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Pipelines are safe: Enbridge

The head of Canada's largest pipeline company is touting the increased safety of the industry as he awaits word on the fate of two major expansion projects from the Trudeau government.

Enbridge chief executive Al Monaco said on an investor call Friday that the heightened critical focus on the industry has led to significant improvements.

"The fact of the matter is that the additional scrutiny, and the tension — although perhaps uncomfortable — is leading the entire industry, I think, to get better," said Monaco.

Pipeline safety has once again come to the forefront after a Husky Energy pipeline leaked more than 200,000 litres of oil into the North Saskatchewan River last week.

Enbridge's own problems with pipeline safety were also highlighted recently when on July 20 the company reached a US$177-million settlement with the U.S. government for a 2010 spill that released some 3.2-million litres of oil into Michigan's Kalamazoo River.

Monaco said perceptions around what's acceptable have also shifted recently.

"Years ago in our industry we would have said, 'You know, things happen.' And of course they do when you run industrial assets, but we're very focused today in making sure that we're striving for zero, zero incidents," he said.

Monaco's comments come as the company waits to hear the fate of its two major pipeline projects in Canada: the $7.5-billion replacement of its Line 3 pipeline from Alberta to the Great Lakes region and its proposed $7.9-billion Northern Gateway project that would take oilsands crude to the west coast.

In April, the National Energy Board recommended approval of the Line 3 project, which would roughly double capacity on the line to 760,000 barrels a day.

Final approval of the project now rests with federal cabinet, which is taking into consideration greenhouse gas impacts before deciding by Nov. 25 if the project is in the national interest.

The fate of the Calgary-based pipeline company's Northern Gateway project also sits with federal cabinet, after a Federal Court of Appeal quashed approval of the project in a June 23 ruling.

The court found the Canadian government had failed in its duty to consult with aboriginal people before giving the green light to the project.

Federal cabinet is now in a 90-day window to decide whether to restart consultations, something Monaco said it ought to do.

"We don't hold the federal government responsible, but we do believe that the federal government now does have an obligation to complete the consultations," he said.

Enbridge reported a $301-million net income for the second quarter on Friday, down from $577 million in the same quarter last year.

Earnings were hit in part by the wildfires in Fort McMurray, Alta., that cut deliveries for May and June by an average of 255,000 barrels per day — 10 per cent lower than just before the fires.



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Big price put on carbon

Move over, British Columbia: Canada's oilpatch next door in Alberta is on track to have Canada's most aggressive carbon pricing system by 2020.

That's the conclusion of a new study that compares the coverage of various carbon taxes and cap-and-trade schemes in four provinces that have all embraced market-based approaches to cutting emissions of greenhouse gases.

The report from Canada's Ecofiscal Commission, an independent, non-partisan research body, comes as a federal-provincial working group is wrestling with ways to co-ordinate a new pan-Canadian price on carbon emissions.

Chris Ragan, the McGill University economist and commission chairman, says an early version of the paper was sent to the working group about six weeks ago.

It's a politically contentious subject complicated not just by some provincial and territorial governments that are reluctant to impose any carbon price, but also by very different pricing systems in provinces that are already on board.

Finding a transparent way to compare provincial pricing — and to set common national pricing parameters — could avoid a politically divisive "zero sum game" argument over dividing up emissions reductions by province, says the study. Comparable pricing, regardless of what system each province uses to achieve it, also offers provincial flexibility while realizing the economic efficiencies of having a relatively uniform carbon price across Canada.

The study's five authors found that factoring in how much of the economy is covered by the price signal matters a great deal, and that emissions trading credits also must be considered for a true province-to-province comparison.

"The obvious point here is that you can't just look at price to compare things," Ragan said in an interview. "At a minimum you've got to think about price and coverage."

B.C. imposed a carbon tax back in 2008, but because 30 per cent of the provincial economy isn't exposed to B.C.'s current $30-per-tonne tax, the effective tax rate is more like $21 per tonne, says the study. Alberta's new, broader carbon tax will eclipse it by 2020, coming in at $23.40.

"B.C. likes to think of itself as the most stringent policy because they've got the higher price," said Ragan.

"They have a higher price but actually don't have the most stringent policy because they have relatively low coverage."

Quebec's existing cap-and-trade carbon market covers 85 per cent of the provincial economy, making it the most comprehensive in Canada.

Quebec, like Ontario, is part of the Western Climate Initiative which includes the state of California in a carbon permit trading market. Quebec's current marginal price of about $16.40 per tonne makes its carbon cost appear much smaller than B.C.'s, but after factoring in coverage rates and the impact of imported emissions permits, the commission found that by 2020 Quebec's effective price will be $18.08 per tonne.

Ontario will be a little further back, with an effective carbon price of $17.83.

