Provincial Economies III

[whatnext]

Originally Posted by thewave46

Alberta has had several high-profile incidents with its electricity system recently.

The cold snap of early January caused AESO to send out a mass text to reduce consumption. Fine, the cold puts strain on these things.

Electricity rates have spiked in the last few years. Alberta has some of the highest rates in the country now. The average rate as per this history was as low as 7 cents/kWh in June 2021 (see average RRO rate). It had spiked to >32cents/kWh in August 2023.

Now this brownout situation during a season not known for high electricity demand as multiple power stations tripped on a daily ramp-up of demand.

Individually considered, not necessarily a problem. As a whole? Starting to think there may be a systemic issue.

Especially when said province likes to brand itself as an energy powerhouse...

[Hackslack]

Albertans should pay more/higher taxes and make the power a provincial government program… is that part of why other provinces pay higher taxes, and pst, and hst… I mean, is other provinces power really that much cheaper, or are the costs actually hidden in the higher taxes, or additional taxes the other provinces pay

[Acajack]

Originally Posted by Truenorth00

Yeah....I don't see it. This is entirely a local management problem. Not something that should afflict other parts of the country, unless we adopt their practices.

I guess I didn't express myself properly as everyone interpreted it as being a reference only to electrical brownouts.

I was actually using the brownouts as an example of other failings in our comfortable lives that we have seen and will probably see in the future.

It could be electricity, or drinking water, or products in stores, or fuel, or anything really.

As I was saying, in Canada we take for granted that most everything is going to work reasonably well, that it will be fixed fast when it doesn't, and that we'll have access to anything we need in a reasonable time frame.

But it's not a given that it will always be the case and the reason it's been that way for the entirety of our lives is due to a fairly fragile, well-balanced human-built and -run "ecosystem".

[casper]

Originally Posted by Hackslack

Albertans should pay more/higher taxes and make the power a provincial government program… is that part of why other provinces pay higher taxes, and pst, and hst… I mean, is other provinces power really that much cheaper, or are the costs actually hidden in the higher taxes, or additional taxes the other provinces pay

Actually Alberta has relatively expensive electricity compared to other provinces.

Quebec, BC and Manitoba have some of the lowest cost power in the country. They are also highly dependent on hydro.

[Airboy]

Originally Posted by casper

Actually Alberta has relatively expensive electricity compared to other provinces.

Quebec, BC and Manitoba have some of the lowest cost power in the country. They are also highly dependent on hydro.

Albertans are paying the highest power rates right now. All because UCP deregulated the market to let free market forces play out. hoping we would see more competitive pricing. But all is did was spike costs. Natural gas rates also went up.

Alternative power production is at 14% right now. The last power loss (selective black outs) was because 2 natural gas and one coal plant were off line. Solar and Wind were reduced but did not account for the loss.

[whatnext]

I posted this in the BC section but Canada is in for a world of hurt in the future. Not only has the Federal gov't been on an out of control spending spree but the provinces are just as bad:

Provincial finances are a future crisis in the making. It’s time to start work on a solution
ANDREW COYNE
PUBLISHED MARCH 27, 2024

... A monetary union thus implies some limits on the borrowing of member states. And indeed, at the euro’s outset, Europe had imposed such limits: deficits of no more than 3 per cent of GDP, total debt of no more than 60 per cent. But these had not been enforced. Greece, and the euro crisis, were the result. Silly Europe. Tut, tut, tut.

Except … that’s also the case in Canada. Australia co-ordinates the borrowing of its member states through a federal-state body known as the Australian Loan Council. American states have self-imposed limits on their ability to take on debt. German Länder (states) are constitutionally prohibited from running deficits. But in Canada, provinces can borrow as much as they like, in any currency they like. Like Europe, we are a monetary union without a fiscal union. Until lately that hasn’t posed much of a problem. It is about to become one.

