Natural Resources Committee on Nov. 18th, 2009

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

Thank you.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Madam Brunelle.

Thank you, Mr. Murphy.

We'll go to Mr. Rafferty.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you, Chair.

Mr. Walker, we heard earlier that nuclear accidents to date have been caused by a combination of negligence and incompetence. As a lawyer, would you think it would be fair to limit liability to an entity if an accident were to happen because of negligence and incompetence?

[John Walker]

The classical answer would be no. I guess there are countervailing arguments in the nuclear environment. We represent nuclear insurers, and we're trying to make a distinction between the limit of insurance and the outright limit of liability of the operator. I'm going to step outside the bounds of what we view as our area of expertise. You have to consider that in Canada, except for one operator, these are provincial government entities, or agencies of provincial governments. If you asked them to carry unlimited liability, you're simply making provincial governments, the people of the province that a reactor is in, bear that risk. You are not really shifting it from the public purse to a private purse. What would be the social utility of bankrupting one of these utilities with unlimited liability? We still need the electricity. If you make them liable for an unlimited amount and you bankrupt them, what have you achieved?

I want to close by saying that those are extemporaneous comments beyond our real scope.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

I thank you for those.

Mr. Murphy, on the dollar cost for protection of the public, I might have the insurance industry or NIAC's role wrong, but does it not get less expensive the more coverage you have?

[Dermot Murphy]

As is demonstrated by the indications of premium multiples I provided, yes. The new limit equates to 13.3 times the $75 million, so it's $650 million. Our estimated range of how much it will cost is somewhere between five and eight times.

As an example, and I believe Chairman Tonks indicated this in a previous meeting, for a person who has $1 million coverage on his automobile and it costs x number of dollars, if he increases to $2 million liability, it's not twice as expensive, it's a multiple thereof.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Would NIAC support a $1 billion liability?

[Dermot Murphy]

Are we capable of providing that level of insurance coverage? Yes, as I said earlier, barring any unforeseen circumstances, our research has shown that in conjunction with two other major pools we partner with--the British pool, Nuclear Risk Insurers, and the U.S. pool, American Nuclear Insurers--we can muster capacity up to the tune of approximately $1 billion.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you, Mr. Murphy.

A question for Mr. Carroll. You said that Germany has unlimited liability, Switzerland does, and I think you said Finland does. We heard from the previous panel that companies would close if unlimited liability were imposed upon them. They would close shop, they would be finished, they would be done.

When they brought in unlimited liability in Germany, how many power plants closed?

[Simon Carroll]

Because of the change in the liability, none.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Did any close in Switzerland?

[Simon Carroll]

As a result of the change in liability, none.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Could you briefly clarify some other liability regimes that some other countries have, just for comparison?

[Simon Carroll]

Yes. In doing so, could I refer to a comment made by Mr. Murphy? He rightly pointed out that in some countries the amount provided by insurers is comparable, but the liability imposed on the operator is very different and higher. In addition, in the case of the country I live in, Sweden, the insurance market can cover €700 million, which is about $1,100 million Canadian. But the amount insurers can cover does vary from country to country. As Mr. Murphy said, the insurance market is very tightly regulated, and the capacity varies.

To go to your question, in Spain, since 2007, the liability has been at $1,100 million Canadian. There's a proposal being considered by the Spanish legislature now to raise it to €1,200 million. I don't have the conversion in my head, but that's a significant increase, to around $2 billion Canadian, I guess. The United Kingdom is in the process of amending its legislation and it would impose operator liability of €700 million, again about $1,100 million Canadian.

Just to reiterate the point I tried to make earlier, the Paris Convention, as amended by the protocol, sets a minimum level of liability of $1,100 million Canadian. Above that is what is being explored now by an increasing number of European countries.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Do I have time for one quick question here?

[The Vice-Chair, Liberal, Alan Tonks]

You have 45 seconds.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Okay.

Mr. Carroll, you indicated with the Paris Convention that Canada, because of our Liability Act, currently wouldn't be invited to be a signatory. Do you think it would be important for Canada to be a signatory to that convention?

[Simon Carroll]

I don't think that's a question I could really answer. However, I would say that the comparison with the Paris Convention is relevant because the Paris Convention sets a base for developed economies with major nuclear programs of what is considered a reasonable minimum level of responsibility by the industry. I think that is an ambition Canada should have, and the bill in its current form misses that ambition by a large margin. Therefore, I think it's inadequate. That's why I think you should be looking at revising that figure.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Rafferty and Mr. Carroll.

We'll now go to Mr. Anderson for seven minutes.

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

Thank you, Mr. Chair.

Mr. Rafferty started off talking about our previous witness and some of his declarations about how accidents are caused. He also made a couple of other comments, and I'd like the insurance folks' reaction to this.

I think he left the implication that operators are being held completely blameless by this legislation. Would that be your impression? I think he actually used the phrase that this leaves the operators blameless. Do you agree with that?

[John Walker]

This legislation would channel all liability to the operators. It makes them completely liable for any loss up to the maximum limit in the legislation.

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

It seems to me that there is an aspect of unlimited liability that can actually remove the responsibility from the operators if they find themselves in a situation in which nothing but the value of the plant is left. The liability comes back to that. There's no value there beyond the plant, and they have no responsibility beyond that, whereas this requires them to carry $650 million in insurance and will cover, according to the work that's been done, virtually any situation that would take place.

[John Walker]

Their limit of liability would be $650 million under the current act, and they would be required to carry $650 million of insurance. Beyond that they would not be liable, and they would be able to continue operating their plant with their current assets, assuming the plant was operable.

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

I think another implication he made was that they're basically free to create unlimited damage as well through this. My question to you is, would you be insuring them if you believed that was the case?

[Colleen DeMerchant]

Not at all.