TC Energy seeks approval for potential minority interest sale of NGTL system

Amanda Stephenson, The Canadian Press

TC Energy Corp. has applied for regulatory approval for a potential minority interest sale of its Nova Gas Transmission Ltd. (NGTL) system, one that could include possible participation from Indigenous groups.

No transaction has been announced, but in its application dated Aug. 18, the Calgary-based pipeline company said it wants to complete a restructuring in order to facilitate potential future minority ownership of the system.

TC Energy's NGTL system transports natural gas production from Alberta and northeast B.C. to domestic and export markets. It spans 24,631 km and connects with TC Energy’s Canadian Mainline system, Foothills system and other third-party pipelines.

In its application to the Canada Energy Regulator, TC Energy asks for a decision from the commission by Nov. 1, to support closing of the reorganization on Jan. 1, 2024.

CIBC analyst Robert Catellier said in a note to clients that TC Energy's move with respect to NGTL is somewhat surprising. While the company has been open about its plan to divest assets in order to pay down debt and pave the way for future growth projects, the NGTL system wasn't on observers' radar.

"We had previously believed the NGTL system was unlikely to be sold due to its highly stable, low-risk business profile," Catellier said.

"There is still a lot of uncertainty regarding whether a sale will be concluded at all, let alone at what valuation. Nevertheless, an NGTL sale could generate considerable interest given the low-risk profile."

TC Energy has been under scrutiny by analysts and credit rating services this year for its significant debt load as well as for cost overruns on the Coastal GasLink project, which is currently nearing completion in B.C.

The projected cost of that project has grown to $14.5 billion, up significantly from a previous estimate of $11.2 billion and more than double the initial cost estimate of $6.2 billion.

Last month, the company announced it would sell off a 40 per cent stake in its Columbia Gas Transmission and Columbia Gulf Transmission systems to New York City-based Global Infrastructure Partners for $5.2 billion.

CEO François Poirier has said he hopes to achieve an additional $3 billion in divestitures between now and the end of 2024.

TC Energy also recently announced plans to split into two separate companies by spinning off its crude oil pipelines business. A shareholder vote on that transaction won't be held until mid-2024.

This report by The Canadian Press was first published Aug. 24, 2023.

Companies in this story: (TSX:TRP)

DEREGULATION

Alberta electricity prices more than double

Laura Dhillon Kane, Bloomberg News

Electricity prices in Alberta in July more than doubled from a year earlier, climbing to a record high and diverging the most ever from the Canadian average in data stretching back four decades.

The 128 per cent surge in the province’s power prices was the primary cause of an 11.7 per cent increase in those costs nationwide, Statistics Canada reported in consumer price index data released Tuesday.

Alberta’s electricity prices can be volatile, and summer heat is driving demand, the agency said. It also blamed base effects, pointing to a provincial rebate introduced in July 2022 that prompted a 24.4 per cent monthly drop in prices. The rebate and a price cap kept costs lower for consumers until they were phased out and ended in spring of this year, Statistics Canada said.

However, National Bank of Canada Chief Economist Stefane Marion disagreed, citing the province’s population growth of about 200,000 people, or five per cent.

“There is much more than a base-year effect at play,” Marion said in a report to investors. “Alberta’s electricity demand reflects not only the summer heat, but also record population growth. Looking ahead, we don’t see much respite for Albertans, given the federal government’s policy decision to decarbonize the electricity grid relatively quickly.”

Prime Minister Justin Trudeau’s government is betting on mass immigration to stave off long-term economic decline and welcomed one million new arrivals last year. The record population growth has filled labor gaps and boosted the economy, but is testing the limits of Canada’s housing supply and other infrastructure.

At the same time, Trudeau has promised to phase out carbon emissions from electricity generation by 2035. Alberta relies on fossil fuels for 89 per cent of its power, and Premier Danielle Smith said on Monday that her province will “never” implement the federal regulations.

She said her province — Canada’s major oil and gas producer — can achieve a net zero grid by 2050, but the federal timeline would risk blackouts and cost too much, carrying a price tag as high as $400 billion.

Smith’s government recently announced a seven-month pause on wind and solar projects to review the use of agricultural and public lands and the role of municipal governments in selecting land for project development. 

