[Recorded by Electronic Apparatus]
Tuesday, April 22, 1997
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[English]
The Chairman (Mr. Andy Mitchell (Parry Sound - Muskoka, Lib.)): Order, please. Providing us testimony today on Bill C-249, An Act to amend the Nuclear Liability Act, we have three different sets of witnesses: from the Canadian Nuclear Association, Mr. Murray Stewart and Mr. Colin Hunt; from the Nuclear Insurance Association of Canada, Elaine Collier and Steve Hammond; and from Nuclear Phase-Out, the national coordinator, Kristen Ostling. Welcome.
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We would ask each group to have one presenter and to make an opening statement. We'll do the opening statements first, then we'll have a round table discussion, with the members asking questions of one or several of the witnesses. Perhaps we could ask the Nuclear Insurance Association of Canada to go first.
Ms Elaine Collier (Manager, Nuclear Insurance Association of Canada): Good morning.
We don't have a formal presentation to make to the committee today. We were asked to come to the meeting here today because we represent people who provide nuclear insurance in the present marketplace, and it's really to make the following statement.
When we saw the bill come to Parliament for increasing the limit to $500 million we canvassed our existing marketplace for worldwide nuclear capacity, and yes, under the existing terms and conditions we are able to supply the insurance. We've had very positive indications it would be available.
The Chairman: Thank you. We appreciate your being here and we'll probably have some questions as the testimony goes on.
Now the Canadian Nuclear Association.
Mr. Murray J. Stewart (President, Canadian Nuclear Association): Good morning. It's again a pleasure for the Canadian Nuclear Association to be appearing before your committee. I'm president and CEO of the CNA, and I'm joined today by Mr. Colin Hunt, director of policy.
I will just remind you that the Canadian Nuclear Association was formed in 1960. It's a non-profit voluntary group to promote the peaceful uses of nuclear energy and technology. Our members comprise nearly a hundred corporate members, including electric utilities, universities, engineering consultants, banks, labour unions, professional associations, reactor component manufacturers, isotope suppliers, and uranium mining companies.
I'll start by saying we find it a bit unfortunate that this private member's bill is actually before your committee. We believe there is a real need to update the NLA, but Bill C-249 is not the way to do it. As we will recommend to you in our brief, we think there is a better way to go forward, such that our industry and all the stakeholders are better served.
Bill C-249 proposes only two changes to the act. The first is to increase the liability insurance from $75 million to $500 million. The second is to require the federal government to compensate victims for damages in excess of that maximum liability.
We agree that the current statutory amount of $75 million may be inadequate. We also agree that the federal government should be specifically obligated to cover damages in excess of that liability amount. It is only implied in the current NLA. However, we fundamentally disagree with the passage of this bill as tabled before this committee. It is our view that the NLA is in need of a comprehensive review and to allow Bill C-249 to become law would neglect all other areas of the NLA.
The passage of this bill would also be inequitable to the nuclear industry and fail to serve the needs of directly affected stakeholders. Only a strengthened nuclear liability regime, provided after a thorough review, can meet these objectives.
The liability act of 1976 was passed in 1970 and proclaimed in 1976, after the financial and economic arrangements required by the act were completed. The act made operators of nuclear facilities solely liable for any accident consequences at their facilities. In doing so the act performs a large service for Canadian citizens living near a nuclear facility. In the event of an accident, those who are injured do not need to prove negligence to receive compensation. All they need to show is the degree and extent of their injuries or losses. There's no need for complainants either to find fault with the operator or to prosecute a third party before receiving compensation.
In addition to making the operator solely liable for accident consequences, the act limited the required liability insurance coverage to $75 million for each facility. In the event of an accident the federal government was to create a nuclear damage claims commission, which was empowered to make recommendations for compensation to accident victims. The commission was not limited to recommending awarding no more than $75 million. Any excess awards are implicitly intended to be covered by the federal government. This interpretation of the act has been supported recently by the Ontario General Division Court decision of Justice Blenus Wright in the trial of Energy Probe, City of Toronto and Rosalie Bertell v. Attorney General of Canada.
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It is clear the Nuclear Liability Act was designed and passed into law by the federal government to foster the development of the nuclear industry in Canada. Its purpose was to remove obstacles placed in the way of nuclear power development because of the institutional and financial inadequacy of the insurance industry. Insurance companies must have sufficient assets on hand to meet claims. We actually question the insurance industry and Canada's ability to meet the provisions of Bill C-249.
Recognizing the limitations of commercial insurance, the federal government deemed it necessary to regulate nuclear insurance in such a manner as to protect Canadians from the consequences of nuclear accidents and to ensure their claims were honoured rapidly and without litigation, while still providing insurance companies with confidence that neither the claims they might have to honour nor the period over which they would have to honour them would be unlimited.
One of the beneficial aspects of the NLA has been that because liability was limited, with the federal government being left responsible for excess damage claims, the federal government has had a strong vested interest in nuclear safety. To ensure nuclear safety would remain paramount among nuclear licensees, operators are regulated in all important aspects of their facilities by the AECB and its on-site inspectors. This may be interpreted as the federal government's insurance policy to avoid a nuclear accident and its consequences, with the premium being paid through fees paid by the regulated industry and its investment in safety equipment.
In presenting Bill C-249 during the second reading in mid-February, a number of errors crept into the debate in the House of Commons that we believe have mischaracterized both the nuclear industry and the NLA. It is not accurate to compare incidents reported to the AECB with the accident at Chernobyl in 1986 or that of Three Mile Island in 1979. It is not accurate to state without expert knowledge that Ontario's nuclear facilities are not built to withstand the magnitude of earthquakes now anticipated in this region. There was also great misunderstanding regarding the lack of householders' insurance. If the insurance industry issued such policies, a nuclear accident would allow double indemnity, as householders are already protected under the NLA.
