Natural Resources Committee on Nov. 24th, 2016

[The Chair, Liberal, James Maloney]

I call the meeting to order.

Good morning, everybody. Welcome. I'm glad to be back at it today.

We're pleased to be joined today by two organizations and three individuals. From Ontario Power Generation, we have Mr. Glenn Jager, president and chief nuclear officer. Thank you for coming, sir.

From the Office of the Auditor General, we have John Affleck and Julie Gelfand. Thank you both for attending today.

What we will do is turn the microphone over to each group for a presentation of up to 10 minutes. You can speak in either official language. There are earpieces, which I encourage you to use for translation services. You will be asked some questions in French, and of course you're welcome to deliver your remarks or answer questions in French as well.

Perhaps, Mr. Jager, I'll start off with you, if that's all right.

[Glenn Jager, President and Chief Nuclear Officer, Ontario Power Generation Inc.]

Yes, it is.

Thank you, Mr. Chairman and committee members, for inviting me to speak with you today. It's an honour.

I'd like to talk about our nuclear industry, its future, and the role of Ontario Power Generation in that. It's an important sector, and it contributes to the sustainability and well-being not only of Ontarians but of all of Canada.

My name is Glenn Jager. I'm the president of Ontario Power Generation's nuclear fleet, and its chief nuclear officer. I'd like to start my remarks with a little-known story about an American admiral and his prediction.

Admiral Hyman Rickover was known as the father of the nuclear navy. He served there for 30 years. He really set in place a lot of the standards and principles that we use to this very day in the nuclear industry.

In 1957 he delivered a speech entitled “Energy Resources and Our Future”, in which he talked about energy and how its effective application drives civilization.

He observed that in 1850, 95% of the energy consumed came directly from humans and animals, pulling carts and things. Only 5% came from fossil fuels. A century later he noticed that was completely reversed, with most of the energy coming from fossil fuels. It was an incredible turnaround in just 100 years.

He then questioned what the next 100 years would look like, from 1950 to 2050, and hypothesized that the future would be increasingly more energy intensive, driving the economy and the quality of life.

Renewables and nuclear would become energy superstars, he said, and historians would someday refer to this as the “fossil fuel age”, the golden age of fossil fuels. He predicted this in 1957.

Think about that and about what's happening now. If we achieve Canada's carbon reduction goal in 2050, that will end the use of fossil fuels. At a minimum, it will substantially reduce it and change its role significantly in our economy.

Nuclear power has played a big role in that. It's helped Ontario move off coal. In 2014 we burned our last piece of coal to make power. Today more than half of Ontario's power comes from its three nuclear stations, and nuclear energy generates about 15% of the country's electricity.

This isn't a well-known fact, as Dr. John Barrett, president of the Canadian Nuclear Association, pointed out last week to you, and he's right. He is correct in saying, too, that nuclear energy is a stable source, and it's not dependent on fossil fuels.

This is an important piece of the nuclear story. Its power is 99.7% greenhouse gas-free.

To echo Dr. Barrett, in 2015 OPG stopped using coal to create electricity. This was the largest single climate change initiative in North America. It brought about the disappearance of the smog days in southern Ontario and the greater Toronto area.

OPG manages, and firmly believes in, a balanced energy portfolio that includes wind, hydro, gas, and nuclear, but it has to be said that it was the bringing back on line of the four reactors at the Bruce station and the two at Pickering that allowed us to stop burning coal and still maintain a clean energy system.

Nuclear is clearly a superior source of energy, especially at a time when Canada and so many other countries around the world are searching for ways to limit their greenhouse gas emissions. It's a clean source of energy, and it's also a cheaper option. OPG's power is low cost. It's about 40% lower than that of other generators in Ontario. It's a made-in-Canada technology, with a deep and diverse supply chain that's anchored right across the country.

Radioisotopes produced by our reactors have many applications in agriculture, medicine, industry, and research. Their applications vary from insect control to food preservation, and from detecting groundwater resources to the diagnosis and therapy of medical conditions worldwide.

