Natural Resources Committee on Nov. 16th, 2009

[The Vice-Chair, Liberal, Alan Tonks]

Good afternoon, members of the committee and witnesses.

For those who may not be sure where they are, this is the Standing Committee on Natural Resources. The chairman is not here today, so I'll be chairing the meeting in his absence. I understand he is going to be back for the next meeting. I hope so, and we hope so.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Be careful what you hope for.

[Some hon. members]

Oh, oh!

[The Vice-Chair, Liberal, Alan Tonks]

This is the thirty-ninth meeting. Pursuant to the order of reference of Monday, June 1, 2009, we are dealing with Bill C-20, An Act respecting civil liability and compensation for damage in case of a nuclear incident.

We have the various briefs that have been provided through the clerk. There is one from Babcock & Wilcox Canada Ltd., and we also have a submission from Bruce Power. Also, at the end of the committee's proceedings, could we have a few minutes? We also have the budget for the committee's study of Bill C-20. Perhaps around 5:35 or 5:40 we can deal with that.

Today, for the first panel, we have Michael D. Lees, president of Babcock & Wilcox Canada Ltd.; Mr. Murray Elston, vice-president, corporate affairs, Bruce Power; Theresa McClenaghan, executive director and counsel for the Canadian Environmental Law Association; and Shawn-Patrick Stensil, energy and climate campaigner, Greenpeace Canada.

To all of you, welcome.

We will be going to approximately 4:30. I think all of you know generally what the routine is. We first have the presentations, and we try to keep them within 10 minutes. Then we have seven-minute rounds of questions from the members.

Without any further ado, we will proceed.

The second panel will begin around 4:30.

I think we'll go in the order of the names I called out. Mr. Lees, as president of Babcock & Wilcox Canada Ltd., perhaps you'd like to lead off.

[Michael Lees, President, Babcock & Wilcox Canada Ltd.]

Sure.

First of all, thank you very much for the opportunity to appear in front of the committee. I look forward to providing some input on Bill C-20 from the perspective of a supplier of equipment and services to the global nuclear industry.

What I'll do, in terms of the presentation, is just give you a very brief background to B&W Canada, followed by a summary of the key points as to why this bill is important.

First of all, at B&W Canada we've been in business since 1844. Our roots go well back in history. We've always been an active supplier to the power generation industry in Canada and worldwide.

Currently, we have facilities in Cambridge, a large manufacturing facility, where we do both nuclear and other components for the power generation industry. We also have a facility in Melville, Saskatchewan, as well as regional offices across Canada.

We employ about 1,000 people, and over half our business is related to nuclear. We provide highly engineered components to the CANDU systems, owned by utilities, both internationally and domestically, and we also provide services domestically and internationally as well.

We are the only nuclear fabricator that still remains in North America, all the rest having closed their shops as the decline in nuclear manufacturing took place through the seventies and eighties. As a matter of fact, I think B&W Canada is a good example of how a company has taken technology developed for the CANDU business and turned around and applied it to an international market for PWR reactors. Over the last 20 years, we've built approximately $1.5 billion worth of equipment and exported it to customers in the U.S. and across Europe.

We feel it's important to have an updated Nuclear Liability Act in Canada in order to allow, really, Canada to ratify the CSC. CSC is the Convention on Supplementary Compensation for Nuclear Damage, and the CSC is an IAEA initiative that basically commits the international community to common standards for handling claims from a nuclear facility accident. So we feel that's very important.

There are five reasons why prompt CSC ratification is important to both Canada and B&W Canada. One, it gives Canada a credible voice on the international stage in nuclear power, in non-proliferation, and on the role of the IAEA. Without Canada being a signatory to that treaty, our credibility is diminished.

Two, it allows an active export industry to both grow and develop, and therefore that export business allows us to control the type of equipment and technology that we send outside our borders. With those restrictions on the use of technology, it does allow us to control, to some extent, how that technology is used. Also, that technology inherently makes other nuclear plants safer, an advantage of western technology.

We also believe the CSC will allow more exports to occur, and that will help Canada's balance of trade as well, which we feel is important.

We also see that a ratified CSC would also preserve Canada's nuclear infrastructure. What I mean by this is that considerable investment takes place to enhance our capabilities to be competitive in a global market, and a broader industry and market being served both in Canada and internationally allows us to make those investments. If we were to rely simply on the Canadian market, we would have difficulty making the types of investments required to grow a business.

