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Ontario Economy

Yes, Ontario’s Liberals can cancel their terrible renewable power contracts—and they should do it now – by Lawrence Solomon (Financial Post – September 16, 2016)

http://business.financialpost.com/

Ontario’s power prices are soaring out of control, industry is leaving the province, the Liberal government is panicking over its re-election prospects, and almost everyone agrees there’s no remedy, that the ludicrously lucrative long-term contracts that the Ontario government signed with wind and solar energy developers condemn the province to many more years of economic hardship.

Except there is a way to deal with the onerous contracts — rip them up. There is no compelling economic, environmental, moral or legal case for the government to “honour” odious contracts. The only honourable course of action for the government, in fact, is to admit its mistakes and pass legislation declaring those contracts null and void.

A compelling economic case? In announcing its Green Energy Act, the Liberals repeatedly boasted they’d be creating 50,000 jobs, boosting the Ontario economy to new heights. With jobs fleeing the province and business confidence at rock bottom, no one hears that boast any longer.

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Oshawa’s future at play in talks with General Motors – by Vanessa Lu (Toronto Star – September 15, 2016)

https://www.thestar.com/

Unifor has threatened to strike at midnight next Monday unless it wins a commitment from the company for more future work in Oshawa.

For auto workers in Oshawa, it’s do-or-die time. In a city that was once synonymous with General Motors, there’s no promise of any future auto assembly work beyond 2019, so there are real fears production could shut down altogether.

That’s why Unifor, formerly the Canadian Auto Workers union, has threatened to strike at midnight next Monday, unless it wins a commitment from the company for more future work in Oshawa. “If we don’t nail it now, we’re not going to nail it done, ever,” said Jerry Dias, the union’s national president. “If they are planning on closing Oshawa, then we’re going to have a strike.”

GM officials have long insisted that it won’t talk about new products in Canada until a collective agreement is signed first. That’s why the union picked General Motors over Ford or Fiat Chrysler as its target to negotiate a contract that will hopefully set a pattern for the other two automakers.

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GLOBE AND MAIL EDITORIAL: Ontario’s new electricity policy: History repeats as farce (September 14, 2016)

http://www.theglobeandmail.com/

A century ago, when Sir Adam Beck created the public utility that went
on to become Ontario Hydro, his slogan was, “Power at Cost.” A century
later, Ontario’s motto might as well be, “artificially costly power,
priced below cost, with taxpayers picking up the difference.” What a mess.

Karl Marx said that history repeats: first as tragedy, then as farce. In Ontario, the history of failed energy policy repeats – first as farce, and then as more farce.

Premier Kathleen Wynne faces an election in a little over a year and a half, and one of the main issues dogging the Liberal government is the price of electricity. Thanks to policy choices that the government itself seems incapable of unwinding, electricity bills have been on an upward tear for a decade.

Many voters are furious. And so the Wynne government devoted the heart of its Throne Speech this week to a plan to lower the price of electricity. Not the cost of electricity, however. Just the sticker price.

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[Ontario electricity rates] Wynne’s way: Rob the poor, help the rich – by Margaret Wente (Globe and Mail – September 13, 2016)

http://www.theglobeandmail.com/

The Wynne government loves to bask in the virtues of “sustainable” energy.
But its deranged pursuit of green energy at any cost – dating back to
the days when Gerald Butts, Justin Trudeau’s BFF, was cutting his teeth
at Queen’s Park – is not economically sustainable at all.

Electricity prices in Ontario are rising faster than anywhere else
in North America. Many experts, including Bank of Montreal chief
economist Doug Porter, warn that soaring hydro rates are among the
biggest threats to the provincial economy.

Out in rural Ontario, far away from the lush grounds of Queen’s Park, a crisis is brewing. Electricity rates have soared so high that many people can’t afford to pay their hydro bills. Local charities have a name for it: energy poverty. The problem is so bad that they’ve set up relief funds to help protect families from the threat of disconnection.

No wonder Kathleen Wynne, Ontario’s Premier, is running for cover. The Liberal government’s energy policy has been a disaster for lower-income citizens, especially in rural areas, where delivery charges are significantly higher.

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Ontario Liberals try to fix the problems they created with more decidedly liberal solutions – by Matt Gurney (National Post – September 13, 2016)

http://news.nationalpost.com/

Ontario’s nearly 13-year-old Liberal government announced a slate of new, purportedly consumer-friendly initiatives Monday. In her speech from the throne, the lieutenant governor said Premier Kathleen Wynne’s government would create 100,000 child-care spaces, and drop the provincial share of the harmonized goods and sales tax from home hydro bills.

