Evidence of meeting #44 for Natural Resources in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was clause.
A recording is available from Parliament.
4:25 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
The intention is to not show unanimity on certain clauses. On clause 20, I'd like that to be the case, but thank you for the clarification.
4:25 p.m.
Conservative
The Chair Conservative Leon Benoit
On clause 21, there are three amendments proposed. Two of them are out of order; one is in order. We will stand clause 21 as per the agreement and we will go to clause 24.
(On clause 24—Insurance)
Clause 24 is the next clause that has no amendment. Clause 23 has an amendment, which is in order.
Mr. Cullen.
4:25 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
I just want to give folks time to read it, but on subclause 24(2), I believe the last line ends with “that authorizes that a portion of the financial security be alternate financial security”.
I'm having a little trouble understanding what “alternate financial security” means.
4:25 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
Alternate financial security might be something like a provincial government guarantee, or self-insurance, or a letter of credit, for example, that the operator might be able to get to cover some of the financial security.
4:25 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Under Bill C-20, we're saying the liability limit for the nuclear provider is $650 million. If, for example, the Province of Ontario or Quebec says, “We want you to build a new plant; we're going to cover your $650 million limit ourselves as a province”, can that be possible under subclause 24(2)?
4:25 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
No, but they can cover a percentage. In the legislation, that percentage is fixed at 50%. For example, if the Province of Quebec wanted to provide a provincial guarantee for half of the $650 million, it would be able to.
4:25 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Did you also indicate that that could be covered through private insurance offers as well? Could the nuclear provider go out and get half its liability covered off another way through a private insurer?
4:25 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
Through self-insurance, it could make a proposal to self-insure half of the liability.
4:25 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Sorry, I'm not in the insurance racket. What does self-insurance mean?
4:25 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
Based on its revenues and assets, it would make certain promises to cover 50% of the risk of the $650 million in the event of a nuclear incident. It would provide a guarantee to the government that would say, in the event of this situation...and then it would have to make a proposal that the minister would then accept, were the minister satisfied that in fact the operator had the financial wherewithal to provide that self-insurance. Also, the operator would have to provide appropriate promise of payment in order to provide that.
4:25 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
So could the provider essentially put up collateral to the government and say that, rather than find $650 million in an insurance policy, they're going to put up some of their other facilities as collateral on the insurance? It seems like an unusual regime. I'm just trying to understand how that happens.
4:25 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
It's not really its other facilities. For example, if it had cash assets, etc., then it might provide a commitment that those would be available. This is a commitment against its assets. Oftentimes this is more expensive than actual insurance.
4:30 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Last question. Could those assets, then, be a contract for the provision of power? We've seen in feed-in tariffs and laws that a contract to a company for so many megawatts over so much time is seen as an asset, in court certainly. I guess what I'm trying to understand is this. When a company goes to seek its insurance out—and I want to know where the 50% limit is as well—you're saying a nuclear provider can get half of its $650 million out of the promise of other assets. So could it be the contract they have with Ontario Power?
4:30 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
No. Generally it would be something that was more concrete than that, more concrete than just a contract or its revenues from the sale of electricity. It would have to be some kind of an agreement that was provided to the government, that in the event of a nuclear incident, this money would be ring-fenced and would be available for the compensation of victims. The 50% is found in subclause 24(3).
4:30 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
You said that would be more expensive to do than to just simply go and get insurance?
4:30 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
No, I said sometimes it is.
4:30 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Okay. Thank you.
I'm just trying to figure out how they can pony up the money and do that in an unusual way.
Thank you, Chair.
4:30 p.m.
Conservative
The Chair Conservative Leon Benoit
On clause 24, is there anything further?
(Clause 24 agreed to on division)
(On clause 25—Approved insurer)
Is there any discussion on clause 25?
Mr. Cullen.
4:30 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Chair, if I can, what is the necessity for this?
To our witnesses, why would the minister be given this power to designate? It says, “in the opinion of the Minister, is qualified”. Is this just simply saying that not all insurance companies will be qualified, or does it allow the minister to go beyond traditional insurance companies to allow this to be the insurer? It says, “The Minister may designate as an approved insurer any insurer or association of insurers that, in the opinion of the Minister, is qualified”. Why give the minister this power? Is there not an industry standard as to who can insure these types of programs?
4:30 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
Nuclear liability insurance is quite a specialized area, and it's important that the insurers who provide insurance in this area subscribe to an appropriate policy and understand the obligations pursuant to the Nuclear Liability and Compensation Act. So it's left with the minister to make that determination to authorize those insurers.
4:30 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Without there being any type of criteria being attached to clause 25, does it not open up a loophole, not with the current minister but with some future minister, to approve and ensure something that's actually below industry standards? It seems like a dangerous clause to me somehow, that there isn't attached to clause 25 any type of stipulation as to what a qualified insurer would be. It simply says the minister has the power to decide who's qualified and who's not.
When you folks were drafting this bill, was there any concern raised about the minister's being given the power to say, “Insurer X over here has no experience...”? And that scenario could exist, where the minister says “Even though you have no experience in the nuclear liability regime, I'm going to let you insure this nuclear power plant.” Is that not foreseeable?
4:30 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
It would be up to the minister to ensure there was due diligence of the insurer that was making the application, to ensure that, for example, the insurer had the financial wherewithal and was able to meet the requirements of the legislation.
4:30 p.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
But do you see my point? I understand that one would hope the minister would go through that type of rigour, but on the face of it, clause 25, under a more nefarious minister, could simply.... It grants quite a bit of power. It says that in the event of an accident, the minister beforehand would have decided who is qualified to insure. Do you see my point about attaching any type of criteria? Clause 25 doesn't say, “go to leading international standards on insurers”. It just says the minister has the power to do it, and one hopes the minister would do as you said, but it doesn't exist anywhere in this legislation. Therefore, it sits in the hands of the minister entirely.
4:35 p.m.
Director, Uranium and Radioactive Waste Division, Electricity Resources Branch, Department of Natural Resources
Most of the current insurers are regulated by the Office of the Superintendent of Financial Institutions, so that's one of the considerations today in terms of the financial wherewithal of the insurers. But there are other elements of providing nuclear liability insurance that are important, so that's why the minister is given that authority.