And the last point I would make is that it brings new vendors and new technology to Canada. Many companies are prohibited from or feel constrained in doing business in Canada because of the lack of the CSC treaty. This would allow that technology to come into Canada, it would generate competition, it would generate innovation, and it would generate lower costs for Canadian utilities.

In summary, we feel that Bill C-20 should be passed in a form that is consistent with the CSC, and that after adoption of Bill C-20, the CSC treaty should be promptly ratified.

Thank you, and I'd be happy to answer any questions at the conclusion.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Lees.

We will have questions after we've heard from the other witnesses.

We'll now go to Mr. Murray Elston, vice-president of corporate affairs at Bruce Power.

[Murray Elston, Vice-President, Corporate Affairs, Bruce Power]

Thank you very much, Mr. Chair.

I work for Bruce Power, which is a privately owned nuclear operator located in Bruce County in Ontario. We operate six CANDU units, and two other units are currently under refurbishment at our site. The six units deliver approximately 24% of Ontario's electricity. We have roughly 3,800 people working full time on this site, and roughly another 3,000 are engaged in the refurbishment project, so you can see that there are a considerable number of employment opportunities at our site. We continue to be a very strong part of Ontario's economic activities.

We have submitted a letter dated October 27, 2009, to the committee through the clerk. I will not refer to it except to highlight a couple of features of it, Mr. Chair, knowing that you've had a chance to take a quick look at it.

I will start with one of the side issues, the availability of liability insurance. I raise that issue because it was part of the presentation I made in this committee in another capacity in November 2007, when we dealt with Bill C-5, a bill this committee, although composed of different members, saw fit to pass. Were it not for an election intervening, Bill C-5 probably would have made its way through the Senate for final passage. That did not occur; hence, we're back here today.

I raise the issue to bring it to your attention and to say that very slow progress has been made with respect to the availability of liability coverage, although we continue to work not only with the department but also through other avenues to find suitable liability insurance competition so that we can get the best rates possible.

On the second point I raise with you, I would agree with Mr. Lees that we are looking for a piece of legislation that would be compliant with the Convention on Supplementary Compensation. We have written that clearly to you. It is one of those issues on which, by now, after appearing in 2007, we as an industry would have thought there would have been progress made. I think at the end of the day any progress is obviously welcome for most of the industry, but for some of us, making sure that we can actually access the international market is a very important opportunity for us as an industry. This committee, I think, has recognized the nature of the evolution of this industry in its very recent sittings, in which you dealt with the issues of the future of the Canadian nuclear industry. Obviously compliance with the Convention on Supplementary Compensation would provide us with a broader range of opportunities than we now have.

I would confirm for you that Bruce Power does support the limit set out in the amendment, the $650 million, but as I said, in looking for that higher limit of coverage and the costs associated with the insurance premiums, we are looking for competition to help us get the best deal that we possibly can.

As we move forward, if there are not amendments proposed to us, I think it's important for us to know of the opportunities available for the government to bring us into compliance with the Convention on Supplementary Compensation and to be permitted to work hand in hand with the committee. If you would like to take a look at the types of amendments that might make this legislation compatible, in our view, we are prepared to bring those resources to this committee and to work with the members if you would like to see the amendments we have proposed in our letter.

I won't go into those changes in depth. You have in front of you a table that sets out some of them, but I would be happy, as I said, to bring resources of the company with me to Ottawa when you go through the bill clause by clause, if you decide that you would like to look deeper into the wording for such amendments. With a little bit of notice, we could bring ourselves in front of the committee when you needed us.

With that, I too look forward to answering some questions. I would just reiterate that it was November 2007, and now it's November 2009, two years later. We would prefer, for efficiency's sake, that we not be back here in November 2011 to do another presentation. Although I love you all dearly, and I like the idea of being in front of a microphone again, it would be nice if we could just do this in one kick at the can, as opposed to having to come back again.

But I do thank you, Mr. Vice-Chair, for your attention.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Elston. As you can appreciate, the committee might feel a little bit different about being here and having the opportunity to hear more from you, but I think we'll leave that for the time being and go on.

Ms. McClenaghan, would you like to make your presentation?