Alberta, meanwhile, will see its rising carbon tax cover 78 per cent of the province's economy by 2020, leaving it with the highest effective carbon price per tonne in the country.

"The paper was shared with the federal-provincial carbon pricing mechanisms working group, and I expect it will be a helpful perspective," Environment Minister Catherine McKenna said in a statement.

"This work will help with my ongoing conversations with the provinces to develop carbon pricing tools that suit each province's unique economy."



5 things to watch this week

Five things to watch this week in Canadian business:

Take a break: Fretting about returning to work Monday? Relax. It's a holiday for most Canadians, including Bay Street traders. The Toronto Stock Exchange is closed.

Real estate tax: As of Tuesday, foreigners buying property in Vancouver will have to pay a 15 per cent tax. The B.C. government introduced the levy in an effort to cool down the city's torrid real estate market — two months after saying it wasn't in favour of it out of concerns it would deter investment from Asia. Concerns are now rising that foreign capital will migrate elsewhere, including Toronto.

Earnings, earnings, earnings: It's another big week for earnings. Quarterly results are due from numerous corporate giants, including Molson, Saputo, Quebecor, SNC-Lavalin and Canadian Tire.

Bombardier: The Montreal-based manufacturer of planes and trains releases its second-quarter results Friday. Bombardier, which has been the focus of much public attention as it makes a push to sell its CSeries passenger jets, is still awaiting response from Ottawa for its request for federal funding.

Jobs: The monthly jobs report for July comes out Friday. The unemployment rate dipped in June to 6.8 per cent, but any enthusiasm was dampened due to several factors including a loss of jobs and the fact that fewer people were looking for work.



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Combi recalls car seats

Combi USA is recalling more than 39,000 car seats because they can transmit too much force to a child's chest in a crash.

The recall covers certain Coccoro Convertible Child Restraints with a model number of 8220. They were manufactured from Jan. 1, 2009 to June 29, 2016.

Government documents say the problem happens when the seats are installed in a forward-facing position and secured only with a vehicle lap belt.

The problem was discovered in government tests. Combi says in the documents that there is little to no risk in real-world crashes. It has no reports of injuries.

Combi will notify owners and send them a cover for the bottom of the seat that reduces the force on children's chests. Distribution of the covers started on July 11.



Disaster drags down GDP

The Alberta wildfires torched the Canadian economy in May, which saw the GDP contract by 0.6 per cent — the country's deepest one-month decline in more than seven years.

On Friday, Statistics Canada's latest reading for real gross domestic product revealed the extent of the economic damage caused by the blaze that roared through the heart of oilsands country.

The dip in the economy was larger than expected. Economists had predicted real GDP to recoil by 0.4 per cent, according to Thomson Reuters.

The fires led to the evacuation of Fort McMurray, shut down key crude operations and have dimmed economic growth prospects for the second quarter. They also destroyed more than 2,000 structures.

Statistics Canada said the decline in real GDP for May was largely due to a 22 per cent drop in non-conventional oil extraction, the sector's lowest level of output since May 2011. Excluding the decline in non-conventional oil extraction, real GDP still moved backwards in May by 0.1 per cent.

The agency said the disaster was the main cause of a 2.8 per cent drop in the output of all goods-producing industries.

Manufacturing output was also hurt. The industry was knocked back 2.4 per cent in May in large part due to a 15 per cent drop at petroleum refineries, which was created by a shortage of crude oil.

The May real GDP reading follows a slim economic growth reading of 0.1 per cent in April and contractions of 0.2 per cent in March and 0.1 per cent in February.

Earlier this month, the Bank of Canada predicted the fallout from the wildfires would fuel a contraction of one per cent in the second quarter, a period that includes April, May and June.

The central bank estimated the fires trimmed 1.1 percentage points from second quarter growth. In April, before the wildfires, the bank had forecast the economy would grow in the second quarter by one per cent.

Looking forward, however, the bank also predicted a "marked rebound" in the third quarter thanks in part to the resumption of oil production and rebuilding efforts in the region. It projected third quarter growth to reach 3.5 per cent.

The bank said it also expects that third quarter bounce back due in part to the federal government's measures to enhance child benefits, which will support household consumption, and its commitment to boost infrastructure spending.



Profits scorched by wildfire

Enbridge says the Fort McMurray wildfire catastrophe was a significant reason for a decline in its second-quarter earnings, which were down 47 per cent from the same time last year.

The Calgary-based pipeline company is reporting $301 million or 33 cents per share of net income for the period that included the evacuation of the northern Alberta city and a temporary shut-down of several oilsands operations.

Enbridge says it took longer than originally anticipated for oilsands production to resume and average deliveries for the months of May and June were down by an average of 255,000 barrels per day — 10 per cent lower than just before the fires.

