Ontario scraps beer tax increase planned by previous Liberal government

TORONTO — The Ontario government says it will cancel a scheduled increase in the provincial beer tax that was set to kick in next month.

The Progressive Conservatives say the three-cent-per-litre increase was planned by the previous Liberal regime and will be scrapped.

The government says beer taxes have increased by three cents per litre each year since 2015.

It says it’s stopping the increase that was set to go into effect Nov. 1 as it reviews the province’s approach to beer and wine sales, including the possible expansion of sales into corner and big box stores.

The government could not immediately say how much tax revenue it will forgo by halting the tax increase.

Beer and wine taxes brought in revenues of roughly $589 million in 2016-2017.

The move to cancel the beer tax increase comes after the government brought back so-called buck-a-beer to the province this summer.

The policy lowers the minimum price of a bottle or can of beer to $1 from $1.25. Brewers are not required to charge less and the minimum price doesn’t apply to draft beer, nor does it include the bottle deposit.

Businesses were offered prime spots in Liquor Control Board of Ontario stores and advertising in the store magazine’s inserts, among other possible incentives for selling their beer for $1.

Two breweries, Cool Brewery in Toronto and Barley Days Brewery in Picton, Ont., have said they will offer lower-priced brews, while Loblaws offered its President’s Choice beer for one dollar a bottle for a limited time.

Doug Ford vows to scrap key Liberal labour reform legislation that hiked minimum wage, gave workers more protections

TORONTO — Ontario Premier Doug Ford is vowing to scrap labour reform legislation from the previous Liberal government that raised the province’s minimum wage and introduced a range of other worker protections, a declaration that comes days after his government said the law was under review.

Ford’s comments, made in the legislature Tuesday, caught the opposition off-guard and upset those in the labour community who have been supporters of the law known as Bill 148.

“We’re going to make sure we’re competitive around the world,” the premier said. “We’re getting rid of Bill 148. We’re going to make sure we protect the front-line workers.”

The Progressive Conservatives said last week that they would halt a planned increase to minimum wage set to kick in next year as a result of the Liberal law, and the labour minister said the rest of the legislation was being reviewed.

The bill mandates equal pay for part-time and temporary workers doing the same job as full-time employees and increases vacation entitlements to three weeks after a worker has been with their company for five years. It also requires employees to be paid for three hours if their shift is cancelled within 48 hours of its start, and expands personal emergency leave to 10 days per year, two of them paid.

When asked to clarify Ford’s comments, Economic Development Minister Jim Wilson maintained that the law was still under review but called it a “real concern.”

“There are parts that we will keep and there are parts that probably will go,” he said. “But we’re consulting on that. We’re just not in a position today to tell you where we’re at.”

Bill 148 — dubbed the Fair Workplaces, Better Jobs Act — was applauded by labour activists who had been calling on the government to increase the minimum wage for years. Former premier Kathleen Wynne used the policy, and its theme of fairness, as a major plank during the spring election.

Some businesses, however, complained about the hike in minimum wage — from $11.60 to $14 an hour on Jan. 1 — and raised prices, cut staff hours and reduced employee benefits in response.

On Tuesday, NDP Leader Andrea Horwath said it’s not clear, despite Ford’s latest comments, just what the government plans to do with the labour reform law. Repealing the legislation will only make life more unstable for workers across the province, she said.

“At the end of the day, dragging us backwards to the days where people couldn’t get three weeks vacation or they couldn’t get sick time off when they were sick at work, these are things that we worry about,” she said.

Interim Liberal leader John Fraser said it sounds like Ford will scrap the bill, despite his minister insisting it is still under review. The premier’s declaration hurts workers across the province, he said.

“It does a disservice to the office to not fully consider the direction you’re going in,” he said. “The premier’s not doing that.”

Pam Frache, the Ontario co-ordinator of the Fight for 15 and Fairness, a group that supports the law, noted that the government has not yet introduced legislation to replace or repeal Bill 148, despite Ford’s comments.

“We still think there’s time for the premier to change his mind, to do the right thing and to stand with the people, not with the corporate elites,” she said.

Meanwhile, the Ontario Chamber of Commerce, which represents the province’s business community, said it would like the government to repeal Bill 148.