[Theresa McClenaghan, Executive Director and Counsel, Canadian Environmental Law Association]

Yes, I will.

Before I start, maybe I would say that's one thing we have in common: the view that the bill is long overdue for revision.

I was noticing in reviewing some historical material for today that my organization, the Canadian Environmental Law Association, made submissions on the Nuclear Liability Act and proposals to revise it in 1984, and I myself was involved in the litigation concerning the current legislation from about 1988 to 1995.

I thank you for inviting the Canadian Environmental Law Association to appear before you. Our organization is a non-profit public legal clinic. We were established in 1970, and our mandate encompasses using existing laws to protect the environment, as well as advocating law reform.

I should say, with my apologies, my written submission was not ready on time for prior translation. It has been provided to the clerk, but I understand, with the rules of the committee, you won't see that until a later date.

I also expect that we will file a supplementary letter with more detail on potential amendments, but I'll speak to them briefly here.

We have three main submissions to make with respect to Bill C-20. Firstly, we would recommend that the bill be amended to remove the cap on liability and to remove the exemption on third-party liability, and I'll speak to each of these in turn. Secondly, we would recommend that the minimum amount of insurance and financial assurance required to be carried by operators be amended so as to substantially increase the available resources even beyond what Bill C-20 provides and to provide for the consequences of a catastrophic accident with off-site impacts. Thirdly, we would recommend that the bill be modernized to accord with principles of sustainability.

I'll speak to each of these in turn.

With respect to the first submission, to remove the cap on liability and to eliminate the exemption that is accorded to suppliers, many other nations are either in the process or have removed their liability caps. The original argument was that nuclear power generation would not be pursued for peaceful purposes without such a cap, but we would submit that's long out of date; that's no longer applicable. Nuclear power was commissioned in Canada decades ago and is well established today. Just as Germany and Japan were able to remove the cap, Canada should be able to do that, too.

Those countries that did remove the cap wanted to “normalize” their nuclear power plant operation in accordance with other fields of industrial activity and also to exhibit the confidence their government had in the safety of their reactors.

Also, as we've often argued, the provision of a cap on liability operates as a subsidy to that single form of electricity generation—that is, nuclear-powered generation. No other form of electricity generation has such an advantage. The subsidy amounts to the costs that the operators would otherwise incur to either insure for or pay the real costs of a severe nuclear plant accident. Those who bear those costs today or under Bill C-20 that might exceed that amount are the public, whose damages and claims would not be compensated except to the limited amount provided by the cap, unless government chose to step in and account for the difference, which is discretionary.

I might add that a serious accident in which radioactive materials escaped containment is a credible scenario that we do have to consider if we're going to allow this type of generation and make the rules governing its operation. In the written brief—when you get it—you'll see a citation from the Auditor General's report from 1992, echoing the fact that because we've had relatively successful accident-free operation on the part of the Canadian nuclear program doesn't mean that accidents can't happen or that we shouldn't consider what the consequences would be if they did.

In the litigation that I mentioned to you earlier, evidence was led on the part of the plaintiffs that damages for a very severe accident could extend between $375 million and $30 billion in 1990 dollars, but in that case, even the industry estimate, which I might add was based on U.S. studies because no Canadian studies had been done, was that such a severe accident could amount to $10 billion. In either case, it far exceeds the amount that is proposed under Bill C-20.

Similarly, the act proposes to cover certain potential damage from transportation of fuel to or from the nuclear power generating plants. Again, there was a contention in the evidence in another case about 10 years ago involving the shipment of mixed-oxide fuel for tests at the Chalk River reactor; the contention was whether the containers were meant to properly protect against serious, especially airborne, accidents. Again, the sufficiency of the cap would be an issue.

With regard to the issue of the act's removal of liability from third parties, as you know, in both the current act and the proposed act, the legislation exempts all of the other parties in the supply chain from any liability whatsoever. This dates from original indemnities that were provided to those suppliers by operators such as AECL and Ontario Hydro, in some cases with federal government consent. That was replaced subsequently by the Nuclear Liability Act.

First of all, I would note that no other supply chain in the electrical generation industry obtains that kind of protection from liability. I would also say that because the industry is well established today, the need to continue to provide that kind of protection is not evident.

The next point I'd like to speak to is an increase in the minimum insurance requirements. Such an increase could be done through a variety of mechanisms, such as pooling or other arrangements, so as to increase the available coverage. I spoke earlier about the fact that the coverage required could greatly exceed the amount provided by this bill.