Enbridge's profit for the three months ended June 30 was down from $577 million or 68 cents per share in the second quarter of 2015. Revenue fell eight per cent to $7.94 billion from $8.63 billion.

The quarter included a $12-million after-tax expense for bringing pipelines and facilities back into services following the Alberta wildfires.

The company's profit was also affected by a $103-million after-tax impairment of its 75 per cent interest in Eddystone Rail in the Philadelphia area. It operates a rail-to-barge loading facility that's been affected by lower prices for the crude it handles.

The writedown was smaller than one reported in last year's second quarter, when it took a $167-million charge to goodwill related to a natural gas and gas liquids business.



Oilsands output plummets

The wildfires in Fort McMurray, Alta., helped lead to a 25 per cent drop in oilsands production in May, according to the latest data from the Alberta Energy Regulator.

The numbers released Thursday show upgraded and non-upgraded oilsands production for May totalled 48.7-million barrels, down from just under 65-million barrels in April.

The massive wildfires forced producers to shut down crude operations as a precaution, with the full effects on production not yet known since many companies had operations halted well into June and even into July.

Non-oilsands production in Alberta, which escaped the effects of the fire, saw a slight increase in production to 15.2-million barrels of oil.

The impact of the wildfires is showing in quarter results, with Suncor Energy saying late Wednesday it had a net loss of $735 million after failing to produce about 20-million barrels of upgraded and raw bitumen because of the fires.

The Insurance Bureau of Canada estimates the Fort McMurray wildfire to be the costliest natural disaster in Canadian history with about $3.58-billion in damages expected, though oil producers are largely excluded from insurance claims because most facilities weren't damaged.



Credit union audit stalled

British Columbia's auditor general says a staffing shortage at the Financial Institution Commission is hampering the review process for provincial credit unions.

Carol Bellringer's progress audit on credit union supervision says there's a 37 per cent vacancy rate for staff at the commission, and without more staff it's unable to meet the goal of reviewing all credit unions every two to three years.

Bellringer's report says the commission gets enough money from credit unions and other organizations that it monitors to offer competitive salaries, but it isn't able to hire the staff under the government pay scale it must use.

Because the skills needed are in high demand, the report recommends the provincial government allow the commission to offer market-appropriate salaries.

B.C. has 42 credit unions and their more than 1.9-million members have over $58 billion of insured deposits, and the auditor says there's a continued risk if the commission can't fulfil its goal of monitoring credit unions.

The review stems from an audit by Bellringer's office in 2013 that made 11 recommendations to improve the process, including increasing the number of staff.

"There is a continuing risk to B.C.'s credit unions and its members if FICOM can't do its job," her report says.

"It's like having a smoke detector in your home, but not buying the batteries. No batteries, no early warning system."

The report says the commission has made progress from the 11 recommendations in the original 2013 report, but three of the recommendations remain undone because of staff shortages.



Husky's oops on spill date

Husky Energy has changed details of when it discovered its oil pipeline spill into the North Saskatchewan River.

Earlier this week the company filed a report that said it found the leak of up to 250,000 litres of blended crude oil at 8 p.m. on Wednesday, July 20.

A new reported filed to the Saskatchewan government amends the discovery date to 10:00 a.m. the following day.

Husky says it told the province of the spill about 30 minutes later.

Last week, the company said it found "pressure anomalies" in the pipeline Wednesday evening but did not shut it down until Thursday morning.

A government official says the province will not comment on the change until a full report into the spill is complete.



Leaving oil in the ground?

The CEO of Suncor Energy says the company is discussing with the Alberta government the possibility of leaving some of its oil in the ground.

Steve Williams says the energy giant is considering "stranding" some of its oilsands reserves if they are too expensive to produce or if they would add too much to their greenhouse gas emission intensity levels.

Williams says he's optimistic that the government will endorse the idea, which runs counter to its traditional priority on developing as much oil and gas resources by insisting companies attempt to produce all recoverable barrels from their Crown-owned leases.

Simon Dyer of the Pembina Institute says he supports the idea, adding that it could help reduce energy demand in the industry and bring down emissions.

Dyer says it won't be necessary to produce all of the crude in Alberta's oilsands if the world can switch to renewable forms of energy in the future.

Greenpeace campaigner Mike Hudema also welcomed the proposal but says producers will have to leave behind more than just the oil that's difficult to produce if they are sincere about reducing emissions.

In a sustainability report released earlier this week, Suncor vowed to reduce its overall emissions per barrel of oil and gas production by 30 per cent by 2030.



Get rich and don't die trying

When people picture retirement, they may envision lying on a sandy beach with a mojito in hand or teeing off on a breathtaking golf course in Hawaii.

What they usually don't consider is the alternative: being broke and struggling to pay the bills.

So how do you ensure you have enough money saved for the retirement of your dreams when you don't know how long you will live?