“The very real unintended consequences (of Bill 148) have forced our members to decrease product offerings and increase the price of products being sold, hire fewer employees, reduce services and hours of operation, cut back on employee benefits, and halt capital investment — all in an effort to stay afloat,” president Rocco Rossi said in a statement.

Ontario’s Ford government eyeing changes to the Liberals’ scheme to cut hydro bills

Ontario Premier Doug Ford’s government is apparently aiming to either axe or alter a key plank of their predecessors’ debt-laden plan to lower household electricity bills.

The move was mentioned in Ontario’s 2017-18 public accounts, which were released on Friday and indicated that the Ford government intends to stop “refinancing” the province’s global adjustment charge.

Global adjustment is a longstanding part of Ontario power bills that chiefly represents the difference between the market price for electricity and the usually higher rate the province owes power companies, either due to contract terms or regulatory decisions. The charge has shot up over the past decade, costing customers billions, and now makes up the bulk of the commodity cost of electricity in Ontario.

Feeling the heat over energy prices, Ontario’s then-Liberal government rolled out their so-called Fair Hydro Plan in 2017, resolving to lower electricity bills by an average of 25 per cent for residential consumers, and then to hold rate increases to the rate of inflation for four years.

The plan did so in part by “refinancing” the global adjustment charge — essentially borrowing money to reduce the amount current ratepayers owed on their bills, with future ratepayers left to pay it back. An auditor’s report on the Fair Hydro Plan last year suggested the total borrowings to be repaid could surpass $39 billion over the life of the program, including interest.

But according to the public accounts, those refinancing plans are being targeted for a change under Ford, whose government has been busy scrutinizing the financial situation left behind by the Liberals.

“In September 2018, the government made a decision to make a future proposed legislative change to the Ontario Fair Hydro Plan Act to cancel the Global Adjustment Refinancing component of the plan,” said part of the province’s recently released financial statements.

“The government will fund all the future obligations issued and outstanding as of the date the guarantee is invoked.”

Another passage in the public accounts said the Ford government would make changes to the act “reducing the amount of the current electricity price reduction to be borne by future ratepayers, and making any recovery from future ratepayers optional.”

However, while future ratepayers may end up no longer on the hook for the refinancing, the effect of the changes on today’s electricity customers remains unclear.

A commission of inquiry struck by the Ford government recently noted that the global adjustment refinancing part of the hydro plan provided nearly two-thirds of the Liberals’ 25-per-cent cut.

Ford has also promised ratepayers a 12-per-cent cut in the price of electricity on top of the 25-per-cent reduction introduced by the Liberals, something the government has suggested can be achieved through moves such as cancelling pre-construction green-energy projects and returning to ratepayers the dividends the province receives for its ownership stake in Hydro One Ltd.

“The government will have more to say about this in the future,” a spokesperson for the province’s finance minister said in an email.

As well, the latest public accounts show that Ontario has recorded an approximately $1.64-billion obligation to a Fair Hydro Trust, which was set up under the previous regime to help with the refinancing and to borrow some of the money needed to pay for the Fair Hydro Plan rate cuts.

The trust is managed by provincially owned Ontario Power Generation Inc., but is a separate financing entity. It will apparently no longer conduct debt offerings, turning Ontario’s already-issued hydro bonds into collector’s items.

“All debt issued under the Fair Hydro Trust will remain outstanding,” said Gadi Mayman, chief executive of the Ontario Financing Authority, the agency which borrows money for the province, in a message posted online Monday.

“The Province will be responsible for making all interest and principal payments due on those bonds. Going forward, there will be no issuance by the Fair Hydro Trust.”

As of this week, the trust had completed two debt offerings, issuing a combined $900 million in bonds with a term of either 15-and-a-quarter or 20 years. Before being brought to a halt, it was anticipated to borrow far more.

But shuttering the trust follows the release last week of recommendations from the independent commission of inquiry into the province’s finances. One of the commission’s recommendations, which were accepted by the Ford regime, was to adopt the preferred accounting of Ontario’s auditor general for the global adjustment refinancing.

The finance minister’s spokesperson said that “our Government has accounted for the Liberals hydro scheme on the Province’s books as previously recommended by the Auditor General in a bid to improve financial transparency for Ontarians.”

Ontario’s auditor had butted heads with the Liberals over the accounting. The watchdog also warned last year, citing another legislative officer, that the financing structure of the Fair Hydro Plan could cost Ontario up to $4 billion more in the long run, as OPG and the trust face higher interest rates to borrow than does the province itself.