The note I would make on that point is that in the United States, as you may know, the Price-Anderson act provides a pooling of insurance such that, depending on which dollar exchange you're using and which year you're using, the range is between $9 billion and $11 billion available from a single accident through a combination of insurance, pooled insurance, contribution from the industry, and supplement by the state. Similarly, under the pooling arrangements and state supplements in other countries such as Germany and Japan, as well as others that subscribe to the Brussels convention, much greater resources are available to those who might suffer in the event of a serious accident. I would submit that even the proposed $650 million amount here is not in any way comparable to the amount available just on the other side of our international border.

The third point is to modernize the bill in accordance with principles of sustainability. I will speak to those very briefly. I will first mention the Rio Declaration, which Canada acceded to in 1992.

One of the principles is the principle of intergenerational equity. We would submit that the provisions of this bill should explicitly meet principle 3 of the Rio Declaration. As well, principle 16 is the polluter pay principle under the Rio Declaration. National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking the approach that the polluter, in principle, should bear the cost of pollution. Another way to put this in the environmental discourse is that costs of potential harm should be internalized to the activity. We would say that removing the cap, increasing the resources available, and eliminating the third-party supplier exemption would more firmly align with principle 16.

To conclude, we think the present bill needs to be amended.

I would like to note that there are multiple objectives the bill may serve. First, if the objective is to provide for compulsory insurance, we would submit that this objective can be achieved without the liability exemptions and limitations. Second, if the objective is to provide a special duty or absolute liability, this can be done, again without completely exempting non-operators and without the caps on liability, just as is the case in other jurisdictions. If the objective is to expedite compensation, this can be done, again through a provision for a special claims tribunal. Similarly, if the objective is to provide some level of protection to suppliers, this could be done by indemnity agreements and without a statutory removal of the plaintiffs' or claimants' rights.

Finally, if the objective is to promote nuclear power generation, I would submit that the committee should recognize that the mechanism of a cap on total liability and exemption of third-party supplier liability is promoting nuclear power generation by imposing the difference in cost on the public. I would submit that's not merited in this day and age.

Finally, I would request that you view the question of amending the Nuclear Liability Act as a question of what system of compensation should be in place in the event of an accident. I would submit that you not view the act primarily as a mechanism to expedite the operation of nuclear power generation facilities.

In my submission, the system we would want in place in the event of a real accident would not consist of historical legislative protection to the industry from the consequences of an accident; rather, we would want a much more significant amount of minimum insurance and pooled resources to assist accident victims. We would want a removal of that cap on liability and the exemption to third parties. We would want to retain other elements such as absolute liability, extended limitation periods, retention of jurisdiction of the courts, and a specialized tribunal, but there is no necessity for the package to include the cap on liability or the exemption for third-party suppliers in order to accomplish those means.

Thank you.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you very much, Ms. McClenaghan.

We'll now go to Shawn-Patrick Stensil, from Greenpeace.

[Shawn-Patrick Stensil, Energy and Climate Campaigner, Greenpeace Canada]

Thank you very much for this opportunity to speak to you again.

Greenpeace released a report today analyzing the subsidies that are provided to the nuclear industry by this act. I hope you have received it by e-mail; it will also be provided to the clerk. Il y a aussi un résumé de ce rapport en français.

By way of introduction today, let me present a contrast. The federal government has provided $650 million in subsidies this year to Atomic Energy of Canada Ltd. for waste cleanup, designing its next-generation reactor, project cost overruns, and simply keeping the lights on. I think it's useful to contrast this subsidy from 2009 to AECL with the cap on liability proposed in this act.

I think it raises some common sense questions about whether Bill C-20 would in fact provide an adequate level of environmental and financial protection to Canadians from any potential future accident. I think it also underlines that this is an industry that can't afford itself. Indeed it raises an issue I spoke to you about previously, three weeks ago: despite receiving billions of dollars in direct and indirect subsidies over the past 50 years, this industry has failed to innovate, lower its costs, and build safe reactor designs.

Special protection for the nuclear industry and the framework for this liability regime date back to the 1950s, when American nuclear vendors feared being sued for the catastrophic damages if one of their reactors underwent an accident. This situation was originally supposed to be temporary, but the industry still needs it today.

