development.

"There's a new way of doing business within our traditional territories," said Gale. “We know our worth, and we know how important it is for us to be a part of our economies meaningfully.”

Industries need to understand that consent and benefit agreements are no longer enough, she said. 

"That's a new standard that industry really needs to understand, that equity is important.”

To make the leap to equity owners will take money, and with interest rates running high, Gale said competitively priced capital is crucial. 

She said the coalition came together close to a decade ago in part because First Nations were being offered credit card-level interest rates for project financing, making it difficult to get anything off the ground.

The $5-billion Indigenous loan guarantee announced last week in the federal budget is an exciting step to making capital cheaper, she said — the profits of which could be used to fund even more projects.

“As we lift more Indigenous nations off the ground with the Indigenous guarantee program, you will see that eventually we may not even need it, because we'll be creating our own source of revenue."

RBC chief executive Dave McKay, in conversation with Gale at the conference, said the country is in the early days of building that self-sustaining cycle.

"To start is hard ... this is the hardest part of it, but then you're going to get a flywheel effect where you're going to reinvest from one project into the next.”

He said the $5-billion federal commitment is a good start, though not nearly enough. He said there are so many projects getting underway, especially related to the energy transition, that will create so many opportunities and funding needs.

Help with financing will also be important in securing proper Indigenous consent, said McKay.

"It's so important that we do this the right way right from the start, and we don't fall into the traps we have in the past.”

Securing proper consent is not easy. 

RBC has faced criticism for its funding of both the Trans Mountain and Coastal GasLink pipelines, projects that have seen both support and stiff opposition among First Nations.

Both projects have now finished construction and are therefore significantly derisked, helping lower the cost of capital for First Nations to buy in. 

McKay said it's just a matter of time before there are equity deals announced on pipelines, along with success stories to come from better co-operation.  

“We've limited ourselves as a country because we haven't worked together, and now that we work together, we should take on bigger and bolder ideas.”

The shift in relationships is coming in part because of Canada's acceptance of the UN Declaration on the Rights of Indigenous Peoples, said Perry Bellegarde, former national chief of the Assembly of First Nations.

“We use that free, prior and informed consent clause as a way, and as a tool, to bring governments and industry to our tables," he said at the conference.

Along with codifying into law the high standard of consent, Bellegarde said it was also important that Canada has rejected the doctrine of discovery, which said any land not yet occupied by Christians was deemed vacant, and so could be claimed by colonizers.

The recognition of the right to self-determination, the right to their own lands, their own laws, is crucial in navigating between growth and sustainability, he said. 

"That right is so important when it comes to looking at the balance between the environment and the economy, seeking to always balance, to find that sweet spot.”

He said it's a good message on Earth Day, to remember that by securing rights, Indigenous people are also seeking to uphold responsibilities, to the generations ahead and to the natural world. 

"Us as two-legged have great responsibility to fit into that global family if you will, so that we can have a hope for the future, our children and grandchildren can have a hope for the future."

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

WORKERS CAPITAL

Fight over where Canada's pension funds should invest is a 'clash of titans': Brosseau

Jordan Fleguel, BNN Bloomberg

One of the main proponents of increased domestic investment from Canadian pension funds says there are two competing theories on the issue that each come to a different conclusion about what’s best for Canada’s pensioners and its economy.

“It's a clash of titans, because we have two economic theories,” Daniel Brosseau, co-founder and partner at investment firm Letko Brosseau, told BNN Bloomberg in a Monday interview.

Brosseau and his firm helped bring national attention to the debate over where Canada’s pension funds should be investing by penning an open letter last month to Finance Minister Chrystia Freeland, urging policymakers to alter the rules for pensions to “encourage them to invest in Canada.”

The letter received pushback from some members of the business community who argued that government should not interfere with pensions’ investment decisions, but Brosseau believes that viewpoint doesn’t take the full macroeconomic picture into account.

“Portfolio management says that Canada is almost three per cent of world GDP, and three per cent of world markets, so a diversified portfolio should have just three per cent invested in Canada, and anything more is a bit overweight,” Brosseau said.

“But you have another theory, which is macroeconomic theory, that says a country should invest all it can in its own development, because that's the way it's going to increase its productivity, its incomes, its jobs, and its general wealth.”

Brosseau said the country’s national pension fund, the Canada Pension Plan (CPP), has around two per cent of its capital invested in Canadian private and public equities, with the majority invested in other markets.

He said this type of investment approach essentially cedes control of Canadian companies to investors from outside Canada, hampering the economy in the long run.

