Natural Resources Committee on Nov. 2nd, 2009

[Paule Brunelle, Bloc, Trois-Rivières, QC]

So, if I have understood correctly, when there are two reactors, there are two separate liabilities of $650 million for each reactor. Is that correct?

[Tom Wallace]

It depends on the definition of what's a nuclear installation, and that would be established in the regulations. I believe you'll eventually be getting into clause-by-clause review, and we will have experts here who have more expertise in exactly how much is attached to each installation. But in broad terms, sometimes it's one reactor and sometimes it's four reactors, if they're all located at an individual site.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Is that all?

[The Chair, Conservative, Leon Benoit]

Merci, madam Brunelle.

We go now to Mr. Cullen from the New Democratic Party.

Go ahead, please, for up to seven minutes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Minister, the question I was hoping to put...you talked about the isotope business that Canada has been in for a long time having an historical and important role. Do you believe that role should continue, and for how long?

[Lisa Raitt, Conservative, Halton, ON]

The Government of Canada believes the health and safety of Canadians is their top priority, and that includes the supply of medical isotopes from the NRU. That's exactly why we've done a couple of things. One is to ensure that it's being brought back into service as safely and expeditiously as possible. Second, we are also pursuing the licence extension at the NRU to ensure that there's a number of years associated...and we've also embarked upon the expert panel.

What we're doing is taking a look at those medium-term and long-term options, because if you take a look at the number one priority, it is the health and safety of Canadians. The supply of medical isotopes to them is of great importance to us, and we've turned to an expert panel to help us determine the medium and the long term.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I only ask because in the midst of all this the Prime Minister also talked about Canada needing to get out of the isotope business, at the same time as we were doing all the things you just said about extending the life. I think it sends some strange messages.

I want to talk about Bill C-20; this is the main part of your appearance here. You talked about it as new legislation, and yet this is its third or fourth incarnation as a bill. The department has been working on it and consulting for a long time. It worked on an initial prospect in 2004; we're now on the edge of 2009-10. This concerns a liability limit in the event of nuclear accidents. The question I have for you is, do you believe that the $650 million that's cited in the bill is sufficiently high, in the global market of what other regions of the world set their limited liability at?

[Lisa Raitt, Conservative, Halton, ON]

I do, for a number of reasons. The limit was set based on the following considerations: it reflects the international norm; it reflects available insurance capacity, which of course is important, because operators have to be able to obtain the insurance; it addresses the reasonable risks, as studied by NRCan and the Canadian Nuclear Safety Commission; and it also reflects the recommendation of the Standing Senate Committee on Energy, the Environment and Natural Resources, which suggested in 2002 that the limit be raised to at least $600 million.

One other aspect of it as well is that, if the $75 million operator liability established in 1976 had been adjusted for inflammation...inflation, it would amount to over $350 million today. So we've made a significant move.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

We won't adjust for inflammation—

[Lisa Raitt, Conservative, Halton, ON]

I appreciate that.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

—if we can help it.

I have to say I'm confused, though, when you talk about world standards, because the $650 million represents about half of what other countries are proposing for their own liability: Japan, $1.2 billion; Europe, in adjusted dollars against the euro, about $1.2 billion; in the U.S., it's pooled and unlimited; in Germany, $2.5 billion.

I'm looking at a 2007 study, not one from 2002, which is when this number was first floated. We're now seven years beyond that; I think things have changed. The federal government did a study of what a dirty bomb going off in Toronto would mean, in terms of cost, and estimated the cost at around $24 billion. That was a defence department study of the cost for repair of a major accident. We don't wish to foretell of major accidents, but we need to incorporate the idea of what it would actually cost if one of these nuclear facilities had a serious accident. I'm a bit confused about how we come to this figure of $650 million, and then, going around the world, see that the limits are much higher—twice as high, in almost every instance, as what is being proposed in this legislation.

One question I have for you is, are you aware of the government's willingness to raise this limit? Do you know of this committee's ability to raise the limit through this process?

[Lisa Raitt, Conservative, Halton, ON]

Here are a few things on the limit itself. It increases the operator liability from the current $75 million to $650 million. That's absolutely necessary. It's a nine-fold increase. It's going to make a six-fold increase in operator premiums, which they're going to have to pay.

The bill, to answer your last part, provides that the limit must be reviewed by the minister at least once every five years to determine whether or not it needs to be increased. So that ability is in the bill, and that increase will be by regulation.

As to looking internationally, the bill provides that in the event of a nuclear accident, the minister tables a report on the cost of the accident in Parliament and a recommendation on the need for any additional appropriation. That's part of the bill as well.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Let me stop you there, because that was my next point.

