Natural Resources Committee on Dec. 4th, 2007

[Jacques Hénault]

I'll answer this.

Before, David McCauley mentioned the two-tier system in the United States where each operator has an insurance policy for the installation. With respect to the secondary tier, that is a retrospective premium that's collected from each reactor. So in fact you have an installation that carries $300 million of insurance, but in the event of an accident that would surpass that $300 million, then each reactor would be assessed. So one installation might have three or four reactors.

[Dennis Bevington, NDP, Western Arctic, NT]

So we're correct.

[The Chair, Conservative, Leon Benoit]

Monsieur Ouellet.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Chair, it seems to me that, with matters as complicated as these, we are like a group of sorcerers' apprentices. If a reactor blew up, we do not know what effect it would have on other reactors. We know nothing about it, but here we are passing a bill on liability. No one can tell us if a damaged reactor is going to cause others to blow up, and I am not just talking about the CANDU reactor, but other kinds of facilities that are going to be built around the world.

I appreciate what Mr. McCauley has just said. But the fact remains that the United States has more reactors and, of course, more money. They have $9 billion to cover incidents, whereas our $650 million covers maybe one reactor, maybe four. There seems to be something illogical about that.

I find Mr. Bevington's point very interesting, but the fact remains that we do not have answers to our questions. I do not see how the people on the other side can say that, if it is written like it is, it must be fine. I do not see things like that. I would like someone to give me an intelligent answer before I have to decide.

[The Chair, Conservative, Leon Benoit]

Is there any further comment from witnesses?

[Brenda MacKenzie]

I would just like to draw your attention to the bill. When a nuclear installation is defined, and if there is damage to that operator's nuclear installation, the compensation goes to victims and not to the operator. So you have to be concerned that if you split your installation into four, that means that damage from one operator's reactor to another of the operator's reactors, if it's not in the same installation, could be compensated under the act. The whole point of the act is to preserve money for victims.

[The Chair, Conservative, Leon Benoit]

Thank you.

We will go to the question on Mr. Bevington's amendment.

(Amendment negatived)

(Clause 23 agreed to)

(On clause 24--Insurance)

[The Chair, Conservative, Leon Benoit]

There is a Bloc amendment.

Madame DeBellefeuille.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Mr. Chair, I would like to ask for the cooperation of my colleagues around the table.

The Bloc Québécois has tabled two amendments: one to subsection 24(3) and one to subsection 24(1).

[The Chair, Conservative, Leon Benoit]

We're looking at all of clause 24 now.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Could we first deal with subsection 24(3) and keep the consideration of subsection 24(1) until later. There is a link, a cause and effect in play here.

[The Chair, Conservative, Leon Benoit]

Yes, I understand.

Is there any objection to going to the Bloc amendment on subclause 24(3) first? It's amendment BQ-3, which is a proposed amendment to subclause 24(3).

Go ahead, please, Madame.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

I think that everyone has received a copy of the wording. It deals with withdrawing the subsection that limits the percentage of the alternate financial security. We paid careful attention to the witnesses who appeared on this matter.They told us repeatedly that it would be better for them to have some flexibility in being able to negotiate premiums and insurance. We also know that the minister reserves the right to examine the financial security provided by the operators. Because he has that right, I think that it would be in our interests, particularly when nuclear power plants are operated by a crown corporation, to allow more flexibility in the provision of alternate security.

For example, the witnesses from the Canadian Nuclear Association explained clearly that, with the 50% limit, costs could rise, including the costs to customers, who, it turns out, are also taxpayers. We are referring here to operators that are crown corporations, like Hydro-Québec, New Brunswick Power, and so on. All operators are members of the Canadian Nuclear Association. People from that association told us what the impact of this subsection would be. We think that it would be better for Quebeckers and Canadians as a whole if the operators has more flexibility in negotiating and researching these alternate securities.

So we are proposing that the subsection be removed so that operators have more room to manoeuvre. Since the minister has the authority to examine the securities, we think that he has the tools to make sure the operators fulfill the requirements.

[The Chair, Conservative, Leon Benoit]

Merci.

Are there any further comments?

Keep in mind that there is a Bloc amendment that has been brought forward to subclause 24(2) as well.

We're dealing now with amendment BQ-3, which is to remove subclause 24(3).

Mr. Anderson.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

As a quick comment, I don't know how long people want to spend on this, but I think our Liberal colleagues pointed out the other day that they felt that 50% was reasonable. I think we feel it is as well. Fifty percent is a reasonable percentage of flexibility here. In fact, I'd say it gives some pretty fair flexibility.

It should also be noted that another percentage can be fixed by regulation should the minister make the decision that this is the case.

I think this gives good flexibility, good opportunity for the operators to find some different means and methods of insuring themselves, and I think it's responsible.

[The Chair, Conservative, Leon Benoit]

Are there any other comments on this amendment?

Mr. Alghabra.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Maybe we could give the officials a chance to respond to that amendment, if they have any comments on it.

What would be the implication of deleting that clause?

[The Chair, Conservative, Leon Benoit]

Mr. McCauley.

[Dave McCauley]

The implication would be, as the member has suggested, that in fact there would be no limit. There would be no requirement for operators to carry a tier of insurance. They could self-insure or use a provincial guarantee or other alternative financial security to address the required amount.

The reason we included the 50% limit was that we felt, first of all, that this was independent. This was a separate fund that could be called upon in the event of an incident and would be quite separate from the operators or quite separate from government. It would be a fund that would be concrete.

We also felt that insurers brought with them claims, administration capabilities, that perhaps an operator would have to go out and contract for. As well, we looked at the experience in other countries, where other countries all include a tier of insurance in their liability regime.

We introduced this flexibility to address the concerns of operators that we should provide some flexibility and have an alternative to insurance. We chose the 50% for the reasons I've indicated.

I should add that there is a further provision in the legislation that allows that amount to be changed by regulation. The 50% can be changed by regulation. It can be either increased or decreased.

[The Chair, Conservative, Leon Benoit]

Okay. Is there any further comment, or should we go to the vote?

Madame DeBellefeuille.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

We are asking for this subsection to be removed because we feel that its intent is for our insurers to keep their monopoly. We want to make sure that the market is not kept exclusively for insurers who specialize in the nuclear industry, like the witnesses we heard from. Removing the subsection opens the market so that operators can negotiate their securities and are not forced to choose from the 50%.

I think that this subsection is a backhanded way of closing the market and making sure that the business goes to a small number of insurers who have been picked by the government. That situation seems a bit murky to us.

[Dave McCauley]

I understand the situation. That is why we decided to include this provision in the bill because the operators said that there was a monopoly in the insurance industry.

However, the monopoly exists because up to now, no other insurer has sought a share of the business of insuring nuclear operators. Others can offer to provide insurance.

Up to now, only NIAC has decided to provide that insurance. That is why there is more or less an insurance monopoly.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Because they have been the only ones interested, you are keeping 50% of the market for them.

[Dave McCauley]

Yes. However, if another insurer asked for government support to insure operators tomorrow, the minister would examine the situation and decide if it is possible. There are no obstacles for other insurers. It is just that, up to now, only one insurer has decided to provide insurance. The market is not closed to others.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

If the insurance market were open, if we did not perpetuate the monopoly, do you not think that the operators could negotiate the costs of premiums and get better prices?