Every year the Parliamentary Budget Office issues a Fiscal Sustainability Report on the debts of the federal and provincial governments. Half the provinces, it finds in its latest instalment, have debts that are “not sustainable over the long term,” meaning they are likely to grow faster than the economy. Its projections are, of course, conditional on the assumptions it plugs into its model, and as such tend to jump about from year to year. Nevertheless, the forecasts for Newfoundland, Manitoba, Prince Edward Island and, of late, British Columbia are consistently worrisome, with projected net debts in 25 years’ time exceeding 50 per cent or even 70 per cent of GDP. When Saskatchewan nearly hit the “debt wall” a generation ago, its debt-to-GDP ratio was in the high 40s....

....University of Calgary economist Trevor Tombe, co-director of the invaluable Finances of the Nation website, is even gloomier. He projects the provinces generally face a “fiscal gap” over the next 25 years on the order of 2.5 percentage points of GDP. That’s the amount they would have to either raise taxes or cut spending – not over the long run, but “immediately and permanently” – to bring their debts under control.

In B.C., according to Prof. Tombe, the gap is between 4 per cent and 5 per cent of GDP. To recoup that much through revenues alone, B.C. would have to double its personal income tax, or triple its sales tax. But Newfoundland, PEI and Nova Scotia are, on his calculations, not far behind..

All of which makes the insouciance of recent provincial budgets in Canada’s largest four provinces a little hard to bear. Take B.C., which not long ago had the most rock-solid finances of any province but whose fiscal future, after years of rapid spending growth under the province’s NDP government, Prof. Tombe now rates as “bleaker than any other.” The province’s latest budget projects a deficit of nearly $8-billion for the current fiscal year, with similarly hefty deficits to follow – nearly doubling the province’s debt-to-GDP ratio in four years...

https://www.theglobeandmail.com/opin...g-its-time-to/

[Airboy]

LNG Canada in Kitimat has now moved from the construction phase and are moving to the commissioning phase.

There were 9000 works on this project. I would expect the main camp to start mothballing parts.

The other project in town the Cedar LNG (owned by the local FN) has moved further along with guarantee for sales. This will be faster to turn on since it will be a floating facility.

My last visit to site was last May and there were 5000 on site then.

https://www.offshore-energy.biz/canadas-first-lng-export-facility-set-for-commissioning-activities/#:~:text=Canada's%20first%20LNG%20export%20facility%2C%20the%20Shell%2Dled%20LNG%20Canada,up%20activities%20about%20to%20begin.

[svlt]

Originally Posted by Airboy

LNG Canada in Kitimat has now moved from the construction phase and are moving to the commissioning phase.

There were 9000 works on this project. I would expect the main camp to start mothballing parts.

The other project in town the Cedar LNG (owned by the local FN) has moved further along with guarantee for sales. This will be faster to turn on since it will be a floating facility.

My last visit to site was last May and there were 5000 on site then.

https://www.offshore-energy.biz/canadas-first-lng-export-facility-set-for-commissioning-activities/#:~:text=Canada's%20first%20LNG%20export%20facility%2C%20the%20Shell%2Dled%20LNG%20Canada,up%20activities%20about%20to%20begin.

Every single one of the LNG projects seriously proposed in BC (LNG Canada, Cedar LNG, Ksi Lisims LNG, Woodfibre LNG) will be going ahead or has already started construction I think - that's a win

Even the Tilbury Marine Jetty in Delta to support the LNG industry that was rife with opposition got its approval. Now we will see if LNG Canada will go forward with Phase 2.

[Airboy]

Originally Posted by svlt

Every single one of the LNG projects seriously proposed in BC (LNG Canada, Cedar LNG, Ksi Lisims LNG, Woodfibre LNG) will be going ahead or has already started construction I think - that's a win

Even the Tilbury Marine Jetty in Delta to support the LNG industry that was rife with opposition got its approval. Now we will see if LNG Canada will go forward with Phase 2.

Plus the Kitimat FN has there Tugboat operation up and running.

