Bill raising nuclear, offshore liability limits to $1 billion reaches third reading in Senate

The Senate recently tabled Bill C-22, the Energy Safety and Security Act, for third reading, with one Liberal senator vowing to vote against it because it would result in rate increases for nuclear liability insurance.

“Right now, the annual insurance costs for Énergie NB Power are around $65,000,” Liberal Senator Pierrette Ringuette said Feb. 19. “With this bill, based on the information I got last week, this New Brunswick Crown corporation will have to pay nearly $8 million a year.”

NB Power owns the Point Lepreau nuclear power plant, west of Saint John.

If passed into law with no amendments, Bill C-22 would increase – from $75 million to $1 billion – the absolute and exclusive liability of nuclear operators in Canada, including those operating nuclear power plants.

Three of Canada’s nuclear generating stations (Pickering, Darlington and Bruce ) are in Ontario while Quebec’s Gentilly plant was shut down in 2012.

“Currently nuclear operators pay between $800,000 and $1.2 million annually for their insurance coverage,” Niall O’Dea, director general of the electricity resources branch at Natural Resources Canada’s energy sector, said last December during hearings before the Senate Energy, Environment and Natural Resources committee. “We would be looking at that rising to between $6 million and $10 million annually for that $1 billion in insurance coverage.”

O’Dea said at the time those numbers are “based on a multi-reactor design.”

The absolute liability for nuclear operators would increase to $650 million on royal assent of Bill C-22, which was passed by the House of Commons in 2014. 

It would gradually increase to $1 billion three years after royal assent.

“At the end of the day, we have to wonder why all these Crown corporations and the taxpayers that use this form of energy – electricity created by nuclear systems – should face additional costs that I find entirely unreasonable, given the ownership structure,” Ringuette told her Senate colleagues. “I hope that you understand the scope of this bill and that you will join me in voting against it.”

Ringuette’s Liberal colleagues in the House of Commons supported the bill last year, Geoff Regan, Liberal MP for Halifax West, told the commons in September.

“It is going in the right direction,” Regan said. “In the nuclear sector, it would increase the liability cap from $75 million to $1 billion, bringing Canada in line with the promises it made when it signed the international Convention on Supplementary Compensation for Nuclear Damage.”

Bill C-22 also proposes to increase the absolute liability limits for some offshore petroleum producers, to $1 billion, for damages from spills. The limit is currently about $30 million in the Atlantic offshore area and $40 million in the Arctic.

“Companies must also demonstrate that they have at least $1 billion in financial capacity in the event the damages go up to this amount,” Alberta Senator Scott Tannas said when he tabled the bill Feb. 19 for third reading. “In the event of an incident, Bill C-22 establishes that the operator is liable for the actions of the contractors. It goes without saying that we are maintaining the unlimited liability for operators who are proven to be at fault or whose negligence causes or contributes to a spill in the offshore.”

Debate on Bill C-22 was adjourned Feb. 19 and it was not put to the Senate for a vote for third reading.

“Before any offshore drilling or production can take place, companies have to prove that they can cover the financial liabilities and damages that may result from a spill,” Natural Resource Minister Greg Rickford told the House of Commons last September. “Currently the financial capacity requirements range from $250 million to $500 million, with $30 million to be held in trust for working in the Atlantic offshore and $40 million for working in the Arctic offshore. This deposit is held in trust by the offshore regulator as a letter of credit, guarantee, or bond. These amounts will increase to $1 billion for financial capacity and $100 million to be held in trust per offshore project. These are significant resources that I think go a long way to help build public confidence.”

For nuclear operators, at least 50% of their liability will have to be covered by an insurer approved by the federal natural resources minister, while those operators would be allowed to cover up to 50% of their liability with “an alternative financial scheme” – such as assets, provincial loan guarantees or letters of credit – said David McCauley, director of the uranium and radioactive waste division at Natural Resources Canada’s energy sector, the Senate committee hearings last December.