The province needs to address whether enough base-load power supply exists to prevent power cuts when wind and solar aren’t sufficient, she said.

 

TD Bank says it's cooperating with a U.S. justice department probe

Derek Decloet, Bloomberg News

Toronto-Dominion Bank says it’s been receiving inquiries from regulators and law enforcement about its compliance with anti-money-laundering rules, including requests related to a U.S. Department of Justice investigation.

Canada’s second-largest bank made the disclosure in its third-quarter financial results Thursday, saying it may face penalties as a result of the probe. 

 “The bank is cooperating with such authorities and is pursuing efforts to enhance its Bank Secrecy Act/anti-money-laundering compliance program,” the Toronto-based company said. “While the ultimate outcomes of these inquiries and investigations are unknown at this time, the bank anticipates monetary and/or non-monetary penalties to be imposed.”

A spokesperson for the Justice Department didn’t immediately respond to an emailed request for comment.

Shares in the bank closed down 2.6 per cent in Toronto.

Toronto-Dominion had a deal to buy Tennessee-based First Horizon Corp., but the transaction fell apart in May after the bank said it couldn’t secure timely approval from regulators. The acquisition was held up by concerns about Toronto-Dominion’s handling of suspicious customer transactions, a person familiar with the matter told Bloomberg News at the time. The regulators’ concerns were related to anti-money-laundering practices, the person said. 

The decision to walk away from the US$13.4 billion deal shocked markets even though the acquisition had looked shaky since early March, when the Memphis-based lender disclosed that Toronto-Dominion had said it didn’t believe it could get regulators to sign off by a May 27 deadline. It would have been Toronto-Dominion’s largest deal ever, adding more than 400 bank branches in the U.S. Southeast. 

Toronto-Dominion could “easily afford to pay” any fines stemming from the investigations it just disclosed, according to Gabriel Dechaine, an analyst at National Bank of Canada. 

“However, we believe the potential reputational hit, along with potentially higher compliance costs and capital requirements — via higher operational RWA — are important considerations,” Dechaine said in a note.

 

RBC plans to cut jobs as CEO McKay vows to rein in expenses

Jenny Surane, Bloomberg Newqs

Royal Bank of Canada said it plans to cut as much as two per cent of its full-time staff in the coming quarter after a surge in expenses weighed on third-quarter results.

Expenses climbed 23 per cent to $7.86 billion for the fiscal third quarter, compared with the $7.31 billion average of analyst estimates compiled by Bloomberg. Royal Bank ended the quarter with 93,753 employees after it shed about 645 jobs in the period.

“We remain focused on executing on our cost reduction strategy while leveraging our strong balance sheet and diversified business model to support our growth,” Chief Executive Officer Dave McKay said in a statement Thursday.

RBC and its rivals have turned to trimming their workforces as a way to cut costs while central-bank activity around the world boosts interest expenses and crimps margins industrywide.

Royal Bank’s wealth-management division bore the brunt of the job cuts in the second quarter, according to filings. The unit’s headcount plummeted by almost 1,300 in the quarter, countering a 667-person increase in the firm’s capital-markets division.

A jump in earnings from the firm’s traders and investment bankers helped boost firmwide net income 8.2 per cent to $3.87 billion for the three months through July, and per-share earnings beat estimates. Net income from the firm’s capital-markets division soared 57 per cent to $938 million, topping the $805 million average of analysts’ estimates.

Trading desks in recent weeks have benefited from an increase in client activity as investors wrestle with the impacts of rising interest rates globally. Investment bankers, too, are seeing a pickup in deals compared with the doldrums of a year ago.

At Royal Bank, revenue from the firm’s trading of interest-rate and credit products helped counter continued weakness in equities, foreign-exchange and commodities trading.

Canada’s largest bank has been on a dealmaking spree. Earlier this year, the Toronto-based firm announced it would acquire HSBC Holdings Plc’s Canadian unit for $13.5 billion to extend its lead in domestic retail banking. Royal Bank has warned the acquisitions would boost costs in the coming quarters.

The company’s shares have slumped 5.5 per cent this year through Wednesday, more than the 4.5 per cent decline for the S&P/TSX Commercial Banks Index.

 

New Toronto mayor lays out first steps in affordable housing plan

Jordan Omstead, The Canadian Press

Toronto Mayor Olivia Chow presented on Thursday what she called a "first step" in her bid to build 25,000 affordable rental homes, in addition to those already planned for the city.