There would also be targeted incentives aimed at lowering the punishing hydro bills paid by manufacturers — there are still some left, amazingly — and rural residents.

The throne speech, which followed the Liberals’ recent byelection loss of a Toronto riding to the Progressive Conservatives, is clearly aimed at addressing the discontent many Ontarians feel with their government, particularly over basic pocketbook issues. The tone of the speech, on the whole, had a “we-feel-your-pain” vibe. It’s the government, after all. And it’s here to help.

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Too much of a good thing — how Ontario’s Liberals bungled the green energy file – by Jon W. Kieran (National Post – September 3, 2016)

http://news.nationalpost.com/

Ontario set an all-time peak electricity demand of 27,005 megawatts (MW) 10 years ago this summer. At the time, rising demand and plans to retire its coal-fired power plants dominated provincial energy policy. What followed was optimism for a new energy policy, focused on the ambitious procurement of large wind and solar installations. I felt great pride in helping to lead an industry that would make Ontario’s power system clean, responsive and cutting edge.

What a difference a decade makes. Intrusive policy and poor implementation are largely responsible for the energy market debacle Ontarians face today. But there is no excuse now for buying more mega-projects when our power supply is saturated and hydro bills are skyrocketing.

Coal-fired power generation effectively disappeared after 2010, by which time Ontario’s electricity demand had already started to plummet. Demand has fallen 13 per cent in the past 10 years, including consecutive reductions in each of the past five years. In 2016, Ontario will consume less electricity than in 1997.

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Wynne Liberals lead Ontario down Michigan’s path to pain – by Kelly McParland (National Post – August 24, 2016)

http://news.nationalpost.com/

There is good reason to be gloomy about a new study contrasting Ontario’s prolonged stagnation to recent signs of revival across the border in Michigan state.

One is the simple embarrassment of being compared to a state that has become synonymous with failure. One of the few comforts available to frustrated Ontarians as the province slid steadily into economic torpidity was the knowledge that things immediately across the border were worse. Every article depicting Detroit as an urban apocalypse offered a little spurt of schadenfreude for Ontario: sure, things could be better, but hey, at least we’re not Michigan.

A more compelling basis for gloom lies in the relative state of mind of the two governments. Michigan knew it was in a mess and had to do something about it. When Governor Rick Snyder took office in 2011 he recognized that drastic measures were required, and set out to introduce them.

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STELCO SALE: Locals outraged at Ottawa’s “deafening silence” on steel industry – by Steve Arnold (Hamilton Spectator – August 23, 2016)

http://www.thespec.com/

Union leaders, Opposition MPs and even the Chamber of Commerce are pressing the federal government to help Canada’s struggling steel industry. Two Hamilton Members of Parliament, three chambers of commerce and union leaders at the local and provincial levels separately have called for help for the industry and especially for retirees and workers in Hamilton.

NDP MPs Scott Duvall (Hamilton Mountain) and Dave Christopherson (Hamilton Centre) have written to Economic Development Minister Navdeep Bains, saying the federal government has stayed on the sidelines too long.

“To date, your government has not been tangibly involved in any way to help protect the jobs, benefits and pensions of current and former employees of USSC/Stelco despite commitments previously made by colleagues and the Prime Minister,” they wrote. “Workers, pensioners, the business community and the City of Hamilton have all appealed for your help. So far, you and your government have been missing in action.”

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Ontario Steel Investments bids on Hamilton plant – by Elaine Della-Mattia (Sault Star – August 9, 2016)

http://www.saultstar.com/

Ontario Steel Investments Ltd. has submitted a formal binding offer to purchase U.S. Steel Canada (Stelco). The total proposed purchase price of the offer has not been disclosed.

But the offer does include the assumption at closing of $954 million of employer liabilities under Stelco’s defined benefit registered pension plans and commitment to contribute $25 million per year towards post-employment benefits for active and retired employees, a press release states.

Ontario Steel Investments Ltd. is a new company established by Essar Global that includes a consortium of steel specialists. Ontario Steel Investments has also indicated they are interested in bidding on Essar Steel Algoma but a bid has not yet been formally presented.

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Wynne says steel important to Ontario economy – by Elaine Della-Mattia (Sault Star – August 9, 2016)

http://www.saultstar.com/

Ontario Premier Kathleen Wynne said the province needs a strong steel industry – especially one that can help build infrastructure for all Ontarians.

“We are building so much in Ontario right now – $160 billion over 12 years – and there is a lot of steel in that build,” she said in an exclusive interview with The Sault Star.