Commendably, this government and past governments have begun a process to modernize Canada's nuclear industry by transferring the costs from the taxpayer to the industry through the privatization of AECL. Greenpeace believes that forcing this industry to take responsibility for itself, as any 50-year-old industry should, is a good thing for the taxpayer, for the environment, and, one could even argue, for the nuclear industry itself.

The Nuclear Liability and Compensation Act as it stands before you now is not a modern piece of legislation. It is still built on the 1950s legislative framework that prioritizes protection of the industry over citizens and the environment. Greenpeace would like to urge this committee and the minority Parliament in general today to work collaboratively to modernize this bill and, like the government's efforts to privatize AECL, force this industry to grow up. Such collaborative work would benefit taxpayers, victims of any potential nuclear accident, and nuclear safety, and it would aid Canada in meeting its commitments towards transitioning towards a more sustainable economy.

What follows is a summary of our concerns.

The liability cap, as it stands, shortchanges Canadian victims in industry compensation compared to those in other western countries. The cap under the revised Paris convention is over $1 billion Canadian. Japan and Sweden are moving in a similar direction, and other countries such as Germany, as Theresa mentioned, have completely removed the cap on operator liability.

This cap on liability also represents a hidden subsidy to nuclear power: the report that we released today estimates that the subsidy from the cap is equivalent to 5.4¢ to 11¢ a kilowatt hour. It's a huge subsidy. Based on the electricity output from Canada's reactors in 2007, the Nuclear Liability and Compensation Act would provide an implicit subsidy of $4.8 billion to $9.7 billion. This creates an unfair playing field for safer green energy technologies and contradicts Canada's commitment to sustainability and the polluter pays principle.

The $650 million cap also shifts responsibility for cleaning up nuclear accidents from the industry to the federal government. Much like the off-book liabilities that we witnessed recently with the cost overruns at the Point Lepreau nuclear station, these were theoretical risks; then suddenly this year, in 2009, the federal taxpayer had to dole out $300 million. This creates a massive unaccounted-for liability to the Canadian taxpayer. The federal government has failed to carry out, to our knowledge, any studies to tell Canadians how large this liability actually is or to develop any mechanisms for reducing it or eliminating it over time.

Industry studies show that even just the health consequences of a catastrophic accident at the Pickering B nuclear station would total over $52 billion. Again, that is a significant off-book liability, and from an accounting framework, it's not too responsible.

Our long-term commitment to the polluter pays principle requires that we, at a minimum, put in place mechanisms to track, reduce, and eliminate this liability, that is, transfer nuclear risks from the taxpayer back onto the industry. I would ask this committee to examine ways of revising the bill in order to do this.

Greenpeace also questions the adequacy of the federal risk studies used to support the $650 million liability cap for so-called foreseeable nuclear accidents. Greenpeace would like to note that the nuclear risk studies are increasingly being withheld from the public, raising transparency issues. Under the proposed Nuclear Liability and Compensation Act, risks are public, and we deserve the ability to scrutinize and assess the risks imposed on us.

Other industry studies contradict the $650 million cap. For example, a foreseeable nuclear accident at the Pickering B Nuclear Station, if calculated out, would surpass $1 billion. So in terms of the government's own criteria for setting the cap, it's not meeting that criteria.

Finally, at a high level, this act ignores Canada's modern commitments and legal obligations to sustainability and the polluter pays principle. Indeed, the Nuclear Liability Act breaks this principle and requires Canadians to pay, potentially, for the industry's pollution.

Fundamentally, many of my affirmation concerns regarding transparency, financial, and environmental risks imposed on the public would be addressed if this act was amended to acknowledge and implement Canada's goals towards sustainability. On this point, I would like to speculate why this legislation has overlooked Canada's commitment to sustainability.

Minister Raitt, just two weeks ago, told this committee that the Nuclear Liability and Compensation Act:

...is the culmination of years of consultation involving extensive discussions with major stakeholders, including nuclear utilities, the governments of nuclear power generating provinces, and the Nuclear Insurance Association of Canada--and it has received broad support.

Support from industry, that is to say. She omits any mention of consultation with the Canadian public or, for example, municipal governments that would be negatively impacted by a nuclear accident.