In a motion backed by the city's executive committee, Chow outlined a plan to get Toronto's housing-related agencies working together on new public and community housing. 

"I want to make sure they co-ordinate it, that there's a bit of a one-stop-shop approach," she said. "It's the first step."

The motion proposes revised housing goals to add 7,500 affordable homes – of which 2,500 would be new rent-geared-to-income units – and a new target of 17,500 rent-controlled homes. 

That's on top of the 40,000 affordable rental units the city has already committed to building by 2031. 

Chow's successful mayoral run earlier this year was headlined by a promise to get the city back into the building of public housing, rather than leaving it solely to the private sector.

Coun. Frances Nunziata voiced support for the motion on Thursday, saying affordable housing approvals too often came up against unnecessary application delays. 

"I think it's important that we all get together, all of us in one room and we talk about what needs to be done ... and this way we can expedite it," she said. 

The motion, which will be considered at a special meeting of city council on Sept. 6, asks staff to report back by the end of the year on its efforts to align the city's resources and find suitable parcels of land for the homes.

One of Chow's first moves as mayor was to fast-track discussions about the city's long-term financial outlook and schedule Thursday's special meeting of the executive committee. 

The committee considered a major report prepared by the city manager and interim chief financial officer, which details a combined $46.5 billion in operating and capital pressures over the next decade. That includes an immediate $1.5 billion operating shortfall the city will have to contend with when it opens discussions on its 2024 budget. 

In an effort to tackle the daunting financial forecast, the report considers several new revenue measures, including a progressive surtax on luxury home sales and hiking the vacant home tax from one to three per cent.

A commercial parking levy was another proposed revenue tool, with transit advocates and business lobby groups offering competing views on the measure when it was discussed Thursday. 

A levy of between 50 cents and $1.50 per day on non-residential spaces could net the city between $173 million and $490 million in new annual revenue, according to estimates in a report prepared by consultants Ernst & Young.

Vincent Puhakka with the TTC Riders advocacy group said a levy on non-residential parking spaces could help reverse "devastating" TTC service cuts. 

"A collapsed TTC will ruin downtown business. Putting a levy on parking will not," Puhakka said. 

Several business interest groups have come out against the levy, arguing it will hurt brick and mortar shops at a time when they are already struggling with a post-pandemic recovery and competition with online retailers.

"We ask that you look at it skeptically," said Michael Brooks, CEO of Real Property Association of Canada. 

Brooks said although the commercial real estate association opposes the levy, it would work with the city to push the provincial government to approve a Toronto sales tax.

The Ernst & Young report estimates a municipal sales tax, which would be the first of its kind in Canada but is used elsewhere including New York City, could bring in around $800 million annually.

Chow campaigned on a pledge to push the provincial and federal government for a new fiscal funding framework given the city's limited revenue-raising tools, such as property taxes, and its outsized role in delivering transit and shelter services to the region.

The city manager has said even if Toronto approved all the new revenue measures at its disposal, it would only cover an estimated 40 per cent of its forecasted budget pressures. 

"We do not have revenue tools that grow with the economy," city manager Paul Johnson told Thursday's committee meeting. 

"We, as the fourth largest city in North America, need to think about the ways that large cities and important economic engines like Toronto are treated in other jurisdictions and find ways to do that in a uniquely Ontario and Canadian way." 

City council will consider the city manager's recommendations at its September meeting. 

This report by The Canadian Press was first published Aug. 24, 2023.

 

Quebec universities oppose suggestion by federal minister to cap student visas

Jacob Serebrin, The Canadian Press

Quebec university administrators, professors and students are rejecting an idea by the federal housing minister that Canada could cap the number of international study permits it issues as a way to ease the country's housing shortage. 

They say that limiting the number of international students will do little to address the housing crunch and would instead hurt university research and deprive Quebec of skilled immigrants.

Daniel Jutras, the rector of Université de Montréal, says Canada's housing crisis is not the result of the rise in international students to the country.

"The (housing) problem is real, the problem is serious, but it's a problem that's been developing over the past two decades as a result of structural issues that I think are not related directly to the influx of international students," Jutras said.