She was in Sault Ste. Marie Monday as part of an 18-stop, week-long tour of Northern Ontario communities. Monday’s formal announcement dedicated an additional $120 million to modernize Northern Ontario schools, bringing a total commitment to $300 million.

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Inside the aging lock that is one breakdown away from crippling North America’s economy – by Peter Kuitenbrouwer (Financial Post – July 30, 2016)

http://business.financialpost.com/

SAULT STE. MARIE, MICH. — The dispatch tower above the Soo Locks on a fine July day offers a spectacular view, but there is little time to admire it. There are five telephones and five radios, and at 9 a.m. a radio squawks. “Go ahead, captain,” says Chris Albrough, lockmaster with the U.S. Army Corps of Engineers.

“Can I have the upper and lower water levels?” asks someone who turns out to be captain of the M/V Burns Harbor, owned by the American Steamship Co.

“Upper is plus 24 inches, lower is plus 31 inches,” Albrough replies, reading from one of five screens. Translation: the water in Lake Superior today is 24 inches above its mean level, whereas the St. Mary’s River is 31 inches above. He watches as the mammoth bulk carrier ship slips from the Poe Lock into Lake Superior.

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Ministry of Energy News Release: Ontario Selects Wataynikaneyap Power to Connect Remote First Nation Communities to Electricity Grid

Province Moving Forward to Help Fight Climate Change, Grow Economy

July 29, 2016 – Ontario has selected Wataynikaneyap Power LP (Watay) to connect 16 remote First Nation communities that currently rely on diesel power to the province’s electricity grid.

Once complete, the project will provide more than 10,000 people living in remote First Nation communities in northwestern Ontario with a reliable, clean supply of electricity. Watay Power plans to begin construction work starting in 2018, once all approvals are secured, with the goal of completing construction and connecting communities by 2024.

Watay Power is an unprecedented partnership between a consortium of 20 First Nation communities and a transmission partner, Fortis Ontario and RES Canada (RES/FortisOntario).

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‘Business unfriendly’ is the new normal for Ontario and Ottawa – by Philip Cross (Financial Post – July 4, 2016)

http://business.financialpost.com/

Philip Cross is the former chief economic analyst at Statistics Canada.

It is an article of faith among left-wing academics, analysts and pundits that the business community controls the agenda of politicians, who sit by their phones waiting for instructions from The Captains of Industry. If only that was true in Ontario, where senior government leaders plan new policy initiatives oblivious to their impact on business.

How the Ontario government works was summarized in former Ontario Premier Dalton McGuinty’s recent autobiography, Making a Difference, in which the business sector barely rates a mention. There is no discussion of the high-tech meltdown in 2001 that devastated McGuinty’s own stomping-grounds in Ottawa when Nortel and JDS Uniphase collapsed.

To McGuinty, the 2008–09 recession was notable because GM and Chrysler came begging for bail-outs, an apt summary of his paternalistic view of the relationship between government and business.

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KPS withdraws bids for Essar Algoma, U.S. Steel Canada – by Greg Keenan (Globe and Mail – July 15, 2016)

http://www.theglobeandmail.com/

KPS Capital Partners LP has abandoned its bids for Essar Steel Algoma Inc. and U.S. Steel Canada Inc., ending its effort to combine two Canadian steel mills that have been operating in creditor protection.

The New York-based private equity fund withdrew the bids because it was unable to reach agreements with the Ontario government, a source familiar with the matter said Thursday. The Ontario government was involved because of combined pension liabilities that exceeded $1-billion at the two steel makers, as well as unknown environmental costs.

KPS had teamed up with Essar Algoma’s term lending syndicate to make an offer that was anointed by Essar Algoma as the preferred bid. Its withdrawal from the U.S. Steel Canada sales process leaves Bedrock Industries Group LLC, another private equity fund, as the only bidder remaining in that auction.

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U.S. Steel: Essar inks deal with union to buy Algoma – by Steve Arnold (Hamilton Spectator – July 12, 2016)

http://www.thespec.com/

The Indian conglomerate planning to merge Stelco and Algoma into a new Canadian steel company is refusing to surrender its dream despite being defeated in bids for both companies.

Essar Global announced this week it has signed a deal with the United Steelworkers in Sault Ste. Marie to negotiate a framework deal to acquire Algoma through a subsidiary called Ontario Steel Investment Limited.

Gaining support of the union is a requirement for a successful bid for both struggling steelmakers. Essar is the union’s preferred bidder because it has promised to maintain jobs, pay up pension deficits and restore retiree health benefits. A competing bid by a New York-based hedge fund, however, is said to have rejected paying off pension shortfalls in favour of higher returns for debt holders.

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