We believe a grave disservice to Canadians and to this government has been done by suggesting the sole goal of nuclear operators is to produce electricity at the lowest possible cost. It is invidious, to say the least, to suggest responsible operators would trade off safe operation for short-term economic benefits. No one is more aware than an operator that unsafe operation means at the very least the economic loss of the power plant, its electricity production, and the possibility of death or injury to workers.
In his decision of finding of fact, Judge Blenus Wright, the one I noted before, explicitly stated that the development of a strong, constantly evolving nuclear safety culture within our industry was completely unrelated to the NLA or its liability limitations.
Bill C-249 will do little to improve the financial protection for Canadians in the event of a nuclear accident. The bill does little to define the powers of the Nuclear Damage Claims Commission. It does nothing to recognize that different types of facilities covered by the Nuclear Liability Act pose different types of risks and that these different types of facilities should be covered differently. The bill fails to offer any alternative methods for improving insurance liability limits while allowing licensees flexibility to meet their liability requirements.
We believe that for more than ten years there has been a clear and acknowledged need for a comprehensive review of the NLA. The sponsor of Bill C-249 has touched on only one or two of these areas needing review. Other areas requiring review include: alternate forms of financial security for compensation; separate liability limits for different classes of facilities; allow the AECB to have discretion to set liability limits for facilities; define the limitation of liability for both personal and property damage; require the formation of the Nuclear Damage Claims Commission rather than leave it at the discretion of the Governor in Council; revise the act to consider damage claims in other countries; revise the act to meet international conventions; define clearly the damages to which the NLA provisions apply; conduct a review of the Nuclear Insurance Association of Canada to ensure sufficient Canadian funds are available to meet liability limits; develop immediately the rules and powers of the Nuclear Damage Claims Commission; and clearly enunciate that the Government of Canada will honour damages in excess of the statutory limits.
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There are other areas of the Nuclear Liability Act in need of refinement or better definition, but I think this laundry list serves to illustrate just how far C-249 fails to really give a complete review of the NLA. There has also been no clear attempt to draw the Nuclear Liability Act into accord with similar legislation in other countries.
The Canadian Nuclear Association is aware that a complete review of the Nuclear Liability Act has been proceeding for some time within NRCan. We observe that this review would have been completed years ago if the review process had not been interrupted by the attempt of the various anti-nuclear groups to have the act declared unconstitutional.
The federal government plan presented to you last week would appear on first examination to cover all the major areas where the NLA needs review and not just the limitation of liability aspects.
It is our view that this review of the act should be allowed to be completed so that a proper and full amendment to the NLA can be brought before this committee. We are concerned that allowing C-249 to pass could mean aborting this comprehensive review without introducing any meaningful reform to nuclear liability in Canada.
We suggest, however, that the current review of the NLA being conducted by the government would be more meaningful if all industry members covered by the provisions of the act were consulted. Our members do not believe it is appropriate to table legislation without first consulting with affected members of our industry, its workers, and the communities that host these facilities.
Thank you. I would be pleased to answer any questions.
The Chairman: Thank you, Mr. Stewart.
Ms Ostling.
Ms Kristen Ostling (Coordinator, Campaign for Nuclear Phaseout): Good morning. My name is Kristen Ostling, and I'm the coordinator for the Campaign for Nuclear Phaseout. I want to thank you for this opportunity to address this very important issue raised by Bill C-249.
I'm also taking this opportunity to table some documents. One contains comments byDr. Gordon Edwards of the Canadian Coalition for Nuclear Responsibility, and Irene Kock, who's a researcher with the Nuclear Awareness Project, has asked me to table the draft of the Province of Ontario's nuclear emergency plan.
First of all, I'd like to give you a little bit of background about the Campaign for Nuclear Phaseout. The Campaign for Nuclear Phaseout, or CNP, is a non-profit alliance of safe energy and environmental groups from across the country. Since its inception in 1989, over 300 organizations from across Canada have endorsed the Campaign for Nuclear Phaseout.
As previously mentioned, there are two important features of this bill: first is the raising of the nuclear liability from $75 million to $500 million. The current $75 million limit on operator liability is grossly inadequate in light of authoritative estimates of the damage of a reactor accident. These estimates have run into the billions of dollars. Moreover, under the Nuclear Liability Act manufacturers of nuclear reactor components are explicitly excluded from liability. In fact, this has not changed with Bill C-249. It's something that should be amended within the act if it's going to stand.
Bill C-249's increase in liability represents a modest reform by international standards. In the United States and other countries, upper limits on the liability of the nuclear industry in the event of an accident are in the billions of dollars. For example, the U.S. limit is currently set at $7 billion U.S., which is an increase from the original amount of $560 million.
The other important change is that proposed section 27 of Bill C-249 would change the word ``may'' to ``shall''. In other words, this proposed section would require the Crown to pay additional compensation to injured parties from public funds if the Governor in Council decides liability will exceed the insured amount.
I'd like to now turn to the question of the possibility of a nuclear accident in Canada, of a Chernobyl in Canada, if you will. Could a nuclear accident like Chernobyl happen in Canada? A number of official government documents in Canada have not ruled out this possibility. Ontario Hydro's own estimate of the chances of an accident is one per 10,000 reactor years. A simple calculation extrapolating this result over the remaining projected lives of all existing Ontario Hydro reactors gives the odds of a Chernobyl accident happening in Ontario as one in 17 - in other words, better than rolling snake eyes on a pair of dice. The same odds of one per 10,000 reactor years were also given by Soviet experts for their own reactors just months before the reactor core explosion at Chernobyl.
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In 1989 the Atomic Energy Control Board admitted in a submission to the Treasury Board that CANDU plants cannot be said to be more or less safe than other types. Every year there are hundreds of significant events at Canada's nuclear power plants. I think this point is important because it shows there is the possibility of accidents at reactor sites. That's why in the House of Commons this figure was cited, to show there are safety issues. I don't think it's an irrelevant point to raise, and so I raise it again. In the 1996 calendar year there were 800 unusual incidents at Canada's nuclear power plants, 411 of which required reports to the Atomic Energy Control Board. This was up from 786 unusual events in 1995.