“Portfolio theory says to invest very little in Canada, and leave the control to foreigners, while macroeconomic theory says to invest all you can in Canada and keep control of your companies,” Brosseau said.

He added that despite his personal feelings on the issue, his main goal was to kick-start a conversation about it so that Canadians can be more informed about where their retirement savings are being allocated.

“It's a question that needs to be asked and needs to be discussed. If people decide that the best thing is that we let that money go and we don't encourage our own economy… if that's best for the country, so be it, we’ll live with it,” Brosseau said.

“But it cannot happen by accident, so this discussion that's going to occur is going to be quite important.”

And the discussion now has a moderator, as the federal Liberals announced in their budget last week that they’ve asked former Bank of Canada governor Stephen Poloz to examine ways to entice pensions to invest more at home.

Brosseau called the move “very positive,” and added that “(Poloz) has all the required skills and knowledge to be able to understand what the real issues are.”

With files from Bloomberg News

 

Inequality worsening as wealth gap widens to highest since 2015: TD Bank report

The Canadian Press

The gap between the highest earners and lowest income groups last year was at its widest since 2015 as the wealthiest households saw income grow much faster than lower-income Canadians.

Higher interest rates are pushing middle- and lower-income households to spend more conservatively, which means consumer spending by the top earners will play a critical role in keeping the broader economy going.

As the national household net worth rebounded to 4.5 per cent last year, from a 6.5 per cent decline in 2022, the gains were not evenly distributed across income levels, the report said.

"Higher-income households benefited relatively more due to their larger holdings of financial assets, which were the main wealth drivers last year," said Maria Solovieva, an economist with TD Bank, in her report. 

Household income in the top category was average of $197,909 in 2023 — up 6 per cent from the previous year. Meanwhile, middle- and low-income households saw a stagnated growth or worse, decline.

The report shows low-income households saw a gain of 0.3 per cent at $31,518 average annual income, while middle-income households saw a decline of 0.3 per cent at $59,178 average annual income last year.

A decline in real estate assets, meanwhile, affected middle- and lower-income households as mortgage debts increased. Middle-income households became more indebted than before the pandemic years as mortgage renewals and debt-servicing fees increased amid high interest rates.

As a result, middle- and lower-income households cut back on discretionary spending — furnishing, household equipment and recreational activities. The cutbacks were significant among low-income households, the report suggests.

Inflation, meanwhile, pushed these households to tap into their savings to make ends meet — causing a direct implication on future spending as these families will have fewer resources to turn to, the report said.

It added lower-income groups will continue to remain tight on resources in the coming years and will be forced to make harder economic choices, slowing down their spending to historical averages.

"This will create a drag on spending," wrote Solovieva. 

Spending from the high-earning group, meanwhile, will keep the economy moving as they continue to maintain purchasing power.

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

 

Union files application to represent workers at Amazon facility in Laval, Que.

The Canadian Press

A Quebec-based union says it has filed an application to represent hundreds of Amazon.com Inc. workers at a warehouse in the province.

The Confédération des syndicats nationaux says the application it made with the Administrative Labour Tribunal is to represent 200 employees at Amazon's DXT4 warehouse in Laval.

The union, which represents 330,000 workers across a wide array of industries, says the tribunal will now have to ensure the union cards warehouse workers signed represent a majority of staff at the facility.

If the tribunal finds the threshold has been met, the union says it will be certified as a representative of all the employees covered by the application.

But the union acknowledged that it could face hurdles in its efforts to be certified. 

It warned in a press release that Amazon has "a long history of union-busting and may well use delaying tactics or other strategies to slow the unionization process, such as artificially inflating the employee list, massive hiring and spreading anti-union messages."

Earlier this month, Unifor filed applications to represent workers at two Amazon warehouses in New Westminster and Delta, B.C.

Shortly after, the union wound up temporarily withdrawing the applications and accusing the e-commerce giant of providing a "suspiciously high" employee count that stymied its efforts.

Amazon spokesperson Barbara Agrait said at the time that the company is confident it provided the board with accurate and complete information. 

"We can assure Amazon employees that our legal teams are ready, and that workers' rights will be respected," said Caroline Senneville, the Confédération des syndicats nationaux's president, said in the press release.

"And we call on all workers in Amazon's other Québec warehouses to stand up for their rights — even against a giant multinational!"

Amazon's Agrait said on Monday that the company favours opportunities for its workers to be respected and valued. 

"The fact is, Amazon already offers what many unions are requesting: safe and inclusive workplaces, competitive pay, health benefits on day one, and opportunities for career growth," she said in a statement. 