The wisest advice, according to financial experts, is to budget conservatively because it's always better to have some money when you die than no money while you're still alive.

"Most people are living longer than their parents and their grandparents did," said John De Goey, a certified financial planner and portfolio manager at Industrial Alliance Securities.

"A good baseline is that you need to plan to live until age 90."

There are several factors that could also affect a life expectancy, including whether there is a family history of health problems and one's gender. On average, women tend to live longer than men so they should plan on living a few years past 90, whereas men might be able to get away with planning on living a few years less.

But how much money do people actually need to save for retirement?

In the past, the general industry standard was that retirees should have about 70 per cent of their annual income for every year in retirement. Some say that figure is now too much.

De Goey says retirees should look at saving about 50 per cent of their annual income in their final year of work, with the funds coming from a variety of sources including cash, investments, Old Age Security, pensions. Another thing to keep in mind is retirees will likely find themselves in a smaller tax bracket.

That means if someone has an annual salary of $80,000 a year while working, they should aim to have $40,000 a year for every year of retirement. If they retire at age 65, and live until 90, then they should have a nest egg of $1 million.

Of course, that goal can vary due to a number of factors. Is there still a mortgage or rent to pay? Do you plan on a lot of travelling? Eating out? Or do you picture a retirement filled with staying put and gardening?

De Goey says the easiest way to ensure people have enough money for whatever retirement they plan for is to work longer.

"There are two benefits of working longer. Number one, you're hopefully able to save a proportion of what you earn, and two, because you're working, you're not drawing on your savings," he said.

"So even if you are saving only five to 10 per cent of your salary in your mid-'60s, you're also foregoing withdrawing that money from your nest egg. The combination of those two things greatly enhances the likelihood that you'll still have money left when your life is still in the bottom years."

Most of his clients balk at the idea of having to stay at their jobs in their senior years. But De Goey notes that because general life expectancy is rising, the amount of retirement years can remain the same.

He suggests to his clients to consider working until the second digit of their age in their 60s corresponds with the decade in which they were born. For example, if they were born in the 1970s, they should continue working until they're 67; if they were born in the 1980s, they should keep working until 68.

Another way to ensure there is enough money left over for retirement is to start socking away money as early as possible.

"Be a very persistent, steady, regular saver," said De Goey. "It's not the sort of thing with the tortoise and the hare, that you can wait, and give it the gas at the end and you can win the race. You're going to run out of runway."

Toronto certified financial planner Rona Birenbaum says retirement should be a priority for everyone.

"Being old and broke is not a pretty picture," said Birenbaum from the firm Caring for Clients.

Some of the mistakes she often sees is that people count on an inheritance that might never come or plan to leave aside money for their children when they don't have enough for themselves.

"Always, always a word of caution," said Birenbaum. "You should not count on money that is not in your hands."



Double double in Manila?

People craving a jolt of caffeine in the Philippines may soon be able to order a double double at their local Tim Hortons.

Restaurant Brands International, the multinational owner and operator of Tim Hortons and Burger King, said Thursday that it has partnered with a group of investors to establish a master franchise joint venture company to sell the fast food restaurant's coffee and donuts in the Southeast Asian country.

RBI chose the Philippines for its first stop in the sub-region of Asia because the country has a strong economy and a fast-growing quick-service market, said Daniel Schwartz, its chief executive.

The Philippines also boasts "a population that has an affinity for coffee and baked goods," Schwartz added, including those of Tim Hortons', the company determined after months of market research.

RBI didn't say how many shops it plans to open in the Philippines, but, said its chief financial officer Joshua Kobza, "we aim to be a leader in the market."

Kobza hinted Tim Hortons would aim to match the level of some of its peers in the local market — many of which boast hundreds of restaurants in the country, he said.

The stores will serve many of the same staples as Canadian locations, like timbits and iced capps, as well as some surprises, he added.

"You'll have a mix of the kind of products that we know and love here in Canada and some new products."

But details about any new offerings likely won't be divulged until the first Philippines location opens, which he and Schwartz said will open as soon as possible.

RBI views Tim Horton's Southeast Asian expansion as a gateway into other markets within the sub-region and other parts of the continent, noted Schwartz.

Since Tim Hortons and Burger King merged into RBI in late 2014, the company's been focused on taking the master franchise joint venture model that's proved successful for Burger King and applying it to help Tim Hortons grow globally.

"We think it's a great opportunity," Schwartz said.

More international expansion announcements are expected from the company in the future, but all Schwartz will say is "stay tuned."

The coffee chain has 4,438 restaurants, not including its 411 limited-service kiosks, as of March 31, 2016, the company's latest quarterly report stated.

According Tim Horton's 2015 annual report (when it had 25 fewer locations), the majority of these shops are in Canada, with 14.7 per cent in the U.S. and 2.6 per cent in the Middle East.



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