Nuclear is helping to drive our economy and the well-being of people around the world.

Today OPG is a much different company from when it was first established in the late 1990s. We're smaller, we're more efficient, and we're more outwardly focused. We have converted two of our coal stations in northwestern Ontario to renewable biomass. The move saved jobs and contributed to reinvigorating local economic development.

We rely more on partnerships and strong community relationships to help us deliver our mandate. As a result, we have made strong commitments to mutually beneficial working relationships with indigenous communities near our current and future operations. For example, we have put in place a formal framework to assess and resolve historical past grievances. OPG has reached 23 past grievance settlements with 21 first nations communities, closing out all of our historic grievances. In turn, these efforts have resulted in a series of generation development partnerships.

Let me tell you about some of these. The Lower Mattagami River project is a $2.6-billion hydroelectric redevelopment partnership with the Moose Cree First Nation. It was completed last year on time and ahead of schedule, and on budget. Nearly 2,000 people were employed during peak construction, including 250 local indigenous people. As well, just last year, in partnership with Coral Rapids Power, a wholly owned company of Taykwa Tagamou Nation, OPG started building the Peter Sutherland Sr. generating station on the New Post Creek in northeastern Ontario. It is a $300-million project and is expected to employ 220 workers at its peak. It is scheduled to begin operating in 2018.

It's important to note, too, that with the help of these local partners and support from the public, OPG has been able to deliver all of these projects on time and on budget.

This is a good segue to the Darlington project that's happening right now. Last month, OPG began work on the first of four units at the Darlington station to undergo a full refurbishment. It's a 10-year, $12.8-billon megaproject that will ensure safe, clean, reliable, and cheap power in Ontario for the next 30 years. It is the largest clean power project in Canada, and an investment in our future.

Again, OPG has made a solemn promise to Ontarians that this project will be delivered on time and on budget. Darlington supplies 20% of all of Ontario's power. It is the lowest-cost provider in Ontario, and one of the best-performing nuclear plants in the world. It does all of this without polluting the atmosphere. To put it into even greater perspective, operating Darlington until 2055 is the equivalent of removing two million cars from Ontario's roads per year.

There are also tremendous economic spinoffs from this megaproject for Ontarians, businesses, and government. It is expected Ontarians will see $14.9 billion in economic benefits. An average of 8,800 jobs will be created annually. There will be an $8.5 billion increase to household revenues, and about $5.4 billion in revenues for all three levels of government.

The Conference Board of Canada estimated the refurbishment and continual operation of Darlington to 2055 will boost the province's GDP by $89.9 billion. This is all for an investment of $12.8 billion, so it's very good news.

What do we see for the nuclear industry beyond Darlington? We see a lot of exciting possibilities. The completion of the refurbishment, which will be delivered on time and on budget, will provide the public with the confidence for OPG to pursue new nuclear options. Among the options and on the horizon are what the industry calls SMRs, or small modular reactors. Right now there are different technologies, manufacturers, and researchers, and they're still developing ways of commercializing these small reactors.

These small reactors could have the potential to provide heat and electricity to remote communities with an industrial operation, such as a mine. They could also be used on an already existing site, connected to the grid, providing clean and stable energy for urban households.

It would mean the end of the huge nuclear plants and the massive upfront cost to construct them. It's more of a graded approach. Much work still has to be done on SMRs, but OPG is well positioned to support the development and introduction of this technology.

Darlington not only has a site licensed that could use these small reactors; it also has the supply chain, the skilled personnel and support, and could serve as the testing ground for all Canadians to explore this future nuclear technology.

In closing, let me say that there is tremendous potential for nuclear energy. Safe, clean, reliable energy is what drives our economy and ultimately the kind of life that we, as Canadians, enjoy.

Building on that thought, I want to reinforce one of the themes of my presentation. OPG is not just a power company; it plays a positive role in the lives of residents right across the province. OPG's aim is not only to deliver low-cost, clean, and reliable power safely; its aim is to generate power with a purpose, one that will make a difference in the communities where it operates, now and for the future.