Greenpeace acquired, through access to information, a 2004 Natural Resources briefing note that explicitly acknowledged that consultations with non-industry stakeholders were being avoided during the development of this bill. The document stated, and I quote:

Consultation with non-industry organizations is an issue. Municipalities, environmental groups, and the general public have not been consulted.

Another extract from the document reads:

Consultations with non-industry groups would attract a fair amount of attention.

Similar to most studies in the nuclear industry, government has avoided broader public consultation to avoid, I would add, justified criticism and scrutiny of this act.

Mr. Elston noted that this act has been delayed a number of times because Parliament has been prorogued. I would also note in other documents we've acquired through access to information dating from 2004 that the nuclear industry was advising the industry not to table this legislation at that point. I'm not sure why, but it didn't seem politically convenient. So we should have room to have a bit of a step back on this one.

All in all, this has resulted in a bill that prioritizes industry interests, shortchanges Canadians, and ignores the federal government's modern legal obligations to sustainability. I would urge this committee, then, to work collaboratively to create better legislation that is in the public interest and not solely in the industry's interest.

At a high level, Greenpeace recommends the following: increase the insurance cap to at least 700 million euros, or about $1 billion Canadian, that is, the industry-insured norm in western countries; above that, remove the liability cap and transfer risk back onto the industry—countries such as Germany have done this, and Sweden just received a report recommending they do this just three weeks ago—and acknowledge Canada's commitments to sustainability and the polluter pays principle in the goals of the act. These factors should be a driving motivation in future revisions of the act, such as the five-year review on the liability cap.

With regard to the five-year reviews, future reviews must address the lack of public transparency we've seen with the current act; that is to say, they should not be simply at the discretion of the minister, as it is currently worded.

Such reviews must explicitly consider and report to what extent the Nuclear Liability Act distorts electricity markets by subsidizing nuclear operators, and a motivating objective of future reviews should be the polluter pays principle.

Finally, we've heard from some colleagues today about the Convention on Supplementary Compensation. We should probably have a broader discussion about that.

My understanding of that convention is that it also would leave Canada open, potentially, to paying for the cost of accidents overseas, so if an accident signs on another member of the convention, Canadian taxpayers may be on the hook for that as well. Given that this would be a Canadian liability, we should probably have a broader discussion about that.

That concludes my remarks.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you very much, Mr. Stensil.

At this point, then, we'll go to the questioning of our witnesses. We'll begin with the opposition.

Mr. Regan.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you very much, Mr. Chairman.

Thank you to the witnesses for appearing before us today.

First, I want to say that my understanding is that if the government were to move forward with the convention, it would have to bring forward legislation to do so. In that case, I presume it would come to this committee and we'd have a chance to review it at that point. We may be doing that, perhaps. We'll see.

The committee has heard today and previously that other jurisdictions have well over $1 billion in liability limits. I'd like some comments on the level in this bill, particularly from Mr. Lees and Mr. Elston. How does the level of $650 million in this bill reflect what's happening elsewhere?

Secondly, what would be the implications of setting the liability limit at $1.2 billion, for example, as we've seen in some places? What would that mean for the nuclear sector, for operators, for the public, and for public safety in particular?

[Michael Lees]

Maybe I can take the first crack at that.

First of all, in terms of what is a reasonable value, $650 million or some higher number, my understanding is that the $650 million exceeds what the current levels are in other countries. I am aware that other countries talk about unlimited liability, but you have to be very careful in how you interpret that. Those same countries will allow a nuclear utility to create a corporation where the only asset in that corporation is the nuclear plant itself, so inherently you're able to create a liability that is much lower than you might perceive it to be when people talk about unlimited liability. I think that needs to be clearly understood when we talk about comparisons between what Canada might do and what other countries might do.

I also understand that Bill C-20 has the ability to increase the level on an ongoing basis subject to approval and perhaps some level of review by NRCan. So there is a provision already built into the bill that allows an escalation of the dollar value if it is deemed at some point in time to not be adequate or not consistent with the CSC as it may evolve in time.

I don't know, Murray, if you have anything to add to that.

[Murray Elston]

Yes. Actually, I think moving it from $75 million, as it is now, to $650 million is seen as a very big uptake in the values against accidents.

