DPR 2004-2005
Canadian Nuclear Safety Commission

• Message from the President and Chief Executive Officer
• Management Representation Statement
• Summary Information
• Mission and Vision
• Regulatory Policy and Program Delivery
• The CNSC and Results for Canadians
• CNSC Challenges and Risks
• CNSC 2004-2005 Performance Summary

• The Canadian Nuclear Safety Commission - Performance Against Plans
1. A clear and pragmatic regulatory framework
2. Individuals and organizations that operate safely and conform to safeguards and non-proliferation requirements
3. High levels of compliance with the regulatory framework
4. CNSC cooperates and integrates its activities in national/international nuclear fora
5. Stakeholders’ understanding of the regulatory program
6. Management and Enabling Infrastructure
• Measures of Performance
• Outcome Measures
• Performance Standards

• The Canadian Nuclear Safety Commission - Operating Context
• The CNSC Strategic Framework
• Governance at the CNSC
• Organizational Information
• Organizational Chart
• Financial Summary Overview
• CNSC Tables
• Audited Financial Statements

• Report Card on Nuclear Power Plant Performance
• Information Sources

	Protecting Canadians' Health Increased demand and the development of new technologies in the fields of nuclear medicine and radiation therapy require constant vigilance on the part of the Canadian Nuclear Safety Commission.
Protecting Canadians' Safety The CNSC's regulatory regime requires that licensees design, construct and operate their facilities safely at all times.
	Protecting Canadians' Security To protect Canadians, the CNSC has initiated major new security initiatives that apply to nuclear facilities and substances.
Protecting the Canadian Environment Protecting the environment is of major importance in the work of the CNSC, through its environmental responsibilities under the Nuclear Safety and Control Act and other relevant legislation.

Section I - Overview

Message from the President and Chief Executive Officer

I am pleased to present the 2004-2005 Performance Report of the Canadian Nuclear Safety Commission (CNSC).

This report covers my fourth year as President and Chief Executive Officer of the CNSC. It outlines the important steps that the CNSC, as Canada’s nuclear regulator, has taken over the past year to deliver on its mission to protect health, safety, security and the environment and to respect Canada's international commitments on the peaceful use of nuclear energy.

On behalf of Canadians, the CNSC continues to exercise effective regulatory control over the use of nuclear energy and materials. In addition to our vital work in licensing and in compliance inspection, we are continuing to improve our robust regulatory framework. In addition, we have launched the Power Reactor Regulation Improvement Program, which is intended to ensure that the power reactor regulation program delivers more effective regulatory oversight. The CNSC has made substantial progress on the documentation of an updated licensing basis for the design of power reactors. This draft CNSC standard will be used to assess the licensability of any new reactors in Canada. The CNSC is committed to the implementation of quality management practices. We have already introduced an integrated management system to define and apply a common set of management practices and principles, align current and future improvements, and link key activity areas to outcomes.

The Commission Tribunal operates separately from CNSC staff, setting regulatory policy directions on matters relating to health, safety, security and environmental issues affecting the Canadian nuclear industry. It establishes legally-binding regulations and makes independent decisions on the licensing of nuclear-related activities in Canada. During the reporting year, the Commission held more than fifteen public hearings involving significant nuclear facility licensing decisions and during which the Commission heard from intervenors, in some cases, in large numbers. Decisions were rendered on these applications based on the need to protect the health, safety, and security of Canadians and the environment.

The CNSC has also been active in efforts to ensure Canadian application of international standards and practices for the safe and peaceful use of nuclear energy. International highlights of the past year include: adopting an internationally harmonized regulatory regime for radioactive sources thereby enhancing regulatory oversight on the tracking and movement of radioactive sources within Canada and internationally; initiating an international peer review of Canada’s power reactor regulatory program; strengthening international guidelines governing the safe operation of research reactors worldwide; strengthening radiation protection requirements for carriers; and reviewing the International Atomic Energy Agency's (IAEA) safeguards system to assess its efficiency and effectiveness.

The CNSC also launched a values and ethics program in March 2005, under the theme “ Helping good people do the right thing ”. This is a key component of a sound governance structure. A clearly articulated values and ethics strategy will provide CNSC staff with practical tools to guide them in making ethical decisions in the course of their work, and will also strengthen the CNSC’s relationships with licensees and stakeholders. The CNSC’s Audit and Ethics Group continues to be responsible for performing a rigorous internal audit role and, new in 2005, for receiving and investigating disclosures of wrongdoing consistent with the draft Public Servants Disclosure Protection Act (Bill C-11).