On Monday, federal Housing Minister Sean Fraser suggested that capping the explosive growth in the number of international students recruited to Canada in recent years was an option to reduce demand for housing. More than 540,000 new international study permits were issued by the federal government in 2022, up 24 per cent from 2021.

Quebec Premier François Legault and other ministers swiftly rejected that idea, reminding Ottawa that education is a provincial jurisdiction.

Around 6,000 of U de M's roughly 42,000 students are international, Jutras said, adding that he doesn't think that number is enough to impact the city's housing market. 

"Cutting down on the number of international students is just not a good idea given the significance of their presence in Canada and the contributions that they make," he said. The education that foreign students get in Canada sets them up for success in the country, he added.

Over the past decade, the number of international students in Quebec has doubled. As of December 2022, there were 58,675 international students at Quebec universities — an increase of 10,000 from the year before, when they accounted for 14 per cent of the total student body. Another 19,460 international students study at public junior colleges and private career colleges. 

Víctor Muñiz-Fraticelli, a law and political science professor at McGill University, said the rise in foreign students could have a greater effect on the housing market of small university towns as opposed to large cities. 

"It's completely absurd to blame international students in a city like Toronto, or Vancouver, or Montreal when they represent a tiny percentage of the population and have a completely different housing market than long-term residents," he said in a recent interview.

Muñiz-Fraticelli said the housing shortage is primarily an urban policy problem. Canada isn't building enough housing, and municipal regulations to encourage the creation of social housing aren't having the desired effect, he said.

Limiting the number of international students  "would cause a tremendous amount of damage to one of the great advantages that Canada has in the world, which is its excellent educational system and its excellent research and teaching facilities," he added.

Catherine Bibeau-Lorrain, president of the Union étudiante du Québec, a 91,000-member group composed of 10 student unions, says Canada should be encouraging qualified immigrants — like those who graduate from the province's universities — to help with labour shortages. 

Quebec residents pay the lowest tuition rates in Canada — around $4,000 to $5,000 a year, including mandatory fees for undergraduates. But international students pay significantly more: at U of M, they pay nearly $30,000 a year. Other Quebec universities charge slightly less, while some, such as McGill University, charge significantly more — up to nearly $70,000 a year in certain undergraduate programs. 

But Jutras said it's "misguided" to suggest that universities like his are recruiting international students to balance the books, adding that two-thirds of the international students who study at U de M come from France and Belgium and pay the lower Quebec rates as a result of agreements between their governments and the province. 

"We bring them here because we think they bring significant value to our programs and bring significant value to the research that's going on here," he said, adding that many international students are doing postgraduate or post-doctoral degrees.

This report by The Canadian Press was first published Aug. 24, 2023.

Liberals look to tackle international student rackets as part of housing crisis

Laura Osman, The Canadian Press

Liberal cabinet ministers are suggesting the federal government is ready to tackle long-standing problems related to the international student program, including cases of fraud and exploitation by shady educational institutions.

But in a slight twist, they are doing so as part of efforts to ease the housing crisis as the government faces enormous pressure to help increase the supply of affordable homes.

The federal cabinet's three-day retreat in Charlottetown focused on housing as ministers hashed out their agenda for the fall sitting of Parliament.

International students became a focal point at the retreat when the Housing Minister Sean Fraser, who was recently shuffled from the immigration file, suggested ballooning foreign student enrolments are putting "unprecedented levels of demand" on the housing market.

Fraser said if colleges and universities are going to bring record numbers of foreign students to Canada, they need to play a part in housing them.

Public colleges and universities have come to rely on the income from international student fees. So, too, have private colleges that sprang up in strip malls and other venues. While they recruit attract foreign students, in some cases the institutions offer a dubious education in return. 

Fraser suggested the government could begin to sort out which schools are offering a genuine education and which are looking to exploit vulnerable students. 

"Separating the wheat from the chaff is going to be a big focus of the work that I try to do with (Immigration Minister Marc Miller) to identify a solution to this challenge," he said. 

Another option: a cap on the number of student visas.

Several experts say they are concerned about the ripple effects of such policies.

There are things the government can do to decrease demand for student visas, said Alex Usher, president of the Higher Education Strategy Associates consulting firm.

"The government seems to be contemplating something much stupider," he said in an interview. "Much stupider and much more complicated."