Every CANDU reactor shares with the Chernobyl reactor the same pressure tube design flaw called positive void co-efficient. Positive void co-efficient means that when a pipe or a pressure tube breaks in or near the core of the reactor, there's a tendency to have a power surge immediately following. The problem affects all reactors that use pressure tubes. The Chernobyl reactor, like the CANDU, had pressure tubes inside the core. Apparently, although no one knows for sure, one of the Chernobyl pressure tubes burst, and there was a terrific power surge leading to an explosion, which blew the roof off. That power surge could have been caused in part by the bursting of a pressure tube.
Pressure tube problems have plagued CANDU reactors for decades. The Atomic Energy Control Board states that nearly all of Canada's nuclear reactors share the design flaw that shut the Pickering generating station in December 1994. There have also been similar pressure tube problems in South Korea and at the Bruce nuclear generating station.
I'd like to turn now to the economic costs of a nuclear accident. Imagine you were affected by a nuclear accident. For example, if winds deposited radioactive fallout over your home, your business, farm or workplace, making them uninhabitable for tens or hundreds of years, you and your loved ones might contract cancer or your offspring suffer genetic damage. Your property could be destroyed and you could face financial ruin, and there's no way to protect yourself. Every home or property insurance in Canada excludes a nuclear accident from coverage. No other industry has this kind of protection against liability. No other industry has the freedom to destroy the health or property of third parties who can neither insure themselves beforehand nor sue for compensation afterwards.
A severe nuclear accident would be devastating to the health and prosperity of tens of millions of people in the Great Lakes region and beyond.
In terms of the costs of the nuclear accident in Chernobyl, these have been well documented. Official estimates put clean-up costs for the first three years at $19 billion. The Soviet government projected in the 1980s that the costs would reach $120 billion by the year 2000, and a more recent NGO study estimates the cost of Chernobyl will reach $358 billion.
It's important to note that the Pickering nuclear power station in Ontario is closer to the city of Toronto than the Chernobyl power station in the city of Kiev. About 135 people were evacuated from the 30-kilometre exclusion zone around Chernobyl. In comparison, the population within a 30-kilometre radius of Pickering is 10 times greater, or approximately 1,496,600 people. There is a larger population within a 30-kilometre radius of Pickering than there is for any other commercial nuclear reactor in the world. Given this population density, the cost of a severe accident at Pickering would be astronomical.
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We know the human environmental impact of a nuclear accident would be severe. Six years before Chernobyl, the report issued by a select committee on Ontario Hydro affairs concluded that a nuclear disaster would have widespread impacts on human and environmental health. I quote from their study. They said:
- It is not right to say that a catastrophic accident is impossible... The worst possible
accident...could involve the spread of radioactive poisons over large areas, killing thousands
immediately, killing others through increasing susceptibility to cancer, risking genetic defects
that could affect future generations, and possibly contaminating large land areas for future
habitation or cultivation.
The effects of radiation around Chernobyl have been quite severe. A consensus emerged amongst exports at a 1995 World Health Organization conference that radiation from Chernobyl is to blame for increased cancer rates in the three states nearest to the Chernobyl accident. The spread of radioactive contamination went quite far in the Chernobyl accident.
I contacted some of my colleagues within the Campaign for Nuclear Phaseout before this presentation and I wanted to give you the perspective of some environmentalists on the nuclear liability issue. First of all, Norman Rubin, who is the research director of Energy Probe, has said:
- No federal legislation we are aware of is more perverse than this one, or more deserving to be
struck down: in fact, the moment it is struck down all Canadians would benefit. First, we would
at least have a measure of financial security, because if we lose our homes, property, or means of
livelihood due to a nuclear accident, those responsible would be forced to pay.
- On issues of nuclear liability, the environmental movement completely agrees with the
economic analysis of the World Business Council for Sustainable Development. (WBCSD).
The WBCSD argued for internalizing costs in order to send the right signals to the marketplace.
Unrealistically low and artificially controlled liability insurance coverage against a nuclear
accident are contrary to the efficient operation of the market place. It is in no one's interest to
continue to promote subsidies either directly as AECL currently receives, or indirectly through
fairy tale insurance rates.
- Chernobyl was not simply another disaster of the sort that humankind has experienced
throughout history, like a fire or an earthquake or a flood. It is a global environmental event of a
new kind. It is characterized by the presence of thousands of environmental refugees; long term
contamination of land, water and air, and possibly of irreparable damage to ecosystems.
About questions of liability in the event of a nuclear reactor accident, I would like to conclude by underscoring the following points.
No municipal, provincial or federal government currently guarantees compensation for victims of a nuclear accident.
Second, every insurance policy in Canada excludes coverage for nuclear accidents.
Third, were the properties and health of Canadians to be damaged in a nuclear reactor accident, manufacturers of equipment that caused the damage would still be free from liability even if Bill C-249 were passed. No other industry enjoys a guarantee of freedom from the economic consequences of damage to health and property of third parties.
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Finally, the current law allowing such a low level of liability amounts to a massive and completely unjustified subsidy to the nuclear industry.
The Chairman: Thank you very much.
We'll turn first to Mr. Canuel for questions.
[Translation]
Mr. René Canuel (Matapédia - Matane, B.Q.): First of all, I would like to ask the representative of the Nuclear Insurance Association of Canada a question. If I understood correctly, you said earlier that it was, in your opinion, acceptable to go from $75 million to $500 million. You made no other comments on this issue. If we had set the figure at $2 billion instead of $500 million in Bill C-249, would you have said the same thing?
[English]
Ms Collier: No, I would not have. Indications are that the worldwide capacity, including the domestic marketplace, under the existing terms and conditions would be approximately, give or take the currency exchange, $800 million to $850 million Canadian at this time.
[Translation]
Mr. René Canuel: Ms Ostling, you talked about Nuclear Phase-Out and you informed me about many different aspects. However, we must not think that there's going to be an apocalypse every day. You take out insurance to cover yourself in the event of damage that is somewhat limited. Should there ever be an epidemic on the national scale, the government will have to assume some responsibility. I would, however, like to thank you because you shed some light on many points.