Thank you.

[The Chair, Liberal, James Maloney]

Thank you very much.

Ms. Gelfand, you look like you're ready to—

[Julie Gelfand, Commissioner of the Environment and Sustainable Development, Office of the Auditor General of Canada]

I'm ready to go.

[The Chair, Liberal, James Maloney]

—to start. Okay. We'll turn the mike over to you.

[Julie Gelfand]

My name is Julie Gelfand. I'm the Commissioner of the Environment and Sustainable Development. My office is located in the Office of the Auditor General.

Mr. Chair, thank you for this opportunity to participate in the discussions as part of your study of the nuclear sector. This panel is timely in light of my recent audit report on the inspection of nuclear power plants, which was tabled in Parliament as part of my 2016 fall reports. Joining me at the table is John Affleck, the principal responsible for the audit.

My role as commissioner of the environment and sustainable development includes conducting performance audits to independently assess how well the federal government is fulfilling its commitments to protect the environment and to foster sustainable development.

Within my seven-year mandate, one thing that I have been doing, which may be of interest to your committee, is a series of audits relating to Canada's natural resource sectors. In addition to my audit of the inspection of nuclear power plants, which I will talk about today, I completed an audit last year on the regulation of oil and gas pipelines. I also intend to examine in the future more resource sectors, which may include mining and aquaculture.

[Geng Tan, Liberal, Don Valley North, ON]

There's a problem with the translation.

[A voice]

Is it not working?

[The Chair, Liberal, James Maloney]

Go ahead, please.

[Julie Gelfand]

As you know, nuclear power generation in Canada, produced through the country's four operating nuclear power plants, is an important source of electricity for Canadians. However, unfortunate events such as Chernobyl and Fukushima are constant reminders that this industry is not without risks and needs to be well managed.

This is why I undertook an audit of the Canadian Nuclear Safety Commission. The commission regulates the use of nuclear energy and materials under the 1997 Nuclear Safety and Control Act. The commission does this so that the environment and the health, safety, and security of Canadians are protected, and Canada's international commitments on the peaceful use of nuclear energy are implemented.

Verifying that the industry is complying with all laws, regulations, and conditions is a core part of what regulators have to do. My audit focused on site inspections, which are one of the key verification tools used by the commission to assure Canadians that nuclear power plants perform safely and comply with regulatory requirements and licence conditions.

At this juncture, I think it is worth mentioning that this was an audit of the commission, and not of the operators of nuclear power plants, such as OPG, who are responsible for their safe operation. My audit pertained to the commission and what it is required to do to inspect facilities, and not on the operators of nuclear power plants as such.

Also, the audit did not cover inspections of nuclear waste facilities.

In our audit, we found that the commission conducted 226 site inspections of nuclear power plants that it had planned over the two-year period that we looked at. We examined a sample of 42 site inspections, the majority of which reported compliance issues, so we looked at how they did their inspections. We found they did 226 of them. We then looked very closely at 42 site inspections and found that the majority of them had non-compliances, so when the inspections were done, non-compliances were found. However, we found that the commission followed up with the licensees, the operators, 100% of the time. Every time there was a non-compliance, the commission was on it. The commission therefore ensured that all the issues were being addressed, so that was a tick on the good side for the commission.

However, we found that it was unclear whether the Canadian Nuclear Safety Commission was conducting the appropriate number and type of inspections, because its planning process was not very well documented. The commission could not show that planning was rigorous, systematic, and risk-based to verify that nuclear facilities were complying with all regulations.

Let me give you an example. The commission had a five-year plan intended to set out the minimum number of inspections required to verify compliance, but this plan changed into more of a list of all possible inspections. The list that was supposed to be the minimum number of inspections morphed into becoming a list of all the possible inspections we could do. That is not particularly systematic or rigorous. Particularly when we're talking about the nuclear industry, which has issues around safety, we need to make sure it's operating safely. From our perspective, the commission should have a five-year plan. The minimum number must be done in these five years, and it shouldn't just become a wish list of inspections.

