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Business

Canadian Energy Companies Look South For Growth

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7 minute read

From EnergyNow.ca

By Heather Exner-Pirot

Enbridge’s announcement in September that it was acquiring three U.S.-based utilities for USD$14 billion saw Canada’s largest energy company also become North America’s largest gas utility. The deal is significant not only on its own merits, but as part of a bigger trend: Canadian energy companies that are looking for growth prospects are finding them south of the border.

The trend is not new. In 2016, Canadian utilities went on an American shopping spree. Fortis acquired ITC for USD$11.3 billion; Ontario-based Algonquin Power & Utilities Corp acquired Missouri-based Empire District Electric Company for USD$2.4 billion; and Nova Scotia-based Emera acquired Florida-based TECO in a USD$10.4 billion deal.

Pipelines were in the mix too, with TC Energy acquiring Columbia Pipeline Group, a gas transmission network, that year for USD$13 billion.

In 2017, Hydro One purchased U.S. power supplier Avista for USD $3.4 billion, and AltaGas took over WGL Holdings (which supplies natural gas to the White House) for USD $4.6 billion. More recently, TriSummit acquired the Alaska gas distribution, transmission, and storage assets of SEMCO Energy for US$800 million in March.

As such, the Enbridge utility megadeal can be seen less as a harbinger and more of a culmination.

What is behind this Canadian appetite for American utilities and pipelines? At one level, it is a response to the inherent limitations of the Canadian utilities sector, which is heavily regulated and often provincially owned. Add in Ottawa’s torrent of climate policies aiming to cut growth in Canadian oil and gas, and pastures look greener elsewhere.

But it also speaks to the confidence the sector’s biggest players have in the long term prospects for natural gas. The Dominion deal adjusts Enbridge’s earnings from a 60-40 mix between crude oil & liquids, and natural gas & renewable energy respectively, to something closer to a 50-50 split. Enbridge, like many energy companies, is betting on natural gas being a bridge fuel in the energy transition rather than being phased out. And whatever fuel mix we use in the future, it will require pipelines and distribution, whether in the form of natural gas, renewable natural gas (RNG), hydrogen or otherwise.

“…it also speaks to the confidence the sector’s biggest players have in the long term prospects for natural gas.”

Two phenomena are worth emphasizing here. The first is that the United States is seen as a jurisdiction for growth; Canada, not so much. Our biggest energy companies are expanding to the south, but the reverse is not true. Enbridge and TC Energy are leading the way, but Cenovus, Cameco, Hydro-Québec and others are also making moves, on top of the long list of utilities above.

This is not just anecdotal. According to the U.S. State Department,1 Canadian foreign direct investment (FDI) in the United States was about 26% higher than their reciprocal FDI in 2022, or USD$528 billion compared to their USD$406 billion. This is part of a broader trend that has been worsening since 2014. In that year, Canadian investment abroad was only about CAD$100 billion more than foreign investment in Canada. By 2022 the imbalance had grown to a whopping CAD$725 billion.2 Canadian companies are generating wealth; they are just generating a smaller proportion of it at home.

The second is that the Canadian and American energy markets are highly interdependent, and growing more so. In fact, 2022 saw record energy trade between our two countries, reaching USD$190 billion, almost triple what it was in the throes of the COVID-19 pandemic, and beating the last high water mark of USD$178 billion in 2008. From natural gas and liquids pipelines to refineries and electricity grids, fundamentally we have a single North American energy system.

As such, we should be developing and coordinating energy and climate policy much more closely. It is inefficient, not to mention painful for the energy sector, when Canada and the United States – and many provinces and states on top of that – propose substantially different standards, goals, and regulations.  Energy is an area that needs closer policy collaboration and alignment between our two nations in order to achieve sustainability, reliability and affordability of supply.

This need is manifesting itself in a growing Canadian presence in the US capital. In the past year or so, TC Energy has established a policy team in Washington DC, and Cenovus and the Business Council of Canada have opened up offices there (as has my own think tank, the Macdonald-Laurier Institute). As entreaties to Ottawa fall on deaf ears, businesses are looking for reception elsewhere.

The Canadian energy sector is betting big on natural gas, be it through retail, pipeline transportation or LNG exports. Where possible, it’s betting on Canada too. But the United States and other markets are where growth is on offer.

We should all celebrate the success of Canadian companies abroad. But we should be creating a policy and business environment that allows them to grow in our own back yard too.

Heather Exner-Pirot is the Director of Energy, Natural Resources and Environment at the Macdonald-Laurier Institute.

Alberta

Alberta fiscal update: second quarter is outstanding, challenges ahead

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Alberta maintains a balanced budget while ensuring pressures from population growth are being addressed.

Alberta faces rising risks, including ongoing resource volatility, geopolitical instability and rising pressures at home. With more than 450,000 people moving to Alberta in the last three years, the province has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported. Alberta’s government is determined to make every dollar go further with targeted and responsible spending on the priorities of Albertans.