My second question is for the representatives of the Canadian Nuclear Association. Approximately how many members do you represent?
[English]
Mr. Stewart: Approximately 100.
[Translation]
Mr. René Canuel: You appear to be saying that this bill should not be passed, at least not from this perspective. You are against increasing the maximum amount from 75 million to $500 million. You have said that this bill should be almost entirely revised and you have identified many different aspects that must be taken into account. In your opinion, what are the three most important aspects that should be given consideration? If this bill were to be presented again, what important aspects would you like to see included?
[English]
Mr. Stewart: I will just address your first one, about how Bill C-249 goes from $75 million to $500 million. Maybe the first point is flexibility, because the bill has to cover everything from a Darlington or a Pickering facility all the way through to uranium fuel processors, for instance the processors in Port Hope. It has to cover the Slowpoke reactors at McMaster University. There is a whole spectrum of installations this one bill has to cover.
That's the flexibility I'm looking at as an example of a complete review of it rather than just an arbitrary $75 million to $500 million. To saddle McMaster University with $500 million of insurance, which they would have to start putting in, may not be appropriate for the risk in any possible excursion that could occur there.
That's just one example of why I don't think a very simple bill like the one we have here is appropriate. It could cause tremendous difficulty from the regulatory point of view and from the point of view of the administration of it. It would cause difficulty within the AECB and within all the regulatory side of it.
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That gives you just one example. I don't disagree that the $75 million may not be appropriate for some of the large facilities, but it may be too high for some of the very small facilities this bill also applies to.
Mr. Colin G. Hunt (Director of Policy, Canadian Nuclear Association): I could add to that by saying the Atomic Energy Control Board has already indicated for a number of decades that in their view $75 million in liability was a grossly excessive amount for the very small one-, two-, and three-megawatt types of reactors that are found as university research installations, such as at Kingston, in Montreal, and in Toronto. Quite clearly one size fits all is a very bad approach for nuclear facilities, just as one size fits all is quite often a bad approach for a great many things.
Mr. Stewart: Again, this bill does talk about what happens after the liability limits are exceeded and this sort of thing. I think the clarification of that would be useful to all parties. Right now it's implied but it's not quite clear what would happen if you did exceed the limitation liability on the insurance side. It's a little fuzzy in that respect. That just gives you an illustration of the complexity of the bill and what has to be done properly with all the stakeholders, be they operators or the cities and regions involved in this whole issue.
The Chairman: Mr. Reed.
Mr. Julian Reed (Halton - Peel, Lib.): Thank you, Mr. Chairman.
One of the difficulties we have is risk evaluation; how you really evaluate risk and how possible or impossible it is to connect that properly with something monetary such as an insurance premium for this kind of liability.
It's obvious the technologies around the world vary greatly. When I hear the reactor at Chernobyl being compared with the CANDU, it's rather surprising to me because the Chernobyl reactor is a graphite reactor, all flammable if you put the heat to it, whereas the CANDU is constructed entirely differently. Then of course we have the light water reactors and the whole ball of wax.
That's proving to be a difficulty for the people who are trying to explore international risk acceptance. How do you team up with Russia, how do you team up with the United States, when we in Canada have something that...? It has its own warts too, but they are an entirely different set of warts, essentially, from those of the graphite reactors in Russia.
I wonder if you might comment on how we as laymen can properly see some kind of risk evaluation that's meaningful.
Mr. Stewart: Without getting into a technical discussion here on CANDU versus the other ones, I'll just say out front that I think there are inherent advantages to the CANDU technology, there are inherent advantages to various technologies, with the redundancy in systems, the safety of systems, and this sort of thing. But in many ways, at the end of the day what gives me the greatest confidence is the confidence in the operating companies and the confidence in our regulatory process in Canada, with the AECB: the approach they take, the legislative clout they have, which this committee knows very well has been reinforced and ensured with Bill C-23, and with the on-site inspectors, who are very technically competent. I think this is a key aspect of the Canadian system. There are very strong, technically competent people who are doing this on a continuous, day-in and day-out basis, not only ensuring that these reactors operate safely but also looking at changes, design changes, design upgrades, when they know of things that can be done better.
The whole system we have in place in Canada certainly gives me a lot of assurance that we have a safe process and a safe system.
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Mr. Julian Reed: I guess my question is, how do we mesh that with the other technologies? How do we do some kind of evaluation? Sooner or later we're going to have to look at international premiums for insurance, if you like, or various countries cooperating and pooling money, or setting it aside, in the event of a catastrophe of some sort. How do we do that? Do we come along as good boy scouts and say we'll ante up equally to Russia, for instance, or ante up equally to the United States?
Mr. Hunt: This is, as you well imply, a very complex and involved question. Part of the solution to this is through a system of analysis of nuclear safety at specific facilities in specific locations called ``probabilistic risk assessment''. Increasingly these things are being done to common parameters and with a universal perspective on what good safety and good safety performance are. There is still some disagreement around the world on the relative weighting you put on various kinds of safety factors.
Examples of two probabilistic risk assessments that have been done in Canada are... One was done by AECL for CANDU 6. The other was done by Ontario Hydro for Darlington.
When you compare the probabilistic risk assessments that have been done on CANDU with the sort of probabilistic risk assessments that have been done for pressure vessel types of reactors in the United States or Europe with the probabilistic risk assessments that have been at least partly done for Soviet-type reactors, it becomes quite clear that CANDU reactors enjoy about an order of magnitude of safety over the best of anyone else's technology.
It varies in some categories. It's a bit more in some, a bit less in others. It would really require a reactor physics expert to testify on this properly, but the literature indicates that's about what the margin of safety is with CANDU.