We also found that the commission carried out only 48% of the inspections set out in that plan. Because of that, the commission also could not show that it had allocated the appropriate number of staff to carry out inspections. When we went to the nuclear stations and we spoke to the inspectors on site, at every single site we went to, the inspectors indicated to us that there were not enough inspectors on site, from their perspective.

Furthermore, we found that three-quarters of site inspections were conducted without an approved inspection guide. The commission's rules are that when an inspector goes out to do an inspection, that inspector must have an approved inspection guide, and we found that 75% of those site inspections were conducted without an approved inspection guide. An inspection guide is essentially a checklist that an inspector uses during the inspection, and it is intended to set out what needs to be checked, basically, to make sure that the inspectors cover everything. We did not find those approved guides in three-quarters of the site inspections that were completed.

We also found that the commission did not provide clear guidance to inspectors on which documents to retain, so as they're doing their inspections they've got notes, checklists, a handbook—field notes, basically as they're walking through and doing their inspection. Because this information was not retained in some cases, the commission could not show that its inspectors had looked at everything that was supposed to be verified. It could not assure us, therefore, that the inspection reports fully and accurately reflected the observations made during inspections.

Last, we found that the commission had a standard time for issuing inspection reports of 50 business days after on-site inspection activities. The commission's target was to meet the standard 80% of the time, but it did so only 64% of the time. This is important, because licensees like OPG have a certain number of days to respond to the commission with an action plan addressing the compliance issues, but this time period only starts once the operator receives the final inspection report. If much of the time it's not receiving it on time, it takes longer to fix the non-compliance issue.

Overall, our audit concluded that the commission could not show that it adequately managed its site inspections of nuclear power plants. We did make a number of recommendations to the commission, including to implement a well-documented, systematic, and risk-based planning process, a five-year plan with a minimum number of inspections—not a potential list of inspections—that followed their own procedures, meaning with approved inspection guides for every inspection.

The commission agreed with our recommendations, and its responses are published in our audit report. I also understand and have seen that the commission has posted an action plan on its website, indicating that it has already started to address our recommendations. However, we have not audited those actions.

Mr. Chair, this concludes my opening statement.

We look forward to answering the committee's questions.

Thank you.

Thank you very much.

[The Chair, Liberal, James Maloney]

Thank you very much.

Mr. Lemieux, you're first on the question paper.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

Welcome back. We nearly had time to miss you even though you were only away for one meeting. I can tell you though that Mr. Barlow did a very good job replacing you. I would also like to thank the witnesses for being here with us today.

My first question is for the spokesperson for the office of the Auditor General of Canada.

Given my expertise in engineering and my experience as a professional helicopter pilot, I have always worked in environments where quality control and strict compliance with procedures were essential. In short, I have always been in an environment in which there was an obligation of results, but not an obligation of means. It is clear to me that the people in the nuclear safety sector in Canada have this same obligation of results, that is, to ensure the absolute safety of Canadians.

Representatives of the Canadian Nuclear Safety Commission have appeared before our committee. They told us that Canada's nuclear sector is one of the safest in the world. Canada is very highly regarded in the international nuclear community.

Finally, I reviewed the report from your office entitled “Report 1—Inspection of Nuclear Power Plants—Canadian Nuclear Safety Commission”. I note that, since 2000, the commission has been conducting inspections without an approved guide. You stated that there are fewer inspections and that they do not comply with systematic and well-documented inspection procedures.

Can you elaborate on how the Canadian Nuclear Safety Commission responded to your recommendations?

[Julie Gelfand]

I have been the environment and sustainable development commissioner for two and a half years. After I finish my reply, I will give the floor to Mr. John Affleck since he has worked with these organizations much more than I have.