[Innsertnamehere]

https://www.bloomberg.com/news/artic...hicle-capacity

Honda to build electric vehicles and battery plant in Ontario, sources say



TORONTO - Honda Canada is set to build an electric vehicle battery plant near its auto manufacturing facility in Alliston, Ont., where it also plans to produce fully electric vehicles.

The Canadian Press has learned that the federal and Ontario governments will make the announcement this week.

Senior sources with information on the project confirmed the deal but were not yet able to give any dollar figures.

Ontario Premier Doug Ford on Monday morning told a First Nations conference that there will be an announcement this week about a new deal that he said will be double the size of a Volkswagen deal announced last year.

That EV battery plant set to be built in St. Thomas, Ont., comes with a $7-billion capital price tag.

The Honda facility will be the third electric vehicle battery plant in Ontario, following in the footsteps of Volkswagen and a Stellantis LG plant in Windsor, and while those two deals involved billions of dollars in production subsidies as a way of competing with the United States’ Inflation Reduction Act subsidies, Honda’s is expected to involve capital commitments and tax credits.

Federal Finance Minister Chrystia Freeland’s recent budget announced a 10 per cent Electric Vehicle Supply Chain investment tax credit on the cost of buildings related to EV production as long as the business invests in assembly, battery production and cathode active material production in Canada.

That’s on top of an existing 30 per cent Clean Technology Manufacturing investment tax credit on the cost of investments in new machinery and equipment.

Honda’s deal also involves two key parts suppliers for their batteries — cathodes and separators — with the locations of those facilities elsewhere in Ontario set to be announced at a later date.

The deal comes after years of meetings and discussions between Honda executives and the Ontario government, the sources said.

Prime Minister Justin Trudeau, Premier Doug Ford and Honda executives were on hand in March 2022 in Alliston when the Japanese automaker announced hybrid production at the facility, with $131.6 million in assistance from each of the two levels of government.

Around the time of that announcement, conversations began about a larger potential investment into electric vehicles, the sources said, and negotiations began that summer.

[whatnext]

I thought this was of interest as it shows where Canadian pension fund end up putting their money though thankfully CPP doesn't seem invested!

A U.K. utility partially owned by Canadian pension funds is drowning in debt
B.C. Investment Management Corp., which manages public-sector pension funds, owns a nearly nine-per-cent stake in Thames Water
Bob Mackin
Jun 30, 2023 4:20 PM

london-riverthames-zigaplahutareplusgetty
An aerial view of river Thames in London, from where the U.K. Thames Water utility draws its name | Ziga Plahutar/E+/Getty Images
Two Canadian pension funds — one of which is Victoria-based — are shareholders in London’s troubled water and sewage utility company.

The Financial Times reported Wednesday that Thames Water is in talks with the U.K. government about potentially nationalizing the company, which is facing a crisis over its £14 billion debt, worth $23.4 billion in Canadian funds. CEO Sarah Bentley suddenly quit Tuesday and a new chair, Adrian Montague, was officially announced Friday.

Ontario Municipal Employees Retirement System (OMERS) is the biggest external shareholder with a 31.777-per-cent stake. B.C. Investment Management Corp. (BCIMC) holds 8.706 per cent. Other investors include sovereign wealth funds in Abu Dhabi and China....

...In 2006, the BCIMC Crown corporation was part of the Kemble Water Ltd. consortium, led by Australian investment bank Macquarie, that acquired Thames Water from Germany’s RWE AG for £8 billion.

BCIMC’s most-recently released investment inventory, dated March 31, 2022, showed Thames Water among 27 companies under its infrastructure and renewable resources portfolio, which represents 9.5 per cent of BCIMC assets under management. The portfolio represents 9.5 per cent of BCIMC’s $233 billion assets under management.

The regulator, Water Services Regulation Authority, which goes by the brand name Ofwat, was “deeply concerned” about Thames Water and four other regional monopolies, which it deemed “the worst performing companies operationally.”...

https://www.biv.com/news/economy-law...g-debt-8272358

[MolsonExport]

Originally Posted by Innsertnamehere

https://www.bloomberg.com/news/artic...hicle-capacity

Wow this sounds like really good news. The Japanese auto manufacturers are playing catch up with Tesla and numerous Chinese brands. The vehicle industry is presently undergoing a sea-change.