One large reason I know for that is that CANDU has a very large heat sink in it, a very large pool of cold water, which most other reactors do not have in any way, shape, or form. Also, as you remarked, to compare CANDU with an RBMK is a ridiculous comparison in the first place, because as you pointed out, the RBMK is flammable. Also, the RBMK has no containment.
Mr. Julian Reed: Do you have a comment, Ms Collier?
Ms Collier: Yes, I do, in view of the points you brought up.
The first one is about the evaluation of the technology, a comparison of the different types of reactors. We do believe that has been done. We have discussed it at various times when various world pool members have got together, especially in the situation of Chernobyl and what could have happened there, which could happen or not happen with other types of reactors throughout the world, not just Canada.
About the risk pricing, the risk pricing currently applied to Canadian reactors is based on originally U.S. pricing from the American nuclear insurers. Then, in conjunction with the Atomic Energy Control Board, we work together on agreeing on the pricing.
In looking at increasing the limit from $75 million to $500 million, obviously we would have to take that into account. But once you get up into the higher limits it doesn't necessarily mean the base premium increases exponentially. I guess that's all I can really say on that particular aspect of what the ultimate cost of the insurance might be.
The way the Nuclear Insurance Association of Canada views it is as a partnership with the utilities and other types of operations that may purchase nuclear insurance for whatever coverage they might require. That's really to take into account the life and health aspects, which do have a bearing on the liability insurance a pool may provide, but also pure insurance characteristics - and that's the risk management, where we get involved in inspections and working with the AECB, with the utilities, on site. We have our own nuclear engineers and we are able to assess the risk from an insurance perspective, to be able to apply an equitable pricing structure on it.
So we're looking at it from a variety of perspectives.
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Mr. Julian Reed: If there were a catastrophic event, whatever that means, wouldn't you tend to agree it really wouldn't matter how much insurance anybody had because there are some events where the cost would be incalculable?
Ms Collier: When you're looking at it from a total perspective, not only physical damage and bodily injury but also life and health and taking it into the more extensive coverages, such as mental anguish, it is difficult.
Mr. Julian Reed: It's like melting the south polar ice cap and having the ocean come up three metres or whatever it's going to be. This is where it is very hard to evaluate.
By the same token, we need energy, we need electric power. It's energy that moves our livelihoods along.
I sat on the hydro select committee in Ontario for four years, and I'm very familiar with the debate. I happen to be a believer that the direction we should be going in with nuclear power is to make the playing field level. As a matter of fact, I have questions that would be out of order here, questions about the whole business of what is a level playing field in terms of the production of energy and why aren't we making money with these CANDUs. We're employing a lot of people, but we're not making money. Those may be questions for another day.
I'd like to ask the nuclear phase-out coalition a question. I see you've quoted some people I know very well, old acquaintances of mine that go back many years. I'm going to ask you a question I've asked some of these people. We know what you're opposed to. What do you stand for?
Ms Ostling: The kind of alternative we would like to see implemented is renewable energy options for Canada. It's possible to phase out nuclear power in Canada. The number one thing that would decrease our dependence on nuclear power in Canada would be energy efficiency. After that, there's a whole series of energy alternatives that could be used, including wind, solar, and biomass.
I agree with your point about a level playing field. I think one of the things about the Nuclear Liability Act is that it does skew the market because it doesn't help to promote a level playing field.
I have with me a fact sheet on renewable energy options for Canada, and I can give you a copy of that.
Mr. Julian Reed: I -
The Chairman: Julian, two other members want to ask questions.
Mr. Julian Reed: I'm sorry. Thank you very much, Mr. Chairman.
Mr. Harold Culbert (Carleton - Charlotte, Lib.): Thank you, Mr. Chairman.
Good morning, ladies and gentlemen. First of all, I should tell you I'm going to ask some questions perhaps from a little different perspective in regard to the subject matter today. I think, first of all, all of our desires would be to have those assurances to avoid any possibility of major accidents and the need for the liability, the need for the insurance.
Point Lepreau is in my constituency, so I can speak with some knowledge. I must tell you I've taken a great deal of pride in the operation of that plant, because as most would know, until some recent downtime, it had operated as number one, or certainly in the top three, based on the criteria they use around the world. I think that's quite noteworthy.
In the presentation that was made here this morning by the Canadian Nuclear Association, I notice that in the bottom paragraph on page 2 regarding Bill C-249, you say, ``It is invidious to say the least that responsible operators would trade off safe operation for short term economic benefits''. I want to know how this is monitored. What different actions are taken when you talk about Pickering, when you talk about plants' ages as they mature, as they become older? What is the different methodology used in these monitoring safety inspections? As we would know, there would be more demand for it as a plant matures. I would want to know what the economic efficiencies are today in comparison with those of the plants that were built, let's say, 20 years ago or beyond.
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There are other questions that run in my mind. We know we have a lot of energy created by power dams in this country. I want to know where the liability lies in power dam operations should there be a leak or a major flood as a result of those power dams, which has actually happened in various locations around the world. I want to know where the liability of operation is there, first of all.
Mr. Hunt: About the aging of nuclear facilities, it's a case where any mechanical construct or any artificial construct will age over time and over time it will need maintenance performed on it if it is to retain its health and vigour and so forth. The ability of facilities to continue when they become mature, more than 20 or 30 years old, varies considerably from place to place.
I'll give you an illustration. Late last year a British nuclear power plant received its licence to continue for another ten years of operation, and it just passed its 40th birthday. This is two stations, consisting of four units each; eight reactors, 40 years old, and they've been given a licence to continue to 50 years old. In other cases we hear of nuclear facilities that for a variety of reasons are retired after 15 or 20 years.
A large part of nuclear technology is like anything else. The decision to maintain it in good, proper working order or to retire it in large measure lies not in nuclear technology but in the economics of the energy supply in the region to which that facility is supplying its energy. For example, in Ontario nuclear-generated electricity has proven to be very cheap.