Curbing the number of visas would leave the Immigration Department to determine which educational institutions should be trusted to receive coveted tuition, he said, which is far outside its jurisdiction. 

"Quickly the discussion becomes, not 'How do we reduce pressure on housing?' It becomes 'How do we ration spots?' And so all sorts of other agendas start coming into play," he said, which would create financial winners and losers. 

The Immigration Department counted 800,000 active study permits at the end of 2022, a 170 per cent increase over the last decade. 

A 2020 report by the Higher Education Strategy Associates fount that international student tuition made up 13 per cent of the post-secondary system's income in 2019, up from just four per cent in 2007.

Mike Moffatt, senior policy director at the Smart Prosperity Institute, supports the idea of scaling back student visas but what's he's heard so far sounds "overly complex and doomed to fail."

Moffatt is one of two housing experts who was invited to the cabinet retreat to offer possible solutions to the pressing problem, and suggested the federal government more or less stay in its lane by tamping down demand for student visas.

For the last several years the federal government has been working to attract international students, last year launching a pilot project to remove the cap on the number of hours they are allowed to work off-campus. 

Moffatt suggests reversing that trend by instituting stiffer financial criteria to apply for a visa, and rolling back some of the reforms that make those student permits more attractive.  

In a statement, the Immigration Department said the government will need to have "difficult conversations" with provinces, who have sole jurisdiction over education, about threats to the integrity of the system and outline the "perverse incentives" created for institutions. 

"Abuses in the system exist and must be tackled in smart and logical ways," the department said in the statement.

Several universities have already pushed back on the idea of a cap. 

"The university, in discussions with (the Immigration Department), has been clear that we do not support a cap on international students," University of British Columbia spokesperson Matthew Ramsey said in a statement in response to the minister's comments. 

UBC's Vancouver campus has an international student enrolment of 28.6 per cent. 

The university said investments in student housing are a way to ease the demand for rentals, including its own plan to build 4,800 beds over the next 10 to 15 years.

NDP immigration critic Jenny Kwan said that's where her party would like to see the government focus, by sharing the cost to build affordable student housing. 

Kwan said visas should be allocated to institutions that have a "credible and affordable" student housing plan. 

She also asid that capping enrolments would amount to blaming the students — echoing comments earlier this week from Conservative Leader Pierre Poilievre.

Vancouver Immigration lawyer Will Tao said he's skeptical of Fraser's suggestion that student exploitation and housing are linked, and wants to see more data about international students and the housing market.

"I think they're trying to sort of get to two birds with one stone politically," Tao said.

"I think international students are kind of a scapegoat. It's the easiest thing to blame. It's the ones with the least pushback." 

This report by The Canadian Press was first published Aug. 23, 2023.

A quarter of young Canadians would move to avoid wildfires: Survey

Ben Cousins, BNN Bloomberg

AUG 23, 2023

With Canada in the midst of a record-breaking year for wildfires, some young Canadians are factoring in wildfire prone areas for their next move.

A new survey from the Angus Reid Institute found 24 per cent of Canadians younger than the age of 35 who experienced wildfires in the past five years are considering a move to someplace safer, while the number jumps to 26 per cent among women.

“It’s a pretty critical mass of people when we think about how many in our population demographics belong to Gen Z or are younger millennials,” Shachi Kurl, president of The Angus Reid Institute said in a television interview with BNN Bloomberg Wednesday.

“It’s maybe a little bit easier when you’re between the ages of 18 to 34 to think about your mobility. You can move more easily.”

Overall, 13 per cent of Canadians impacted by wildfires in the past five years are considering a move. 

Federal data shows 5,753 wildfires burned more than 13.6 million hectares as of Aug. 16, more than six times the 10-year average and the worst on record. 

“This year was so different in that for the first time Toronto was dealing with the air quality problems that we deal with on an almost annual basis in the summer,” Kurl said from Vancouver. “It really does speak to the fact that there is no running from – or hiding from – the impacts of wildfires.”

Recent wildfires have forced a city-wide evacuation of Yellowknife. Mayor Rebecca Atly said Tuesday that city staff are planning for residents to return, but don’t yet have a timeline.

Meanwhile in B.C., wildfires have damaged or destroyed nearly 200 structures in West Kelowna.