"We look forward to working with our employees to continue making Am

 

As personal EV demand wanes, the business case for switching grows

Ben Cousins, BNN Bloomberg

Demand for electric vehicles (EVs) is slowing for average Canadians, but new data suggests businesses should seriously consider changing their fleet.

A new report from Canadian telematics firm Geotab examined data from more than 750,000 light-duty commercial vehicles in North America and Europe and found 41 per cent of their internal combustion engines (ICE) were considered cost-effective and range capable of an EV transition, which would provide an average savings of $16,000 per vehicle over seven years.

Overall, the report found 75 per cent of analyzed light-duty ICE vehicles could be replaced with an EV today, without infrastructure upgrades or charging improvements, while 81 per cent of medium-duty ICE vehicles and 58 per cent of heavy-duty trucks have daily usage within the range of commercial EVs currently on the market.

“These analyses have shown that many fleet applications and fleet duty cycles could be fulfilled by an EV, reinforcing our belief that EVs are key to unlocking sustainable fleet operations today,” Charlotte Argue, Geotab’s senior manager of sustainable mobility, said in a news release.

“We have uncovered a roadmap for fleet electrification that aligns with sustainability objectives, and presents a compelling case for a zero-emission transition.”

On top of the business case for transitioning to a commercial EV, there’s also the environmental case. Geotab suggests it could save 8.3 million litres of fuel and 19 million metric tons of CO2 emissions from entering the atmosphere over the next seven years if every cost-effective light-duty ICE vehicle was transitioned to an EV.

“The opportunities for fleets to electrify will continue to grow with better data insights spotlighting challenges and solutions to accelerating adoption, ultimately improving outcomes for business and the planet,” Eric Mallia, Geotab’s vice president of sustainability solutions, said in the release.

Personal EV demand falling

Geotab’s report comes as demand for EVs among the Canadian population is sliding.

A recent report from AutoTrader, released earlier this week, found just 46 per cent of Canadians are interested in buying an EV as their next vehicle, despite new EV prices falling nearly 18 per cent year-over-year in 2024.

The report found interest in purchasing EVs is down from 56 per cent in 2023 and 68 per cent in 2022.

This comes as supply chain issues that have plagued the EV industry are easing, with inventory levels up 145 per cent year-over-year and overall growth in new EVs up 522 per cent.

Politics also appear to be playing a role in Canadians’ loss of interest, as 75 per cent of respondents said they’re skeptical of Canada’s zero-emissions goals and 60 per cent believe the country’s goals could change if the Liberals lose the next election. 

Methodology

Geotab analyzed the driving patterns of light-duty ICE vehicles driven in North America and Europe over one year. The study assumed that vehicles were in service for seven years, unless stated otherwise, and were purchased, not leased.

For an EV to be considered EV suitable, it needed to be considered range capable and have a total cost of ownership that was equal to or lower than that of a comparable new ICE vehicle replacement. Total cost of ownership includes the local cost of procurement and maintenance as well as the local fuel and energy costs as of July 2023, but excludes resale value.

Estimated avoided emissions are solely tailpipe emissions and do not account for emissions generated through energy production or vehicle manufacturing. Emissions calculations are based on the emissions factor of 2.29 kg of CO2 per litre of gas.

The study analyzed driving and dwell behaviours of medium-duty and heavy-duty internal combustion engine trucks, excluding buses. The analysis considered all trips and dwells, aggregated by day based on local time, to identify the distance travelled and cumulative time stopped.

AutoTrader’s data was collected via an online survey conducted nationwide in French and English. The survey was deployed from Feb. 9 - March 11, 2024. The online survey took a total of seven minutes to complete. Where relevant, the findings also include insights from AutoTrader’s marketplace data.

 

Biden is marking Earth Day by announcing US$7 billion in federal solar power grants

Alexa St. John and Will Weissert, The Associated Press

US President Joe Biden during a campaign event at the Scranton Cultural Center at the Masonic Temple in Scranton, Pennsylvania, US, on Tuesday, April 16, 2024. Biden's home state of Pennsylvania is taking center stage as he seeks to capitalize on Donald Trump's absence from the trail, targeting a 2024 swing state where a contentious steel deal and persistent unease over the economy have magnified voter concerns about his agenda. Photographer: Hannah Beier/Bloomberg , Bloomberg

President Joe Biden is marking Earth Day by announcing US$7 billion in federal grants to provide residential solar projects serving 900,000-plus households in low- and middle-income communities.

He also plans to expand his New Deal-style American Climate Corps green jobs training program.

Biden’s latest environmental announcements come as he is working to energize young voters for his reelection campaign.