I'll give you an illustration of that. With the Darlington nuclear facility the cash cost to produce electricity is under 1¢ a kilowatt-hour. Darlington is the cheapest source of thermal electricity in Canada today. Its total cost is a good deal higher than that, because of course it accumulated a large capital debt to pay for the construction of the plant, but that has nothing to do with its operating cost. Its operating cost is something under 1¢.
When you look at the financing of hydraulic facilities, it is rather similar to that of nuclear power plants. They are large in capital and relatively extremely low in operating maintenance and fuelling costs. So their economics resemble those of nuclear plants, and again, they are largely situational and geographically based. They too age. They too are in need of frequent maintenance and repair.
You asked about the liability scheme for hydraulic plants. That I cannot answer. The only part of the question I can answer here today is that in this century there have been at least a hundred major dam breaches that have caused extensive flooding.
One illustration would be from the same month of the same year as the Three Mile Island accident, which I am sure everyone in this room has heard of. Three Mile Island, it's worth noting, killed no one, injured no one, had no off-site or indeed on-site health or environmental consequences. However, that same month a power dam in the province of Gujarat in India ruptured. It drowned at least 5,000 people in less than 10 minutes - and no one has ever heard of it.
Mr. Harold Culbert: I think that was the point I was making. We have to put it in some sort of balance.
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However, maybe I could ask another question or two. What I'm looking at is regardless of where the plant might be situated, personalities, individual experience, training, differ because of those individuals. What is the pressure or what is the liability on the individual operators in those plants to ensure they are operated safely...obviously efficiently, but safety first is the factor, and without taking any gambles or chances on the safety aspect because of the dollars and cents or the operational efficiencies?
First I want to know who is the watchdog. I want to know it isn't the fox-guarding- the-chicken-house scenario. I want to know we have independent watchdogs that are not in nuclear energy and do not have any particular investment in nuclear energy.
I think ultimately what we're talking about is assurance of safe operation. If I were from the insurance industry I would want to be assured that what I'm investing my guarantees in is in fact operated as efficiently and safely as could be and there would indeed be no errors or opportunities for breakdown. I want to know what those precautions are and what the liability is and how it puts pressure on those individual operators.
Mr. Hunt: What you're looking at is the sources of incentives for safety and for safe operation, and there are two. The first and most important one comes from the needs of the operator itself.
If you are running an electric utility and you go to the time and the enormous expense of building a nuclear power plant, the first thing is when you build that nuclear power plant, whether it cost you $1 billion, $2 billion, $3 billion, or $4 billion doesn't matter, it's a large amount of money. You want to ensure you have safe, good operation so you can recoup that investment. That's the very first thing you have to do. That is absolutely mandatory for you, strictly from an economic point of view. You must maintain safe operation or you won't be allowed to operate.
That motive means Ontario Hydro and New Brunswick Power and Hydro-Québec will strive to run a safe nuclear power plant whether the Atomic Energy Control Board is present or not. That is true for nearly every reactor operator around the world today, certainly all the ones in the western world, and it is now becoming the motivation and the driving force behind the electric utilities in the former East Bloc nations.
Secondly, I would like to add that the Atomic Energy Control Board does not create safety. The Atomic Energy Control Board motivates safe procedure. It encourages safe procedure and it verifies when safe operation is in fact being carried out, and if in its view it's not being carried out it shuts it down. But in and of itself it cannot create safety. That comes from the operator, and it comes because it's in the operator's own interest, and only in the operator's interest, to operate safely.
Mr. Harold Culbert: I have one little question I want to address to the insurance people. Every other industry or every other area you would take on to cover... With my automobile insurance you would look at my statistics and my record to see if I had a good safe driving record and so on and take that into consideration in your premiums. What areas of review do you take in the nuclear energy field in order to establish your premium rates, your guarantees, and what type of pressure do you put on in order to ensure those safe operations that are first and foremost, and what kind of club, if you will, do you wield in those areas?
Ms Collier: It's a three-pronged question there. It goes back to one of the comments I made a bit earlier.
We like to view the insurance we provide as working in a partnership. I should say very positively that we have an extremely good relationship with Point Lepreau in the risk management area with their new risk manager, Neil Duplessis. We are supposed to be underwriting the risk, so we make sure we underwrite it on a regular basis prior to the renewal date.
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In addition to that there are two ways. The first one is our nuclear engineers, either Canadian or foreign, visit the plants on a regular basis and have quite a good working relationship with the management and all the people responsible for various areas of the plants in question. That's the first level.
The second level is the members or the managers who are involved in providing the insurance coverage. What we do is we visit the plants, and we also talk to the people, plus we talk to the utilities on more of a corporate level, in terms of discussing underwriting terms and conditions for the renewal.
In terms of the premium changes per se, there has not been an awful lot of movement in premium pricing for operators' policies, except to say there have been some reductions made over the past few years, and those have been done prior to renewal after having done our job on the underwriting and engineering side. If we don't think a premium reduction is warranted because we'd like to see some improvements made, then it isn't made. Conversely, if there are positive aspects to the risk at hand, then we're prepared to consider them as well in the pricing of the risk.
So we like to work closely with the utilities. When I came on board, one of the mandates we saw was that we couldn't just operate in a vacuum, but we needed to have that relationship there.
The Acting Chairman (Mr. Julian Reed): Thank you.
Reg.
Mr. Réginald Bélair (Cochrane - Superior, Lib.): Thank you, Mr. Chairman.
Your line of questioning a while ago corresponded exactly to the questions I wanted to ask.
There's only one question left to ask, I think. Mr. Stewart's presentation states very clearly that the federal government should be responsible for compensating for any damages exceeding$75 million, yet your colleague, Mr. Hunt - and I think you're both with the same organization - has just stated that the federal government is only there to encourage - I'm trying to use your words - and to monitor only the safety of nuclear reactors; the responsibility, the onus, is on the operator to ensure its own safety. In my view, this totally defeats Mr. Stewart's words in his presentation. This having been said, why should the federal government be liable, responsible, for any excess over $75 million, especially in the case of private operators?