The province is forecasting a $4.6 billion surplus at the end of 2024-25, up from the $2.9 billion first quarter forecast and $355 million from budget, due mainly to higher revenue from personal income taxes and non-renewable resources.

Given the current significant uncertainty in global geopolitics and energy markets, Alberta’s government must continue to make prudent choices to meet its responsibilities, including ongoing bargaining for thousands of public sector workers, fast-tracking school construction, cutting personal income taxes and ensuring Alberta’s surging population has access to high-quality health care, education and other public services.

“These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”

Nate Horner, President of Treasury Board and Minister of Finance

Midway through 2024-25, the province has stepped up to boost support to Albertans this fiscal year through key investments, including:

  • $716 million to Health for physician compensation incentives and to help Alberta Health Services provide services to a growing and aging population.
  • $125 million to address enrollment growth pressures in Alberta schools.
  • $847 million for disaster and emergency assistance, including:
    • $647 million to fight the Jasper wildfires
    • $163 million for the Wildfire Disaster Recovery Program
    • $5 million to support the municipality of Jasper (half to help with tourism recovery)
    • $12 million to match donations to the Canadian Red Cross
    • $20 million for emergency evacuation payments to evacuees in communities impacted by wildfires
  • $240 million more for Seniors, Community and Social Services to support social support programs.

Looking forward, the province has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. It expects to earn more for its crude oil, with a narrowing of the light-heavy differential around US$14 per barrel, higher demand for heavier crude grades and a growing export capacity through the Trans Mountain pipeline. Despite these changes, Alberta still risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.

After a 4.4 per cent surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5 per cent in 2025, lower than the first quarter forecast of 3.2 per cent growth because of reduced immigration and non-permanent residents targets by the federal government.

Revenue

Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:

  • $16.6 billion forecast from personal income taxes, up from $15.6 billion at budget.
  • $20.3 billion forecast from non-renewable resource revenue, up from $17.3 billion at budget.

Expense

Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.

Surplus cash

After calculations and adjustments, $2.9 billion in surplus cash is forecast.

  • $1.4 billion or half will pay debt coming due.
  • The other half, or $1.4 billion, will be put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund and/or spent on one-time initiatives.

Contingency

Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.

Alberta Heritage Savings Trust Fund

The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.

  • The fund earned a 3.7 per cent return from July to September with a net investment income of $616 million, up from the 2.1 per cent return during the first quarter.

Debt

Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.

  • Debt servicing costs are forecast at $3.2 billion, down $216 million from budget.

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Business

Trump’s government efficiency department plans to cut $500 Billion in unauthorized expenditures, including funding for Planned Parenthood

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From LifeSiteNews

By Emily Mangiaracina

Elon Musk and Vivek Ramaswamy shared their plans to ‘take aim’ at ‘500 billion plus’ in federal expenses, including ‘nearly $300 million’ to ‘progressive groups like Planned Parenthood.’

Elon Musk and Vivek Ramaswamy are planning to ax taxpayer funding for Planned Parenthood as part of their forthcoming work for the next Trump administration, they revealed in a Wednesday op-ed in The Wall Street Journal. 

The businessmen have been appointed by President Donald Trump to lead a new Department of Government Efficiency (DOGE), which will work from outside the official government structure to cut wasteful government spending and excess regulations, as well as “restructure federal agencies,” as Trump announced last week on Truth Social.

Musk and Ramaswamy shared Wednesday that as part of their work at DOGE to downsize government spending, they will be “taking aim at the $500 billion plus in annual federal expenditures that are unauthorized by Congress or being used in ways that Congress never intended,” thereby “delivering cost savings for taxpayers.”

They specifically called out Planned Parenthood as one institution that will lose taxpayer funding once DOGE kicks into gear. In their op-ed, the duo said the federal expenditures they plan on cutting includes the “nearly $300 million” dedicated “to progressive groups like Planned Parenthood.”

Musk and Ramaswamy also reportedly will take aim at the “$535 million a year to the Corporation for Public Broadcasting and $1.5 billion for grants to international organizations,” according to Catholic Vote, although they have not shared all of the federal spending they plan to cut or reduce.

“With a decisive electoral mandate and a 6-3 conservative majority on the Supreme Court, DOGE has a historic opportunity for structural reductions in the federal government,” the business duo wrote. “We are prepared for the onslaught from entrenched interests in Washington. We expect to prevail.”

Mogul and X owner Musk, who was outspoken before his DOGE appointment about the big problem of waste, noted last week that if the government is not made efficient, the country will go “bankrupt.”

He reposted a clip from a recent talk he gave in which he explained that not only is our defense budget “pretty gigantic” — a trillion dollars —but the interest the U.S. now owes on its debt is higher than this.

“This is not sustainable. That’s why we need the Department of Government Efficiency,” Musk said.

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