“The government’s desired outcome was that the electricity subsidy would be funded by ratepayers and therefore have no impact on the deficit or net debt,” the commission’s report stated, adding that the global adjustment refinancing “also presents a risk that the global adjustment itself may be struck down as unconstitutional.”

“There is a risk that a court may find the global adjustment is not a valid regulatory charge if shifting costs over a longer period of time inadvertently results in future ratepayers cross-subsidizing today’s ratepayers.”

The recent moves by the Ford government fit into their broader strategy of undoing the plans of the previous Liberal regime. Since winning the June election, the Ford government has taken steps to dismantle the province’s carbon-pricing system, prevent another minimum wage increase and to repeal green-energy legislation.

The government has said they are trying to put the province’s finances back on track, and their commission of inquiry projected the province’s deficit for 2018-19 would be $15 billion — more than double what the Liberals’ budget had forecast, which is partly due to the inclusion of the hydro plan-related expenses.

“I can tell you that we now know the Fair Hydro Trust was all about a cover-up, and the first phase is exposing what the Fair Hydro Plan is,” Ontario Finance Minister Vic Fedeli told reporters last Friday.

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Hydro One earnings surge clouded by fears of government interference

Hydro One Ltd. has begun to rebuild after a management shake-up at the hands of Ontario Premier Doug Ford, but the company still faces the spectre of political interference, including new government controls that it warns could tamp down earnings and make it difficult to recruit executives.

The Toronto-based electricity utility reported Tuesday that profit was $200 million for its second quarter ended June 30, up from $117 million a year ago. The increase was due in part to greater energy use because of warm weather, as well as the favourable impact of a regulatory decision.

However, Hydro One’s latest results also come after the sudden retirement of former chief executive Mayo Schmidt and the replacement of its board of directors.

The moves were made under pressure from Ford, whose successful campaign for the premier’s office in Ontario’s June election included a vow to fire both the board and Schmidt, who Ford dubbed the “Six Million Dollar Man” over his approximately $6.2-million compensation package for 2017.

Moreover, the Ford regime recently passed legislation that gives Ontario — which remains Hydro One’s largest shareholder, even after the previous Liberal government sold approximately 53 per cent of the once provincially owned utility — greater control over the company’s C-suite.

The Doug Ford regime recently passed legislation that gives Ontario greater control over Hydro One’s C-suite.

Among other provisions in Bill 2, the legislation sets out that the Ford government can issue orders regarding compensation for directors and certain executives of Hydro One, Ontario’s largest distributor and transmitter of electricity.

“The introduction of Bill 2 may adversely impact the company’s ability to continue to attract and retain executives,” warned Hydro One in its latest financial filings.

Hydro One already has another executive they must replace. On Tuesday, Paul Dobson, Hydro One’s acting CEO, said the company is losing Ferio Pugliese,​ executive vice-president of customer care and corporate affairs, as of the end of this week. Pugliese is leaving for another opportunity, Dobson said during a conference call with analysts.

“We are pleased to have significant bench strength and management depth within Hydro One and we are confident that we will be in a position to appoint a well-qualified and experienced replacement in the near future,” he added.

Bill 2 also allows for the Ontario energy regulator to keep the cost of Hydro One’s executive pay out of the electricity rates charged to customers, which the utility said is estimated to reduce net income for 2018 by around $9 million.

A new board of directors at Hydro One was named Tuesday as well, which will be chaired on an interim basis by provincial nominee Thomas Woods, the former vice chairman of Canadian Imperial Bank of Commerce.

Hydro One has a new board after the last one resigned en masse.

Other directors named Tuesday include interim Canada Post Corp. president and CEO ​Jessica McDonald, who was also previously CEO of the British Columbia Hydro and Power Authority, and Russel Robertson, the former head of the anti-money laundering unit at Bank of Montreal.

Under the terms of an agreement between the company and the Ford government, the transition to a new board of directors was to be finalized by Wednesday. Ontario nominated four replacement directors for the company. Another six nominees were put forward by an ad hoc nominating committee made up of four of the company’s other largest shareholders.

The new board will be tasked with finding a successor to Schmidt.

Still, the turmoil atop Hydro One has jolted the utility’s nearly $7-billion takeover of northwestern U.S. energy company Avista Corp. Reviews of the Avista deal by some state regulators in the U.S. have been delayed, with the leadership changes at Hydro One cited as a cause.  