Mr. Hunt: I'd like to make the point that I said the federal government cannot create safety. It encourages safety and it verifies safety. Safety has nothing to do with liability. Safety is the safe operation of a plant and liability is -
Mr. Réginald Bélair: What if an accident occurs?
Mr. Hunt: If an accident occurs, then you didn't have a safe operation; therefore, you have to deal with accident consequences. So the two conditions fundamentally have no direct legislative connection between themselves.
I would again remind you that in our deposition we indicated that in the court case of Energy Probe, City of Toronto and Rosalie Bertell v. Attorney General of Canada, the judge in a finding of fact specifically stated that safe operation of nuclear facilities is in no way related to the existence of the Nuclear Liability Act and its limitation provisions.
Mr. Réginald Bélair: I don't agree with that.
Ms Ostling, I would like to give you an opportunity to finish answering Mr. Reed's question.
Ms Ostling: Do you mean in terms of energy alternatives?
Mr. Réginald Bélair: Yes, and if possible I'd like you to associate costs with them.
Ms Ostling: We haven't done any studies that associate costs with the different energy options, such as insurance costs, if that's what you're asking about specifically. However, the energy alternatives we're proposing are clean, safe, and economical.
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The nuclear industry has already cost Canadians over $15 billion in subsidies. What the renewable energy sector is asking for is not more subsidies; it's asking for a level playing field.
I was recently at a conference here in Ottawa called Renewable Energy: Releasing Canada's Stranded Opportunities. It was very interesting to note that Anne McLellan, the Minister of Natural Resources, was talking about encouraging alternative energy in Canada, and not just in Canada but as an international energy option.
Mr. Réginald Bélair: That's fine, but you're saying your organization is for nuclear phase-out. Somewhere down the line in time there will be no more nuclear reactors in Canada.
Ms Ostling: Exactly. What we're acknowledging is a process that's already under way. Nuclear power is being phased out not only in Canada but internationally. The purchase of the last nuclear reactor in North America was in 1978. There are no new purchases of nuclear reactors in Canada.
We see this essentially as a process. We're going through a process right now where Canadians and the international community certainly are concerned about nuclear power as a result of events such as Chernobyl and Three Mile Island, but not just those events. There are the routine emissions at nuclear power plants. There is more and more concern and more awareness.
So we're not just calling for a phase-out; we're acknowledging that the phase-out process is happening. We would like to see that happen in a responsible, gradual manner.
Mr. Réginald Bélair: None of your proposals would create pollution?
Mr. Ostling: The number one proposal we're suggesting, energy efficiency, would not create any pollution at all. With each of the alternatives, wind power, solar power, small hydro, biomass or tidal power, there would be much less in the way of environmental consequences than there has been with nuclear power.
One of the things we've heard here today is that nuclear power is cheap. This cannot be said if you take into account the huge costs we're looking at right now for nuclear waste disposal, which is going to be another huge liability for Canadians. We're talking about at least $13 billion. That's what the nuclear industry is estimating. None of these options are going to require any kind of waste disposal options such as burying dangerous radioactive materials in the Canadian Shield.
Mr. Stewart: Could I clarify something? I don't want to get into debate, Kristen, but here are two simple points.
First, the real reason no new nuclear reactor has been built in North America is there's no real need for more electrical generation in North America. Small, distributed power is required, but as you know, Ontario has excess power; New Brunswick... We don't need more power, so obviously no base load is being built.
That being said, as we speak today, over 40,000 megawatts of nuclear power plants are being constructed around the world, and that is more than three times what Canada has installed in nuclear power plants. Even a couple of weeks ago Japan opted for another two 1,300 megawatt units. Those countries that have the power demand growth that Canada enjoyed back in the 1960s and 1970s are opting for the nuclear option, based on economics and, we believe, sustainable aspects. That is why, when you look at the Canadian industry, our uranium mining industry is very profitable and growing, why they're putting in new mines. It's to supply the existing and growing need for fuel for nuclear reactors.
We tend to get a bit parochial when we look at our North American or European situation, where there's no need for added power. We've done that. But around the world, in Southeast Asia and the growth countries such as China, they are opting for the nuclear option, based on pure economics.
Mr. Réginald Bélair: Two short questions. The first one has to do with nuclear waste.Ms Ostling has just alluded to it. I think it is an addendum to the liability not only of the safety of the nuclear reactors but of the waste...
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Maybe I should ask the question of Ms Collier. When we talk about the transportation and storage of nuclear waste, is this usually included in a policy?
Ms Collier: Yes, it is. But the extent of the waste being stored was not originally anticipated. We're moving forward 20 to 30 years from there. So it is being stored on site in a safe manner, and yes, that is part of the liability coverage at the present time.
Mr. Réginald Bélair: I'm thinking much more about transporting nuclear waste. As you know, there are experiments now being done in the Canadian Shield, in the Winnipeg area, to store underground - not half underground - waste from, let's say, Darlington, Bruce, and Pickering, Ontario. That's quite a distance. You're talking at least 1,000 miles. What if an accident happens? Is that covered under the policies you offer to your clients?
Ms Collier: The operators form provides it for the operator of a nuclear reactor, facility, or what not in that particular instance. We also have the suppliers and transporters form, which is a separate form not presently subject to the act, where that can be purchased.
Mr. Réginald Bélair: Maybe I should rephrase my question. Is it implicit in your policy that the operator is responsible for its transportation and storage? When you issue a policy, is that implicit? The point I'm trying to make is whether or not the federal government is still responsible for that transportation, as Mr. Stewart would say.
Ms Collier: I don't believe so. I'm sorry, I would have to check the wording. I can't recall the exact wording...once it's off the site. If you want to give me a minute, I can look for that information and read it back to you.
Mr. Réginald Bélair: Mr. Stewart may have something to say.
Mr. Stewart: I'd like to clarify a couple of points. First of all, from the cost point of view, the operators of nuclear reactors in Canada have made provision in their financial statements and in the base cost to cover the eventual disposal, be it deep geological or whatever. New Brunswick has another alternative, but that is fully provided for in their rates and financially. Ontario Hydro has around $8 billion to $9 billion reserved for the eventual disposal of their waste. This is built into the power rates. So this is not a contingent liability that's uncovered.