METHODOLOGY

The Angus Reid Institute conducted two online surveys for this project. One survey was fielded between Aug. 8-11, 2023 among a representative randomized sample of 1,606 Canadian adults who are members of Angus Reid Forum.

Another study was fielded between July 26-31, 2023 among a representative randomized sample of 3,016 Canadian adults who are members of Angus Reid Forum. For comparison purposes only, a probability sample of this size would carry a margin of error of +/- 1.5 percentage points, 19 times out of 20.

With files from CTV News

Sask. livestock industry applauds provincial 

aid package, calls on Ottawa for more

Ben Cousins, BNN Bloomberg

With the Saskatchewan government providing up to $70 million in aid for drought-stricken livestock producers, one industry leader said he hopes the federal government will offer support as well.

 “It’s a good start, but more help is going to be needed if we’re going to be looking at maintaining the number of livestock we have here in Saskatchewan,” Grant McLellan, chief executive officer of the Saskatchewan Cattlemen's Association, told BNN Bloomberg in a television interview.

Earlier this week, the provincial government announced $70 million in aid to livestock producers to offset the added costs they face due to drought in the region.

McLellan said the money will largely go toward feed and water for producers’ beef cattle, bison, horse, elk, deer, sheep and goats.

Severe drought has hit Saskatchewan and the prairies hard this summer. Agriculture Canada’s Canadian Drought Monitor shows the majority of the province at least “abnormally dry” as of July 31, with some parts of the southwest under “extreme drought.”

In 2021, while facing similar drought levels, the federal government and province to offer combined aid at $200 a head. With the province’s package amounting to about $80 a head this time around, McLellan is calling on Ottawa to provide the balance.  

“We’re looking for the federal government to partner with the province and our producers to bring that support to bear just like they did in 2021,” he said.

Without more aid, McLellan fears some producers might have to trim their herds, which could have a ripple effect on Canada’s grocery bill.

“It’s a real risk,” he said. “If our herd is downsized, we could see prices at the grocery store go even higher.”

With files from CTV News Regina

 

Return of live shows after COVID closures revived performing arts industry: StatCan

The Canadian Press

People watch the Foo Fighters perform at Festival d'été de Québec on Saturday, July 8, 2023, at Plains of Abraham in Quebec City. (Photo by Amy Harris/Invision/AP)

A new report from Statistics Canada says the return of live shows and events after pandemic restrictions revived the country's performing arts industry in 2022, with significant revenue and salary growth in specific sectors.

The report says promoters and presenters of performing arts, sports and similar events hit hard by COVID-19 cancellations in 2020 and 2021 saw revenue increases of nearly 146 per cent in 2022, compared to the previous year. 

Meanwhile, the non-profit performing arts industry saw revenues increase by 71 per cent, while the for-profit industry had an increase of more than 56 per cent in 2022.

StatCan says 2022 was the first full year of true recovery in these industries and it used data from the goods and services tax sales and payroll deduction files, among other sources, to estimate related revenue and salary growth.

The report also looked at Canada's film and television industry — currently impacted by the U.S. actors' and writers' strikes — and found that an "unprecedented" number of backlogged and new projects in 2021 led to a nearly 31 per cent rise in 2022 industry revenues. 

Despite good news across the arts, entertainment, culture and recreation sectors, StatCan says there was no post-pandemic bounce back for newspaper, book and periodical publishing industries, which all saw a countrywide decline in revenues in 2022.

StatCan says the report released on Tuesday provides a "first glance" at the pandemic recovery in 2022 for these sectors and more detailed annual business surveys will provide official estimates later this year and in early 2024. 

Among other findings in the report: 

• The largest year-over-year increases in performing arts were seen among musical theatre and opera companies, which had a revenue growth of more than 217 per cent in the for-profit sector and just over 100 per cent in the non-profit sector in 2022.
• Although revenues increased across all amusement and recreation industries in 2022, the level of growth depended on the activity. For example, golf courses saw more modest increases than skiing facilities because pandemic restrictions in 2021 did not significantly hinder golfing.
• In the publishing industries, newspaper publishers saw the largest revenue decline in 2022 (-2.7 per cent), followed by book publishers (-2.6 per cent) and periodical publishers (-0.8 per cent).

 This report by The Canadian Press was first published Aug. 22, 2023.