Hydro One’s financial filings warned: “If the closing of the merger does not take place as contemplated, the company could suffer adverse consequences, including the loss of investor confidence, and may incur significant costs or losses, including an obligation to pay or cause to be paid to Avista corporation a termination fee of US$103 million.”

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Unveiling of Ontario’s buck-a-beer scheme expected today

Ontario Premier Doug Ford is expected to roll out the provincial government’s buck a beer plan when he visits a brewery early today in Picton, Ont.

The move was one of Ford’s promises during the spring election campaign. He has also vowed to expand the sale of beer and wine to corner and box stores in Ontario.

A source with knowledge of the plan told The Canadian Press last week that the Progressive Conservative plan will lower the minimum price of a bottle or can of beer to $1 from $1.25 by the Labour Day weekend.

Brewers would not be required to charge less, however, and the lower minimum price would not apply to draft beer, nor would it include the bottle deposit.

The source said the government hopes to get brewers on board by launching what it calls a “buck-a-beer challenge” with incentives for those who cut prices to $1.

The Tories have said a return to buck a beer would see more competition in the beer market without affecting the province’s revenues from beer and wine taxes, which government documents show brought in roughly $589 million in 2016-2017.

Ontario previously had buck-a-bottle beer but the Liberal government quietly hiked the minimum price in 2008, citing its “social responsibility” mandate.

Hydro One pushes ahead to buy Peterborough utility amid political turmoil

As it tries to move past politics and get back to business as usual, Hydro One Ltd. announced Wednesday that it has finally secured a long sought-after deal to buy a Central Ontario utility.

Under the terms of the transaction, Hydro One said its wholly owned subsidiary agreed to pay $105 million to the city of Peterborough, Ont. for the business and distribution assets of Peterborough Distribution Inc., the local power company that serves approximately 37,000 customers.

The announcement comes after months of negotiation and pushback from some Peterborough residents over the sale of PDI. A Hydro One spokesperson said in an email that the city would receive all cash for the utility’s assets, and that the deal would be financed with the Toronto-based company’s existing resources. No equity will be issued, the spokesperson added.

However, the transaction also follows the retirement of Hydro One’s chief executive and comes amid an overhaul of the company’s board of directors. Both moves were made under pressure from new Ontario Premier Doug Ford, whose campaign for the office included pledges to fire both the board and CEO of Hydro One. The Ontario government is still the largest shareholder of the company, which was partially privatized by a Liberal regime that was ousted by Ford in the province’s June election.

National Bank Financial analyst Patrick Kenny called the PDI transaction “one small step forward” after the July shake-up of Hydro One’s board and C-suite. The deal also comes as Hydro One is pursuing a much bigger fish: a nearly $7-billion takeover of U.S.-based energy company Avista Corp.

“We continue to view the heightened uncertainty facing investors, pending the appointment of a new Board of Directors and CEO (and ultimate direction of the company and Avista transaction), as a net near-term negative for the stock,” Kenny wrote in a note.

Shares of Hydro One were down approximately 0.84 per cent as of 11:11 a.m. on Wednesday, trading at $18.84.

The PDI acquisition is still subject to approvals from the Ontario Energy Board, the provincial regulator of the electricity industry that previously quashed an attempt by Hydro One to buy an Orillia, Ont.-based utility. Both Hydro One and Orillia Power Distribution Corp. are appealing that decision.

“This merger is structured to benefit all stakeholders and provides us the opportunity to leverage our scale to positively impact distribution rates and quality of service,” said Patrick Meneley, executive vice president and chief corporate development officer at Hydro One, in a release.

The release from Hydro One said that base distribution rates at PDI will be cut by one per cent and frozen for five years, and that PDI workers will receive employment offers to move to Hydro One.

Hydro One is Ontario’s largest distributor and transmitter of electricity. As part of a separate agreement, Hydro One said it would also build an operations centre and fleet maintenance facility in Peterborough.

“Hydro One’s investment in Peterborough secures its existing jobs in our community, provides guarantees for Peterborough Distribution workers, and creates new jobs through the opening of a new regional operations centre in Peterborough,” said Peterborough Mayor Daryl Bennett in a release.