Mr. Réginald Bélair: So you're saying the operators are responsible.
Mr. Stewart: Are responsible and also -
Mr. Réginald Bélair: But in the case of an accident, are you still saying the federal government should be responsible in excess of $75 million?
Mr. Stewart: Whether the $75 million is right or not, I think we can debate.
The other point is I think even the federal policy of waste is very clearly defined in their most recent institutional financial framework; that the generator of the waste is responsible for that waste and for the eventual disposal, transportation, and whatever of it. Ontario Hydro or New Brunswick Power can in no way get rid of their responsibility, nor do I believe they are going to or want to, for the ultimate disposal of that waste.
That is very clearly in the federal policy, which I believe all the parties in the waste hearings that just ended fully endorsed. I don't think there was any dissenting voice in terms of the presentations or commitments from the generators, shall we say, of the high level waste. This applies to the mining companies and all the rest.
Mr. Hunt: Something I would just add to that very briefly is that it was remarked upon how expensive all of this is in terms of the final disposal of waste. It should be mentioned that $12 billion or $13 billion represents a very tiny fraction of the total value of electricity those nuclear facilities will produce over their economic lifetime - not their physical or plant lifetime but just their economic lifetime of 30 years, which is a figure somewhere in excess of $140 billion. In that kind of context, then, $11 billion, $12 billion, or $13 billion represents a very tiny fraction.
Mr. Réginald Bélair: I have one last question, Mr. Chairman, and I'll be very brief.
Why should Canada stand number seven in the world in terms of liability?
Mr. Hunt: It shouldn't.
Mr. Réginald Bélair: So what would be an acceptable amount of liability? It ranges from $750 million in the U.S. to about $50 million for Italy, and we are at $75 million.
Mr. Stewart: I'm not going to give you a number this morning, but I think this is why we want to look at it logically and properly, to put ourselves in line with the rest and also have flexibility between a McMaster Slowpoke and a Darlington, or whatever. I think that's one of the points you want to make. We have to be appropriate for the needs; assess the risk and make it appropriate.
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Mr. Hunt: It's the view of our association that you cannot come up with a number that makes sense until there has been a comprehensive review of the act itself and all the provisions in it.
Mr. Réginald Bélair: There is no number that makes sense.
Mr. Hunt: There may be, but only after you've gone through the act and all its parts.
Mr. Réginald Bélair: It could be $25 million; it could be $500 billion.
Mr. Hunt: It would all depend on the facility.
Mr. Réginald Bélair: If you eliminate the whole city of Toronto, try to rebuild that with $75 million. That's the point I'm making. Clearly it's not enough.
The Chairman: Julian, you said you had one short question.
Mr. Julian Reed: Yes. They are just a couple of brief requests, actually, Mr. Chairman. One is for Mr. Hunt. I was wondering if Mr. Hunt might supply this committee with his rationale for delivering 1¢ power out of Darlington.
Mr. Hunt: That's Ontario Hydro's own cost estimate for 1995.
Mr. Julian Reed: Yes, I know. It's wonderful. It's wonderful money management, believe me. I don't believe a word of it, and I can establish why I should not believe a word of it.
The other was for Ms Ostling.
If renewable energy is such a good thing and should be embraced, why are the environmental groups not embracing it and becoming proactive? I was very encouraged to hear your comments today, but you're a rare bird among environmental groups. I could ask you why it took me six years to get approvals to build a no-brainer small hydro plant in Ontario.
You don't have to answer it. You can just think about that.
Ms Ostling: There are very many environmental groups that are in favour of renewable energy options, and they have cooperated with us in the development of our research materials on this issue. Many of them attended and participated in the recent conference here in Ottawa. So you're not alone. We're not alone.
The Chairman: I have one question to ask Ms Ostling. It's what her advice to this committee is specifically on this piece of legislation.
I understand your testimony and appreciate it, but is it your suggestion that we do a more comprehensive approach to this, or is it your suggestion that the law that currently exists be totally repealed and not be replaced with anything; let the private sector do what it may with the situation? I'm not sure what your suggestion is and I'm trying to get a handle on that.
Ms Ostling: The number one preferred option would be to abolish the Nuclear Liability Act, because it's unfair. It would definitely change the nature of the Canadian nuclear industry and help, we hope, to create a level playing field for the renewable energy sector.
Secondly, I realize that's a pretty big stretch. If that's not possible, I think the level of liability needs to be very much increased, up to $1 billion. I was encouraged to hear that internationally at least $800 million would be available. It should go to the maximum. Definitely I would agree with the Canadian Nuclear Association that we need a comprehensive review of the act.
The Chairman: Mr. Stewart.
Mr. Stewart: One of your colleagues asked a question about making money in the industry. I can't resist, because I'm paid for by all of my member companies and I'm not aware of any of my member companies not making money. You can read the current reports of the Camecos and Spars and CAEs and General Electric companies -
Mr. Julian Reed: Then we can stop subsidizing the nuclear industry.
Mr. Stewart: I'm just addressing your comment.
Mr. Julian Reed: Well, which way do you want it?
The Chairman: We can have this debate afterwards.
Let me thank the witnesses for being here today. I very much appreciate it.
Not knowing what the future may bring for this committee, or even if we'll all be back next week, I want to take this opportunity to thank all the members, those who are present and those who are not, for their work and cooperation and help since I've been chair of this committee. I want to extend that appreciation.
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On behalf of all the committee, I want to thank the staff, all of them, from the various departments within the House of Commons, for all their hard work and support for us as a committee over the last several months. It's very much appreciated.
I also thank our translators, who have been with us, trying to interpret what we say, which can be difficult from time to time.
Thank you also for all the support from the department and from everybody else who has contributed.
Thank you very much.
The committee stands adjourned to the call of the chair.