So the limit to the operator hits $650 million. Anything beyond that—and one can imagine, having looked at Three Mile Island and Chernobyl and the rest, that because it's not all concentrated around the site of the nuclear accident, the costs and liabilities can go far beyond, depending on the wind and where the contamination lands.... Just so I'm clear, this bill imagines that Parliament—the taxpayer of Canada—would pick up anything that went beyond $650 million. Am I right in understanding that?

[Lisa Raitt, Conservative, Halton, ON]

No, I think it allows a latitude, an ability to make a report on the accident in Parliament and the ability for the minister to make a recommendation, if there is a need, for additional appropriations. But I think what's important to remember is that this number is based upon what is happening internationally, what is an acceptable increase for operators in Canada, and as well upon a risk assessment of the costs associated with a nuclear incident.

Then finally, just in terms of other countries—you mentioned liabilities being pooled in other countries—the reality is that the other countries are not completely backed up by insurance, and in fact in this case they would be backed up by insurance, to $650 million, which is a difference. The minister's ability to make recommendations on additional appropriations is embedded there.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

No one disputes the need to update from $75 million. My point and question is that when we do any scenario of a major nuclear accident within the Canadian facilities, in terms of the likely compensation required, you crack through $650 million without breaking a sweat. The only place we see that being compensated for is from the Government of Canada.

We have this limited liability regime, and what I'm worried about, to be frank, is that this is all taking place in the conversation around privatization of AECL. We don't want to set a limit of liability that is somehow an enticement for folks to build reactors on this side of the border instead of the U.S., where you have a pooled liability and an unlimited cap, and folks can end up suing for quite a bit more.

The cost of insurance is part of the cost of doing business. In the nuclear industry no one insures these things because they're so risky, whether in cost overruns or in terms of accidents, and we don't want an enticing aspect of the Canadian build project to be that it has a much lower limit of liability than they do south of the border.

I'm looking around the world and seeing much, much higher rates everywhere, simply everywhere, than what is being proposed here.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Cullen. I think you've made your point.

[Lisa Raitt, Conservative, Halton, ON]

Do I get to respond, Mr. Chair?

[The Chair, Conservative, Leon Benoit]

Minister, if you would like to respond, go ahead, please.

[Lisa Raitt, Conservative, Halton, ON]

I think it's really important to remember that electricity production is the choice of the province. Each province will be choosing the operator of the nuclear installation. It is the operator that is responsible for the liability associated with it. The scenario that the honourable member has brought to our attention couldn't happen, because the operators are chosen by the provinces and they'd be the responsible ones. Surely the province would make a very judicious decision in ensuring that the $650 million liability limit in place was sufficient and satisfactory.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Cullen. Thank you, Minister.

We go finally to Mr. Trost, from the government side, for up to seven minutes. Go ahead, please.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

After listening to some of the earlier questions from some of my colleagues, I think this was partially covered, but perhaps you might want to elaborate or expand a bit. You were being asked questions about how companies view the stability and the future of the industry. Do you want to elaborate any more on that? How is this bill going to impact future nuclear development in the country? How is the industry viewing it? Is it a priority? Going forward, how will it affect projects?

[Lisa Raitt, Conservative, Halton, ON]

Thank you for the question.

Certainly industry operators, suppliers, and contractors have indicated to us that this is a priority bill for them. They want to have certainty. They recognize that there will be construction of new facilities in Canada in the coming years and they want to make sure that there's a level playing field vis-à-vis the United States in terms of liability. That's what Bill C-20 addresses.

As has been indicated already, this is something we've been working on for many years, and it's time to modernize this last piece of legislation.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

One of the other things you mentioned in your testimony was Canada's excellent safety record. As you've handled this portfolio and from your experience dealing with people in the industry, what do you feel are some of the major reasons? Is it legislation like Bill C-20? Is it our regulators? Is it that we have particularly conscientious companies? What is the core of the reason we have such a good safety record in Canada?

[Lisa Raitt, Conservative, Halton, ON]

I think it's a combination of regulation and technology, and underpinning it all is very good training in health and safety for people who work in the industry. There's a great pride. I've spoken already about people who work in the industry. There's a great pride in the people who work in the industry in terms of how safe they are. As well, people who work in the industry feel a great responsibility to the host or to the operating community, and a great amount of regulation governs what kind of reporting has to happen. Finally, the CANDU technology is simply the best in the world, both in terms of the systems in place to ensure safety and in terms of our use of unenriched uranium for the facility itself.

All those factors give us that strong base, that strong safety record, and it is a very attractive prospect to sell to the rest of the world.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Cullen was talking about the different liability limits. The bill we have before us, Bill C-20, talks about $650 million as the liability limit. He was noting that currently it's less than the limits in other countries, although with the way the Canadian dollar is rising, $650 million Canadian may be more than $1.2 billion American in a couple of years.

Is there anything in this legislation that would prevent the government from raising the limit in future years?