No one likes to be audited by the auditor general or the commissioner. Departments do not like us coming onto to their premises to see if they have done what the are supposed to do. There are, however, a number of ways of reacting to an audit by the auditor general or the commissioner. For example, officials can think that, since they are managing a large organization, they cannot be aware of everything that happens in it. Or a deputy minister of an important department can be grateful that the auditor general or commissioner has audited a small part of the department's operations and made recommendations. The deputy minister can also show openness and look at the audit as a way of learning something.

From what I have heard, this is not what happened with the Canadian Nuclear Safety Commission. According to Mr. Affleck, it was quite difficult to work with this organization. I would say that the commission was aggressive with the auditors.

My last report covers three audits. To guide you on these matters, I would invite you to look at the Fisheries and Oceans Canada audit. You will see how the department responded to our recommendations. You can compare the response of Fisheries and Oceans Canada to that of the Canadian Nuclear Safety Commission.

Fisheries and Oceans Canada showed openness. If an organization is audited by the auditor general, I would say the best reaction is to agree and say they will do everything they are told because these audits are important and serious.

If you look at the Canadian Nuclear Safety Commission's response, you will see there is a kind of code. It says it agrees with our findings, but that it will continue on as before and that it is doing everything correctly.

Since French is my second language, I hope I have been clear. I think your question is very important.

I will now give the floor to Mr. Affleck.

John, can you add to that?

[John Affleck, Principal, Office of the Auditor General of Canada]

Sure. As Julie mentioned, I have a fair bit of experience—

[Julie Gelfand]

You have nearly 30 years of experience.

[John Affleck]

—doing performance audits, and this was a challenging one, to say the least, but in the end I'd have to say it was positive in the sense that we came to “yes” and we did get the commission to agree to all our recommendations. Mind you, if you look at the responses, the first paragraph is in total agreement, then the second paragraph goes on to extol all the good things that the commission is doing.

Probably the most challenging thing for the team is the commission is full of really experienced, really good people, and over time it has developed a corporate culture of relying on professional judgment. You'll note several observations in our report to that effect, and in a precision industry, as you suggested, Mr. Lemieux, we'd expect things to be very rigorous, very systematic, very documented, very precise. That led to a healthy debate about the value of doing that, but we would expect no more from the regulator than we would from the industry.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

For your part, Mr. Jager, what do you think of the commission's work?

[Glenn Jager]

Let me start with this. There are two principles, and principle number one—I agree with Ms. Gelfand—is that safety for the operators is our first priority always, and our plants are safe. It's built into our operation first and foremost. We understand very clearly that is our accountability to all Canadians. It's in our procedures. It's in our training. It's in our operations, just as you mentioned for pilots. It's in our DNA, quite frankly, and everybody in OPG understands that, and that's how we operate. That's a basic first principle.

The second principle, I would say, is that critical review is very important to the nuclear industry in that it improves operations and ensures safety. As operators, certainly at Ontario Power Generation we view ourselves as an open and transparent organization. Everything we do is there for anybody to see. I'd invite anybody here to come to see our operation. We regularly receive audits and reviews from many different groups, including the CNSC. The International Atomic Energy Agency, an international regulator, comes to look at our operations. We have the World Association of Nuclear Operators, the Institute on Nuclear Power Operations, and all the provincial ministries that govern our operation. There are many regulators that come to look at our operation, including our own internal audit structure as well.

All this critical input is very important and very essential to safe operation. That's a fundamental principle for nuclear power operations, and good regulation really means good operation, so we value the role of the regulator. We understand the regulator's mission and we respond to any input that the regulator has for us. Certainly, and very obviously, we comply with all the conditions and licence terms that are provided to us.

The CNSC has the ultimate authority with regard to our operation. Notwithstanding the fact that we operate safely, and that is our primary objective, the CNSC has that authority. They can issue orders, audits, oversight, and we value that.

The last thing I would say about the CNSC is they have site inspectors who are there all the time, continually reviewing our operation, so, yes, they perform audits. These are structured reviews of their program and licence conditions, but in addition to that, they have site inspectors and directors who are there all the time looking at our operation, ensuring compliance, and giving us feedback where they find issues. We promptly and immediately follow up on all that feedback where we find it. We see that as a critical part of safety.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Strahl, we'll go over to you.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you Mr. Chair.