I think the industry itself works overtime to ensure that we have a safe operation, and as Ms. McClenaghan identified, we have been safe. We haven't had those types of accidents in the more than 40 years that we've had commercial reactors generating electricity in Canada, but as an industry, we recognize that we must upgrade the limit from $75 million, which we see as being too small, to the $650 million limit, which I think is within the range of world coverages. In effect, we are agreeing to this movement because we recognize that we have to modernize.

Having said that, I note that it puts us into the other part of my presentation, which said that if we go to these higher levels, then we must be permitted to have competitive opportunities to shop for that liability coverage to ensure that we are getting the best possible value for our coverage. That, Mr. Regan, looking at moving from $75 million to $650 million, presents its own issues.

We think this is a valid and reasonable increase in coverage that moves us into a range that is acceptable around the world.

[Geoff Regan, Liberal, Halifax West, NS]

When you raised this issue of competition for insurance during your initial comments, you didn't elaborate. Can you clarify what you foresee there?

[Murray Elston]

Under the provisions of this legislation we have the opportunity to designate an insurer residing with the government. At the moment that insurer is an association of insurers, which is the only party we can go to in Canada. We have made presentations to NRCan—not only Bruce Power but a couple of the other generators—to see if we can find a successful way of designating other competitors in the market.

We have not been able to move to having a second or even third designated insurer for the purposes of looking at competitive quotes for our insurance. We believe competitors to NIAC are available from other venues—some may be in the United States and there are certainly some in Europe. As the values on our limits go up to $650 million, it is obviously important to get the best premium value that we can.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

Ms. McClenaghan, in the case that there were a nuclear accident in Canada, which obviously we all hope never happens, what would be the full extent of the ensuing liabilities on operators—this is something you've studied as a lawyer, I guess—and the Canadian taxpayer, in your opinion?

[Theresa McClenaghan]

That question was asked in the litigation I adverted to earlier. The litigation for the plaintiffs, whom I represented, indicated that depending on the assumptions about the kind of accident, the direction of the wind—all those things make a big difference—the liability could range between $375 million and $30 billion. The expert who talked about the $30 billion noted that was probably, in some circumstances, an underestimate. As I indicated, the Ontario Hydro evidence in that same case, using the same assumption of an escape from containment type of accident, was $10 billion, based on U.S. modelling. So in both cases, that was greater.

I might add that the Price-Anderson act in the United States, which offers $9 billion to $12 billion, depending on which exchange rate you use, reached that level because of the experience, in part, of Three Mile Island and the recognition that if there were an accident in which radioactive materials escaped containment, the pre-existing provision of compensation would be insufficient. What they did was to pile up a number of kinds of coverage in order to reach that total available number of resources.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Regan.

We'll go to Madame Brunelle for her seven minutes of questioning.

Madame Brunelle.

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

Thank you.

Ms. McClenaghan and Mr. Stensil, you seem to be of one mind on wanting to abolish the liability cap, which is set at $650 million. I wonder to what extent that is realistic. You have talked to us about unlimited liability, but, though the government seems to be leaning towards nuclear reactors, do you really think that it is going to be paying the operators' premiums?

[Theresa McClenaghan]

Yes. That's what happens right now, in fact. Under the current act, which is $75 million, the insurance consortium that Mr. Elston referred to has finally, over time, insured that whole amount.

But that wasn't true originally. Originally the private consortium insured about half of it, and the Government of Canada, more or less through a re-insurance agreement, insured the rest. In many parts of the world an amount is made available by a combination of insurance pools and states, i.e., nations committing to put a certain amount on the table in order to arrive at these totals. They do that presumably as a function of the policy decision to expedite using nuclear power generation.

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

Mr. Stensil, would you like to answer?

[Shawn-Patrick Stensil]

Basically, I think we are saying the same thing. We do not want insurance costs to be paid by the federal government or by taxpayers. The industry has to pay them. There are two aspects to that. We have to make sure that there is enough money to pay for damages in the case of an incident, but there must also be no cap on the insurance, as is now starting to be the case in Germany and Sweden. This is not a token gesture: it is a way of making the industry accountable and making it clear what its responsibility is in the case of an incident.

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

When we talk about industry, we are also talking about making a profit, of course. I wonder how realistic it is to use that model without a paying polluter becoming a paid polluter. Would the costs of the electricity produced go through the roof? How can we see that as realistic? We might as well say that we are going to abandon the nuclear program because liability insurance costs too much.