Now put yourself in the shoes of Alberta’s power companies. When you look at their Power Purchase Agreement (PPA) contracts with the provincial government, all of the sudden the bank in this story starts to look very similar to Alberta’s NDP government. The difference is that instead of locking into a different mortgage, Alberta’s power companies would be looking elsewhere to spend their capital.
What kind of precedent does this set for Alberta’s future employment opportunities? For the same reason no one would want to do business with a shady bank, the same goes with ‘corporations’ doing business and putting capital into a province with a shady government. There was another time in both Alberta and Canada’s oil patch history when this happened as well, this was called the National Energy Program. I find it interesting to see articles giving companies like ConocoPhillips a hard time for investing in jurisdictions other than Alberta when, in fact, they were one of only a few multinational oil companies that decided to give Alberta a second chance after the NEB was introduced. If anything, Albertans should be thankful they invested the capital they did over these last 30 years; contributing wealth to a struggling province coming of the heels of the 1980’s downturn.
One of the things I loved about Alberta over the last fifteen years was that when I would travel to place like Halifax, I would see out of work people holding signs saying “help me save cash to fly to Calgary for work.” When I saw these signs it gave me a proud feeling that my province was doing something right and that I was going to have employment opportunities after I was finished school. Alberta was putting people to work but unfortunately other Canadians had no where else to prosper. When I hear people writing about all the things our government has done wrong for last fifty years I have to wonder if these writers would have preferred to be somewhere else in Canada for the last fifteen years. I sure wouldn’t have. And when I see new policy (PPA) coming into Alberta I get a strong sense that this current government does not have a clue how the Alberta engine runs. It’s almost as if we are putting water in the gas tank.
As for Alberta’s fiscal situation, it is also very important to look around Canada and ask “why hasn’t any other province dealt with their financial woes.” When Alberta was governed by the PC’s government the province was a net contributor of transfer payments to other have-not province’s. Now, Alberta seems to get all the heat for the looming fifty billion dollar deficit. There seems to be no praise for having no debt to begin with and is ultimately the reason for why Alberta can take on any debt at all! Alberta is not Norway, our wells do not flow at 50,000 bbls per day. Royalties on digging oil with a shovel or injecting steam (Alberta’s case) vs. oil flowing for 20 years out of the North Sea I imagine are completely different. Unless we can get every statistic available on operating costs, net backs and other forms of government revenue, I don’t think its fair to compare Alberta’s bitumen to North Sea oil. I’m not sure how well Albertans would take paying $2.50/litre to fill up their cars as Norwegians do.
To make everything all better for Alberta, our government does have one trick up their sleeves, it’s called a carbon tax. From what I understand, this tax is going to go on everything from the natural gas we heat our homes with, to the fuel we use to deliver produce to the grocery store. Did I mention Alberta is taking out 6,300 Megawatts of coal fired power (roughly a third of Alberta’s power generation) earlier than planned and that renewables such as wind the government plans on replacing coal power with is at the time of writing running at 32/1445 MW capacity (~2% utilization). I’d be interested to see some economics on that.
At the end of the day, Albertans really have to thank every single corporation in town that hasn’t either closed shop or decided to move elsewhere. If you don’t think a carbon tax with no plan, $15 min wage, 20% increase in corporate tax, up to 50% increase in income tax, $1.25/L markup on all beer sold from outside Alberta, Bill 6, early coal shut down, increase in the government’s payroll, suing power companies for PPA’s which are owned by Albertan cities has any impact…then math must have been hard.