Senior administration officials say young Americans are keenly invested in the Biden climate agenda and want to actually help enact it.

The officials say the Climate Corps initiative is a way for them to do that.

Alberta standardizing local utility franchise fees, Calgary to see biggest impact

Story by Matthew Black •  Edmonton Journal

Affordability and Utilities Minister Nathan Neudorf speaks as Parliamentary Secretary for Affordability and Utilities Chantelle De Jonge, left, and Premier Danielle Smith listen as he introduces legislation to lower fees for utility bills and help to keep people more informed about their options on Monday, April 22, 2024, in Edmonton.

© Provided by Edmonton Journal

The Alberta government is introducing new legislation that will standardize how municipalities are allowed to calculate franchise fees on electricity bills, in a move it says will prevent spikes in power prices, particularly in the city of Calgary.

The changes will be implemented via Bill 19 — the Utilities Affordability Statutes Amendment Act, 2024 — introduced in the legislature on Monday.

It proposes amendments to three existing pieces of legislation, and mandates that local access fees not be tied to the default rate, as is in part the case in Calgary, and rather be tied to consumption, as done by Edmonton and other municipalities, or as a percentage of transmission and distribution costs.

Affordability and Utilities Minister Nathan Neudorf said the bill primarily impacts Calgary, which is the only municipality to incorporate the default rate into its fee calculation.

But, the new bill is also intended to block other municipalities from adopting Calgary’s approach and switching to the market rate, something he said would bolster a municipality’s treasury but at the expense of taxpayers.

“We are aware of other municipalities, in large part due to the windfall profits Calgary saw, that are contemplating making those changes themselves. This is clarifying that this is not the avenue for them to seek those kinds of funds,” he said.


Global News Southern Alberta stakeholders sign historic water-sharing agreement
1:46

cbc.ca Alberta takes on drought challenges with historic water sharing agreement
2:51

The Canadian Press Alberta announces plan to protect consumers against power price spikes
2:11


The government claims Edmontonians paid an average of $75 on average in local access fees over 2023 via Epcor, with Calgarians paying more than triple that, at $240 on average, via Enmax.

That difference resulted in $186 million more in fees collected by the City of Calgary than anticipated, according to the province’s analysis.

“It is unacceptable for municipalities to be raking in hundreds of millions of dollars of surplus revenue off the backs of Albertans tying their fees to that variable rate,” Neudorf said.

Calgary city council has eyed moving to a consumption-only model , but not until 2027, which Neudorf said is too far away.

On Monday, Calgary councillors were slated to hear from hundreds of members of the public regarding proposed blanket rezoning changes.


Calgary Mayor Jyoti Gondek said in a statement that the bill explicitly targets Calgary for work it already has underway, stating, “it’s nice that the province is finally paying attention to this.”

“Any changes to local access fees are governed by the Alberta Utilities Commission (AUC) which is in minister Neudorf’s portfolio,” it reads. “The AUC is the reason council couldn’t just flip a switch and make a change to the fees.”
Local access fees

Utility retailers pay a linear tax and franchise fee for the right to use a municipality’s property to exclusively operate. Together, those costs are labelled as a local access fee which is paid to the municipality by the utility retailer who recoups that cost from customers through monthly bills.

Under existing rules, the AUC must approve electricity rates which are not allowed to exceed 20 per cent of the distribution charge, though municipally-owned subsidiaries in Calgary (Enmax) and Edmonton (Epcor) are exempt from needing that approval.

Bill 19 aims to change that exception, and would require AUC oversight for all such agreements.

Pre-exiting agreements continue in effect until they are approved by the AUC or 270 days after Bill 19 comes into force, whichever happens sooner.

The legislation also does not affect Medicine Hat, which generates its own power and owns the distribution system.
RRO name change to be formalized

The new legislation, if passed, would also formalize the name change to the default electricity rate announced by Premier Danielle Smith last week .

The rate was previously known as the regulated rate option but will be renamed as the rate of last resort, with Smith calling the old title “misleading.”

Around three in 10 Albertans are on the default rate, which changes based on market prices. It’s used by customers who don’t sign a contract with a retailer either because they don’t have a sufficient credit score to do so, or because they don’t realize they are on the default rate.

Opposition energy critic Nagwan Al-Guneid said Monday’s bill came three years too late.

“The United Conservative Party is introducing legislation effectively three years too late to save Albertans from volatile utility rates,” she stated.

“The UCP is essentially closing the barn door after the horses have bolted, as it will not help Albertans who have no choice but to remain on the regulated rate option.”

mblack@postmedia.com