Ms. Gelfand, thank you for your presentation. It was very interesting. Unfortunately, I will have to continue in English.

In your news conference on Parliament Hill regarding your report, you called your findings “serious” and “not acceptable” and said they should not happen when we're dealing with nuclear power plants.

I found your response to Mr. Lemieux very enlightening when we contrast it with the testimony that we had from Dr. Binder of the CNSC here before the committee. I would characterize it as downplaying the situation as administrative oversight with no impact on safety.

I have a press release here from OPG about Darlington being rated among the world's safest and best-performing nuclear stations in the world. You mentioned in your presentation that the things that come to mind when Canadians think about nuclear power are often the tragic accidents that have happened in Chernobyl and Fukushima, so we want to make sure that we are putting this in perspective but also that we are treating it seriously.

Can you speak to the relative safety of Canadian nuclear power compared to the safety of plants elsewhere in the world? Could you also perhaps expand on whether this was strictly administrative, or could it lead to problems in the future? I want to make sure that we characterize this correctly.

[Julie Gelfand]

I'll answer first that this was not an audit of the safety of the plants. This was an audit of whether or not the Canadian Nuclear Safety Commission followed its own rules. It's very clear.

It's clear to us as well that it's likely the industry is ahead of the regulator. I tend to agree with Mr. Jager that within the industry, safety is in their DNA. I spent a few years in the mining industry. It is in their DNA. It never used to be in the mining industry. It is now in their DNA.

The industry is making sure that it's safe, but the regulator has a role to play. We looked at the role of the regulator. I also want to make it really clear that we looked at one tool the regulator uses. The Canadian Nuclear Safety Commission is looking at its logbooks every day and has meetings with them every day and is using all these other tools, but it says in its own documents that the site inspections are the primary tool. They have a bunch of other tools, but the site inspections are the primary tool they use, so we looked at the primary tool. Unfortunately, we couldn't look at everything.

It's not just administrative. We saw more than one five-year plan for minimum site inspections, so which one is it? In an industry that requires precision, that probably lives with precision, to have a regulator that is not as precise, as rigorous, as systematic as the industry, is the part that's not acceptable from my perspective. They have to be as rigorous as the industry, if not more so, and to come and show me three rolls of five-year plans.... Which one is it? As an average Canadian, I don't think it's right from the regulator's perspective to have a five-year plan of the minimum number of site inspections morph into something that's not really the minimum but kind of the whole list of possibilities.

I'm going to try to answer the question. I can't tell you the safety of our plants. That's in the hands of the operators. We looked at one tool that the CNSC uses, the primary tool. We found some gaps. Are they purely administrative? I would say no, but they're still doing the site inspections. They're following up 100% of the time when they have a non-compliance. They're not doing them with approved guides, so it's like a pilot who has a checklist not having the checklist. Most pilots have a checklist. The operators are the pilots in a sense, but the inspector is also kind of a pilot for his site inspection and should have a checklist to cover everything. I want to know that the inspector is perfect, if you know what I mean. I want the industry to be perfect. It's in their DNA, but you would expect the regulator to be just as precise, just as risk-based, just as systematic.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Right, and I think, having been around this for a while, that you're right. Usually when a press release comes out from a government department that finds itself under the microscope, they will accept every recommendation of the Office of the Auditor General and move quickly to implement. Certainly that wasn't the first response of the regulator when they were here.

In your opinion, have they moved quickly enough to address the shortcomings that your audit revealed?

[Julie Gelfand]

We found on their website that they have an action plan. I was reviewing it prior to coming here. They indicate they have completed, I think, four out of the five recommendations. They still have one. They have given themselves a deadline.

I can't give you any assurance. I'm an auditor, a verifier. I can't say, “Yes, it's done.” They say it's done. I haven't gone in to check that it's done.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Do you do that?

[Julie Gelfand]

No. That's actually your job.