[Hackslack]

Originally Posted by Innsertnamehere

https://www.bloomberg.com/news/artic...hicle-capacity

Very cool!

I’m just happy the feds increased the capital gains tax inclusion rate only to announce significant tax breaks to some of the worlds largest auto manufacturers. They nailed the timing of this announcement, in my opinion.

Not only will they provide tax breaks to these companies, they’ll also likely scuttle investments in this country with the increase in capital tax tax inclusion rate.

[Arrdeeharharharbour]

...goddammit, keep those hundreds of millions of dollars OUT of our economy!!!

[Hackslack]

Originally Posted by Arrdeeharharharbour

...goddammit, keep those hundreds of millions of dollars OUT of our economy!!!

Lol, no debate with that. I encourage all types of investments in our country, just funny they increase capital gain tax inclusion rate on its citizens, then give tax breaks to international corporations. I wonder how many hundred of millions will be lost to the economy and spent on tax’s from the capital gains increase, and forfeiture of future investments because of the capital gains tax increase.

[Arrdeeharharharbour]

Originally Posted by Hackslack

Lol, no debate with that. I encourage all types of investments in our country, just funny they increase capital gain tax inclusion rate on its citizens, then give tax breaks to international corporations. I wonder how many hundred of millions will be lost to the economy and spent on tax’s from the capital gains increase, and forfeiture of future investments because of the capital gains tax increase.

I guess it's financial investment vs. social investment.

[casper]

Originally Posted by Hackslack

Lol, no debate with that. I encourage all types of investments in our country, just funny they increase capital gain tax inclusion rate on its citizens, then give tax breaks to international corporations. I wonder how many hundred of millions will be lost to the economy and spent on tax’s from the capital gains increase, and forfeiture of future investments because of the capital gains tax increase.

I am certain if a Canadian citizen was offering to build a multi-billion dollar manufacturing facility, the feds would be willing to provide a tax break.

[Innsertnamehere]

yup. This will be the largest industrial manufacturing facility in Ontario, I believe - by a significant margin.

The Volkswagen plant was already going to be the largest, and this is apparently twice the size of that. It will be immense. The spin-off benefits will be huge, Honda is basically focusing a huge portion of it's north-american production in Ontario. Simcoe County is already exploding in population too, this will only bolster it.

It's also interesting as the plant will be located further north than the "traditional" southwestern Ontario manufacturing belt. Projects like the 413 will be all the more important with this as far more traffic will be heading north of the GTA from southwestern Ontario where a lot of suppliers, etc. will likely be.

[kwoldtimer]

Originally Posted by Innsertnamehere

yup. This will be the largest industrial manufacturing facility in Ontario, I believe - by a significant margin.

The Volkswagen plant was already going to be the largest, and this is apparently twice the size of that. It will be immense. The spin-off benefits will be huge, Honda is basically focusing a huge portion of it's north-american production in Ontario. Simcoe County is already exploding in population too, this will only bolster it.

It's also interesting as the plant will be located further north than the "traditional" southwestern Ontario manufacturing belt. Projects like the 413 will be all the more important with this as far more traffic will be heading north of the GTA from southwestern Ontario where a lot of suppliers, etc. will likely be.

I believe that it will be four manufacturing plants in total (including the Aliston re-tooling).

[MonctonRad]

Originally Posted by Hackslack

Not only will they provide tax breaks to these companies, they’ll also likely scuttle investments in this country with the increase in capital tax tax inclusion rate.

Well, I'm gonna sell all my stock bearing mutual funds before the capital gains changes come into effect (still taking a tax hit), and doubling down on good solid predictable dividend paying vehicles like bank stocks for my retirement future.

Great for the banks. Not so good for start-ups looking for investors.............