A news release from PDI said that there “should be no changes to your electricity account with PDI for approximately one year as the purchase of PDI awaits approval by the Ontario Energy Board…followed by deal closing.”

Until then, the utility added, it is “Business as Usual.”

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Ontarians may see a $7 reduction in their monthly bills as gas utilities halt cap-and-trade

Ontario’s biggest natural gas distributors are halting activities related to the provincial carbon-pricing program dismantled by Premier Doug Ford, a move that could remove costs for both the companies and their customers.

The Ontario Energy Board, which regulates the province’s electricity and natural gas industries, issued an order on July 6 asking Enbridge Gas Distribution Inc., Union Gas Ltd. and Epcor Natural Gas Limited Partnership to send a letter by Friday “confirming that they have ceased cap and trade activities.”

Both Enbridge Gas Distribution and Union Gas are owned by Calgary-based Enbridge Inc.

The order from the OEB followed Ontario’s recently installed Progressive Conservative government announcing on July 3 that it had revoked the province’s cap-and-trade regulation and that it would begin “an orderly wind-down” of the variety of green programs funded by the carbon-pricing system.

Another regulation filed on the same day states that “no registered participant (of the cap-and-trade system) shall, on and after the day this regulation comes into force, purchase, sell, trade or otherwise deal with emission allowances and credits.”

The gas companies are registered participants in the cap-and-trade program.

“Union confirms that it has been in compliance with Ontario Regulation 386/18, prohibition against the purchase, sale and other dealings with emission allowances and credits, since it was issued on July 3, 2018,” said a July 12 letter from Union Gas to the OEB.

Epcor also confirmed it had ceased ceased cap and trade activities in compliance with the new regulations in a July 13 letter.

Also called off by the OEB was a nearly completed review of the utilities’ projected costs of complying with cap and trade in 2018.

“The OEB recognizes that the Climate Change Act currently remains in effect, and that elements of the government’s approach to winding down the cap and trade regime are not yet known,” said the July 6 procedural order. “However, given the revocation regulation the OEB considers it appropriate to suspend its review of the gas utilities’ 2018 cap and trade compliance plans.”

Ontario Premier Doug Ford.

Businesses have been seeking answers ever since the Ford government decided to toss out Ontario’s cap-and-trade system. Under cap and trade, the province’s largest producers of carbon emissions had to buy permits for those emissions.

“Cancelling the cap-and-trade carbon tax will result in lower prices at the gas pump, on your home heating bills and on virtually every other product that you buy,” trumpeted Ford in a press release.

Ontario had raised approximately $2.9 billion in proceeds from the cap-and-trade system’s allowance auctions before Ford’s election, although the carbon-pricing plan’s cancellation has put a number of related programs in jeopardy.

“The government made a clear election platform commitment to end the cap and trade program; the regulation effectively ends the program,” said the notice posted to Ontario’s environmental registry.

But the program is being ended after a lot of money was spent meeting its obligations, and it’s unclear how, or if, companies will be reimbursed for the incurred costs.

Natural gas is used for heat by approximately three-quarters of Ontario households, and gas companies in the province had been responsible for covering carbon emissions paid for by their customers.

The distributors, however, were allowed to recoup cap-and-trade-related costs through the rates they charged. A spokesperson for the OEB said those charges represented approximately $6 to $7 per month in costs for a typical residential customer, depending on the utility and the amount of gas used.

“The OEB is actively monitoring further developments from the government to inform next steps in relation to the gas utilities’ costs and cap-and-trade charges on utility bills,” the spokesperson said in an email.

Based on a carbon price of $18.99 per tonne, Union Gas projected total cap-and-trade obligation costs of $282.8 million for this year, according to its OEB application. In 2017, Union — now part of Enbridge after the Calgary-based company’s $37-billion merger with Houston-based Spectra Energy Corp. — said its total cap-and-trade obligations cost $275.3 million, a table in the application showed.

Enbridge Gas Distribution estimated in its application to the OEB that its customer-related carbon costs for 2018 would be approximately $377 million. The company also forecast $4.6-million in facility-related costs.

“The cap and trade charges approved by the OEB in respect of the gas utilities’ 2017 cap and trade compliance plans currently remain in effect, as the OEB denied the gas utilities’ requests to charge their higher proposed 2018 cap and trade charges on an interim basis effective January 1, 2018,” noted the OEB’s procedural order.