The News Rundown

Hydro rates on upward swing despite NDP's best efforts

With all of the news surrounding the upcoming federal election, John Horgan and the BC NDP government has flown under the radar this summer so far. However, there has been a concerted focus on natural resources in the past few weeks, which is probably one of the weaker files for the NDP during their minority government so far.
On the 29th, Trudeau was in Surrey with Minister of Fisheries and North Vancouver Liberal MP Jonathan Wilkinson as well as Horgan to make an announcement that both the federal and provincial governments and BC Hydro have formed an agreement to push projects that increase power transmission. The end goal of the increased power transmission will be to electrify the natural gas industry, which produces about 18% of the carbon pollution in the province, and to take advantage of BC Hydro's "ability to provide clean energy for industry". The three-page agreement says $680 million in “near-term” electrification projects are being considered for possible funding.
Environmental groups and Andrew Weaver's Green Party have criticized Horgan’s NDP government for its backing of the liquefied natural gas industry in B.C. The federal and provincial governments have boosted LNG Canada’s plans for a $40-billion project in Kitimat, which is expected to create 10,000 construction jobs and up to 950 permanent positions in the processing terminal on the coast of B.C. Trudeau said Thursday’s agreement builds on that project.
Most of the natural gas sent to the refinery at Kitimat would be shipped to Asia, which still has a sizable portion of their industry running off of coal. It's a huge part of Horgan's climate plan, which sees changing other countries' habits from hard methods of pollution like coal into the less polluting natural gas. Ever since the approval of Site C, this NDP government has seen an approval rate of energy projects unprecedented for an NDP government in BC, with the notable elephant in the room exception of the Trans Mountain Pipeline. Balancing a massive natural resource industry with the environment is a tightrope that Horgan appears willing to walk.
Unfortunately, it's not been all sunshine and daisies. As part of Horgan's push to "make life more affordable for British Columbians", he promised to freeze BC Hydro rate increases. However, he abandoned that promise in early 2018 after failing to persuade the commission that the freeze was affordable. As a result, Hydro proceeded with a rate increase, scheduled under the previous Liberal government, of three per cent effective April 1, 2018.
But never fear, on the 27th, Energy Minister Michelle Mungall had a glowing and proud report to make surround BC Hydro: “British Columbians will pay less for electricity next spring if the B.C. Utilities Commission approves B.C. Hydro’s request for a decrease in rates. I am thrilled that B.C. Hydro is now able to apply for a rate reduction for the first time.”
However, reading beyond the first few paragraphs of the release, one discovered that the overall direction on Hydro rates was neither as thrilling — nor as affordable — as the New Democrats were making out.
Putting the 2018 and ’19 increases together with those proposed for 2021 and ’23, then subtracting the tentative 2020 and ’22 decreases, one comes up with an overall increase of 9.2 per cent — or about 9.5% compounded. Hydro reckons that a one-per-cent increase adds about $16 annually to the average Hydro bill. So, at the end of six years, the cumulative impact of 9.5% would be in the $150 range.
Whether that seems like a lot would depend on one’s family budget. But it would be a stretch to reconcile a $150 increase with the promise to “make life more affordable for British Columbians.”
As for insane gas prices, the B.C. Utilities Commission delivered the results of a gas price inquiry undertaken at the direction of the NDP to find out why gas prices had been shooting up at an unexplained rate.
Horgan ordered the gas-price inquiry in May when prices at the pump reached $1.70 in the Lower Mainland, saying the public deserves answers about why prices are so much more expensive and variable than in other jurisdictions. At the time, the B.C. Liberals and Alberta government bought ads blaming Horgan and linking his government’s resistance to the Trans Mountain pipeline expansion and taxes to the surging costs.
The commission’s marching orders were to explore factors that may be influencing gas and diesel prices in B.C. since 2015, including refining and retail margins, as well as factors that contribute to retail and wholesale price fluctuations such as access to refineries, the amount of fuel in storage, and refinery and pipeline capacity. The commission was to explore mechanisms the province could use to moderate price-fluctuation increases.
Werner Antweiler, a professor at the Sauder School of Business at the University of B.C. noted that one of the challenges is that B.C. remains a peripheral market in North America, with only two local fuel sources, refineries in Burnaby and Prince George. It relies heavily on Alberta for refined fuel products that can be constrained by refinery outages and space on the Trans Mountain pipeline. Both mean higher costs for transportation, via truck or rail from Alberta, or farther afield in markets in the U.S., he said.
Antweiler said the commission heard interesting information on what was driving prices, including that in the Lower Mainland higher retail margins were largely accounted for by the high cost of land. On the wholesale side, factors such as increased costs related to B.C.’s low-carbon fuel standards were cited by industry.
And now the inquiry has found that there is a “significant unexplained difference” of about 13 cents per litre in the price of gas in southern B.C. compared to the rest of the Pacific Northwest.
BCUC chair and CEO David Morton said “The prices in the Metro Vancouver area are higher by an unexplained 13 cents per litre, and they’re higher than they would be expected under more competitive conditions, and the higher price differentials cannot be explained by economic theory or justified by known factors in the market. We didn’t look at the taxes, we removed the taxes and we looked at the portion of the price that doesn’t include taxes … and then from that we determined the 13 cent unexplained difference.”
The review added that B.C.’s wholesale gas market is “not truly competitive” with high levels of market concentration and high barriers to entry, with retail prices that can be controlled by just five refiner-marketers. Despite this, the review found there was no evidence to suggest collusion among retail operators or cartel behaviour, as Horgan had suggested.
However, critics, including the Canadian Taxpayers Federation, have said the commission report is pointless because it was barred from investigating government policies that affect prices, including taxes, which amount to as much as 40 cents per litre in some parts of B.C.
Under the inquiry’s terms of reference, the BCUC had the power to compel oil companies to explain prices, however several major producers resisted sharing information about refining and retail margins, citing “competitive sensitivity.”
So while Horgan is moving forward on energy, prices continue to climb. The hope is that when projects like Site C and LNG Canada bear fruit, the extra tax revenue will be used to offset costs. All in all, there are worse problems to have right now.
Supplementals:

https://vancouversun.com/business/local-business/gas-pricing-inquiry-report-ordered-by-b-c-govt-to-be-delivered-friday
https://vancouversun.com/business/energy/ottawa-b-c-to-push-electrification-of-natural-gas-industry-to-cut-carbon-emissions
https://globalnews.ca/news/5836657/bc-gas-price-inquiry-findings/

The federal government’s Bill C–69 has been proclaimed into law.
Bill C–69: NEB Replacement, upstream emissions, energy and transportation projects.
Alberta has launched a constitutional challenge against this Bill now that it has been proclaimed.
The Alberta UCP has called it the “no more pipelines act”
In a statement from Justice Minister Doug Schweitzer and Energy Minister Sonya Savage, the Alberta government said, “This is a dark day for Alberta and Canada as a whole… This act is an unconstitutional attack on Alberta and our vital economic interests. It will make it virtually impossible for any future pipelines and other critical infrastructure projects that Canadians depend on… Under the Constitution, Alberta has clear and sole jurisdiction over the development of our natural resources.”
The Ministers also warned that this act will cause more investment to move to the US and other jurisdictions.
The Senate proposed 188 amendments to C–69, the government accepted 99 of them.
It is highly irregular for the Senate to submit so many amendments and have the government not pull back.
Nine of 10 provinces were opposed to it in part or on the whole.
During the Alberta election the UCP, NDP, Liberals, and Alberta Party all opposed C–69. This doesn’t even begin to touch on industry, indigenous groups, unions, and others who oppose C–69.
Bill Morneau sent a statement to CTV news saying, “The Harper government gutted environmental protections, eroded public trust, discouraged investment, and made it harder, not easier, for major projects to get built in Canada. Premier Kenney and Andrew Scheer want to weaken regulations to help their oil industry friends but weakening rules that protect the environment and people is not the way to build an industry. It makes no economic sense.”
We are seeing two parallel worlds. One in the east and one in energy producing jurisdictions.
Note RE: Constitutional Challenges
The battle of C–69 will be one of the many dividing forces in the coming fall election.
Supplementals:

Liberals Undecided If Trudeau Will Be In 1st Leaders’ Debate

There's been lots of news surrounding the upcoming federal election, and most of it seems to be centered upon Trudeau and the Liberal government. Despite not officially calling the election yet, the Liberals appear to be acting as if the campaign is already underway.
Federal Liberal ministers and MPs continued their cross-country spending announcement tour last week, making 330 spending commitments on everything from fixing up bus stops in London, Ont., to building new dressing rooms at a hockey rink in western P.E.I., to funding a youth exchange program to be run by Tides Canada. In our BC story, I already detailed the spending commitment made towards LNG Canada. Those 330 spending commitments made from Aug. 19 to Aug. 25 total $2.85 billion. For the week before that — Aug. 11-18 — Liberal MPs and ministers made 595 spending commitments worth a total of $4.9 billion.
Under Canada’s fixed-date elections law, the earliest Prime Minister Justin Trudeau could call this fall’s election would be Sept. 1 and the latest would be Sept. 15. Once he calls the election, all those spending announcements would stop.
That pace and scale of the spending announcements by the Trudeau government is significantly greater than a similar spending announcement program the Harper Conservative government engaged in just before the 2015 general election. In the entire month before former prime minister Stephen Harper called the election on Aug. 2, 2015, Conservative ministers and MPs made 604 spending commitments worth a combined $1.4 billion.
Despite acting like the election is already set in stone, one has to look at the underlying clues to show that Trudeau will be unlikely to call the election sooner rather than later.
As of yesterday, the amount of candidate nominations show a huge lack of preparedness for the NDP for the upcoming election at 148/338, and the Liberals (248) trail the Conservatives (332). Even smaller parties have nominated more candidates for the upcoming election than the Liberals, which shows that they probably aren't planning on calling it until the last moment possible.
Despite all the spending and campaigning, Trudeau looks like he will be dodging criticism from his opponents. He will be attending 2 official debates, an English debate on October 7th led by 5 journalists, Althia Raj from HuffPost Canada, Susan Delacourt from the Toronto Star, Rosemary Barton from CBC News, Dawna Friesen from Global News, and Lisa LaFlamme from CTV News. For those keeping score at home, yes the English debate leaders are all female, and 3/5 are from left-leaning outlets, with Friesen and LaFLamme occupying the center.
The French event on Oct. 10, will be moderated by Patrice Roy from Radio-Canada, and feature journalists from Le Devoir, Le Soleil, La Presse and L’Actualité.
The Canadian Debate Production Partnership (CDPP) is setting up the official debates. The CDPP is comprised of HuffPost Canada, HuffPost Québec, CTV News, CBC News, Radio-Canada, Global News, the Toronto Star and Torstar, La Presse, Le Devoir and L’Actualité. The participation of HuffPost Canada means that, for the first time, a digital-only news organization is part of the production group for the leaders’ debates.
While Trudeau seems happy to join in the official debates organized by center-left organizations, he won't confirm whether he will attend or be a no-show to the first federal leaders’ debate next month. That debate, sponsored by Maclean’s magazine and Citytv and hosted by journalist Paul Wells, will take place Sept. 12 in Toronto. Trudeau also hasn't confirmed his attendance at the planned Munk debate on foreign policy on Oct. 1, with spokesperson Braeden Caley saying they are still "mulling over their options".
Conservatives released a press release Tuesday suggesting Trudeau is “hiding” and “running away” from debates ahead of the next election, saying “Just because Trudeau has a lot to run away and hide from doesn’t mean he should.” The attacks come days after both Liberals and Conservatives revealed new ads where both leaders wore light blue button-up shirts to introduce their parties’ campaign slogans.
Seemingly inspired by the same directional theme, Liberals settled on “Choose forward” while the Tories picked “It’s time for you to get ahead.” The Greens have drawn from the same pool of inspiration with theirs: “Not left. Not right. Forward together.”
So while all parties (other than the floundering NDP) are gearing up for the election, Trudeau seems to dodging questions and debates, as well as promising spending that might not even go through after the election. If he wants to campaign, he should just call the election.
Supplementals:

Firing Line

McKenna backs off pledge to freeze carbon tax at $50 a tonne

The carbon tax was one of the tax policies implemented by the Trudeau government and was in the 2015 #RealChange platform.
The logic being that if the actions of the population that are damaging to the environment are taxed, people will stop.
The difference in practice though is that everything we buy, our gasoline, the gasoline used to bring groceries to stores, and most importantly the fuel we use to heat our homes can’t be switched off. It would be like going back to the pre-industrial age.
Not feasible in Canada.
The provinces were given the choice of implementing their own.
Alberta’s former NDP government brought in their own but that was repealed with the UCP’s first Act of Government, the Carbon Tax Repeal Act.
Ontario, Saskatchewan, Manitoba are challenging the federal carbon tax in court. Alberta supports these provinces and in the event the Trudeau government is re-elected will launch its own challenge.
Earlier this week Ontario appealed the decision of the Ontario Court of Appeal that ruled the carbon tax constitutional. This means that Ontario’s fight is going to the Supreme Court of Canada.
Saskatchewan filed a similar ruling to the Supreme Court this past spring.
Why are we talking about this?
Environment Minister Catherine McKenna has backed away from a pledge to freeze the carbon tax at $50/tonne after 2022.
She now says that re-elected Liberal government would review the levy with provinces before deciding how to proceed.
A $50/tonne carbon tax equates to 11c / litre on gas.
Everyone pays this. Rail operators. Truck companies. You.
This all adds up.
This doesn’t even begin to factor in the cost of electricity and heating fuel and the carbon tax on natural gas plants.
The Parliamentary Budget Office issued a report saying that the carbon tax would need to increase to $102/tonne to meet the international target for reducing green house gases if the carbon tax was the sole policy.
Other policies of course could include technological development but in action this week the government sent $15m to Brazil to help with their wildfire situation in addition to the $26.5m offered by the G7 group of nations.
The catch though is that this year has seen 35% more wildfires than in the last 8 years on average but the number is far below the fires seen between 2003 and 2010.
The recent number is what the media and governments like the Trudeau government and the government under Macron in France want the public to focus on.
It furthers the cause of climate change, provides a mental image, and allows the media themselves and the governments like Trudeau’s to virtue signal to the public with G7 communiques, aid, media stories, and most importantly gives the governments a green light to act at home.
All because the context is missing that the numbers are lower than they were between 2003 and 2010 and that they are above average for the last 8 years. It also probably factors in that the media and Trudeau and Macron amongst others dislike Brazilian President Bolsanaro’s policies as a right wing populist and that he initially turned down aid for the fires.
The fires in Brazil are bad. They are the burning of land that has already been cut to make way for new farmland. The burning of the Amazon happens yearly and we should be paying attention every year, not just this year.
Back in Canada, McKenna says that it was always the plan to plot the future of the carbon tax, signed in agreement with every province in 2016 except Saskatchewan.
Whether this was the plan in 2016 or the plan this week, a carbon tax beyond $50/tonne is going to be the reality with a re-elected Liberal government.
Supplementals:

Word of the Week

Debate - a formal discussion on a particular topic in a public meeting or legislative assembly, in which opposing arguments are put forward.

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Show Data

Episode Title: Debating Energy

Teaser: BC energy moves forward while prices increase, silence on Bill C-69 shows government apathy for Alberta, Trudeau is committing to billions in spending but not to debates, and a re-elected Trudeau government will double the carbon tax.

Recorded Date: August 30, 2019

Release Date: September 1, 2019

Duration: 46:16

Edit Notes: None

Podcast Summary Notes

Duration: XX:XX