Natural Resources Committee on Nov. 16th, 2009

[Shawn-Patrick Stensil]

In Germany, they look at insurance in a different way. I think the English word is “security”. They have to have $2.5 billion in reserve in case of an incident. That is not quite enough, but it is better. In the long term, if the industry knows that it is going to be held responsible if an incident occurs, it will be more careful.

I have friends in the United States who tell me that, because of the pooling they have there, when a company causes problems and is not well managed, the other companies put pressure on it to improve its management. There are other models, but the principle is that the polluter pays.

Perhaps it is not realistic for the polluter to pay everything, but it is an important factor in the industry as a whole.

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

Mr. Stensil, are you telling us that companies can put up assets in the place of premiums? Are you saying that, if a company has x billion dollars in assets, it can take the place of insurance premiums?

[Shawn-Patrick Stensil]

I do not think so. I do not know how to say “security” in French; I do not think that it is insurance. Perhaps Murray knows. They have another way of putting aside the money—the $2.5 billion.

Does that answer your question?

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

Not quite, but we will look into it.

Thank you.

[Shawn-Patrick Stensil]

Okay.

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

Mr. Elston, from what you are telling us, I gather that you feel it is impossible to get insurance for more than $650 million at a competitive rate. So you do not believe what other people here have said: that it will be possible to get insurance if the cap is abolished.

[Murray Elston]

I think, Madam Brunelle, we are suggesting that moving from the $75 million to the $650 million will put a lot of pressure on the ability of the existing insurance entities to provide us with that coverage, but we are looking to increase the number of places to which we can go to get the competitive rates that we think are needed to provide insurance at a reasonable price. We think expanding the pool of insurers is the right way for us to go, to make sure that the value is in fact there. So I would say that you get two benefits. One, because of the increased coverage, you have more places to go, and then, secondly, with the competition among the various venues, then you can have an option.

I think the most difficult situation for anyone in the market is to have no choices to make. I think that would be a good thing for us to move toward.

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

You tell us in your presentation that you are worried and concerned by the possibility that the minister may decide to increase the cap without having sufficiently consulted the stakeholders. Is this your concern, that insurance premiums will go through the roof?

[Murray Elston]

I think the concern, chiefly, is more to the point that certainty for business prospects is always the best route to take. I think that being able to count on a reasonable progression towards review and consultation is always preferred for business so that we can make appropriate arrangements to cover any changes that might be moved. That's what our chief concern is. I don't think proliferation, necessarily, of those costs is the chief concern, but it's about the certainty of us being able to move to having competitive choices.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Madam Brunelle. We're at the end of your seven-minute question period.

Mr. Cullen.

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

Thank you.

Just to pick up on that, Mr. Elston, your concern is that if the minister in the future were to change this, then you would like to be consulted prior to that change or during the course of it.

[Murray Elston]

Yes.

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

To Mr. Stensil's point about non-industry stakeholders not being consulted to this point in the process, what are your feelings on that? Do you think non-industry stakeholders should be brought into the consultation process that the government is using?

[Murray Elston]

I think Mr. Stensil was talking about 2004. At the preliminary stage of any legislative review, I think it's not uncommon to have to start with somebody, but obviously the difference in this situation is that we're in front of this parliamentary committee for the second time now with a piece of legislation that really has attracted the attention of a good part of the public.

In fact, I took a quick peek at the list of some of the presenters the last time. An item from 2004, which I think would attract some attention, is not bad theatre, but when the reality of our current circumstance is that the government has been down this track, through this parliamentary committee, in fact with some of the same members, although not exclusively the same members, a concern about not consulting the public broadly would be about notification. Notification has occurred in this situation, not once but twice now. I think we all have been prepared.

I think the presentations here should lay to rest any concern that the public was somehow kept out of being aware of any changes.

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

Insurance is the cost of doing business for you, I assume, just like labour and construction materials.

[Murray Elston]

Yes.

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

You have a cap being placed on the cost of insurance to your industry. Do other sources of energy generation have a similar insurance cap put on their costs?

[Murray Elston]

I can't talk about all other sorts, but when you consider that most of the energy companies in Canada are generally owned by government shareholders, a certain self-insurance goes on with a number of those. When you take a look at the various places where in fact that shareholder steps in and says, for instance, we operate the electricity systems so we will do our own insurance--

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

You're suggesting that those other forms are being publicly subsidized because they're owned by the public.

[Murray Elston]

Some people like the word “subsidy” because it attracts a lot of attention. I think it's good business sense from shareholders in the electricity business to underwrite their own obligations to be safe and secure for their populations. I see nothing wrong with that. I don't see it as a subsidy. The issue clearly is driving those entities to not only be safe and secure but also to operate their utilities in a way that provides their beneficiaries with very sound and competitive electricity rates.

So the decision is not about subsidization. The decision by those shareholders is all about making their jurisdictions very competitive in a very tough world of doing business.

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

Right.

Have you run any estimates on the cost of a nuclear accident at your facility?

[Murray Elston]

If they have been run, I have not seen them. And I have not done that.

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

Are you aware of the federal government running any such estimates on the cost of nuclear accidents in Canada ?

[Murray Elston]

No, but I am aware of the fact that there have been scenarios undertaken. I haven't really seen any of those.

I do know that the litigation that Ms. McClenaghan speaks about, for instance, had a series of experts. I will go back and actually take a look at it, and I will probably send the judgment that was given in the case to committee members for review.

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

Let me go to Ms. McClenaghan.

We seem to have a discrepancy as to whether this is meeting international standards. The minister came before us and said, when we were talking about the actual $650 million cap, “this number is based upon what is happening internationally”.

I'm a bit confused. Translated into Canadian dollars, this talks about Europe, $1.5 billion; Japan, $1.4 billion; the U.S. pools, unlimited.

Is $650 million correct? Is it equal? Is it the same? Is it different?