As you will see in the following pages, the CNSC has made important strides in every area of its mandate. Although many challenges lie ahead, our accomplishments so far provide a solid foundation on which to build.

As we move forward, our commitment to the people of Canada will remain unwavering – to protect health, safety, security and the environment and to respect Canada’s international commitments on the peaceful use of nuclear energy. Whatever new growth or demands we face, we will not lose sight of this mission.

Sincerely,

The paper version was signed by

Linda J. Keen, M.Sc.

Management Representation Statement

I submit for tabling in Parliament, the 2004-05 Departmental Performance Report (DPR) for the Canadian Nuclear Safety Commission.

This document has been prepared based on the reporting principles contained in the Treasury Board of Canada Secretariat’s Guide for the preparation of 2004-05 Departmental Performance Reports :

• It adheres to the specific reporting requirements;
• It uses an approved Program Activity Architecture;
• It presents consistent, comprehensive, balanced and accurate information;
• It provides a basis of accountability for the results pursued or achieved with the resources and authorities entrusted to it; and
• It reports finances based on approved numbers from the Estimates and the Public Accounts of Canada.

The paper version was signed by

Linda J. Keen, M.Sc.
President and Chief Executive Officer
August 19, 2005

Summary Information

Mission and Vision

It is the Canadian Nuclear Safety Commission’s (CNSC) mission to regulate the use of nuclear energy and materials to protect health, safety, security, and the environment and to respect Canada’s international commitments on the peaceful use of nuclear energy . In pursuing its mission, the CNSC ¹ is working toward its vision of becoming one of the best nuclear regulators in the world.

To realize its vision, the CNSC is committed to:

• An effective of its regulatory regime;
• A high level of transparency;
• Attraction and retention of excellent staff; and
• An efficient regulatory regime.

To assess the achievement of this vision, the CNSC participates in domestic and international regulatory fora, benchmarks its activities against other domestic and international regulators by sharing and adopting best practices in a global context and meets the principles of Smart Regulation. The CNSC is responsible to the public, through Parliament, for assuring that these responsibilities are properly discharged.

¹ Note: The Canadian Nuclear Safety Commission is referred to as the “CNSC” when referring to the organization and its staff in general, and as the “Commission” when referring to the tribunal component.

Regulatory Policy and Program Delivery

The CNSC’s Regulatory Fundamentals Policy (P-299), which was adopted in January 2005 by the Commission, is consistent with the principles of good governance and the Government of Canada’s Smart Regulation initiative. It states that persons and organizations subject to the Nuclear Safety and Control Act (NSCA) and regulations are directly responsible for managing regulated activities in a manner that protects health, safety, security, and the environment, while respecting Canada’s international obligations.

The CNSC regulates the use of nuclear energy and nuclear materials in Canada. Its regulations apply to the following areas:

• Nuclear power reactors
• Non-power reactors
• Nuclear substances and radiation devices used in areas such as health care and research
• Nuclear fuel cycle from uranium mining through to waste management
• Imports and exports of controlled nuclear materials, dual-use materials, equipment and technology

The CNSC is a departmental corporation under Schedule II of the Financial Administration Act and a separate employer under the authority of the Public Service Staff Relations Act . The CNSC is an independent federal regulatory agency and a quasi-judicial administrative tribunal. To serve Canadians, the ultimate outcome of the CNSC is safe and secure nuclear installations and processes solely for peaceful purposes; and public confidence in the nuclear regulatory regime’s effectiveness. Consistent with the Government Canada’s Smart Regulation principles, the CNSC engages in extensive consultation and communication to ensure that information is clearly understood and accepted by stakeholders, including licensees.

The CNSC is an independent agency of the Canadian Government. The person responsible for the CNSC is the President and CEO. Reports are submitted to the Minister as part of the CNSC’s accountability to Parliament, because only Ministers have standing to table reports in Parliament. CNSC is able to maintain an arm’s length relationship with government when making legally-binding regulatory decisions.

The CNSC is not an advocate of nuclear science or technology. Rather, its mandate and responsibility is to regulate users of nuclear energy or materials to ensure their operations will not pose unreasonable risks to Canadians. Canadians are the sole clients of the CNSC.

The CNSC’s operations are funded through an annual appropriation from Parliament. The CNSC’s workload and therefore its resource requirements are largely driven by the level of demand for licensing and oversight and by the nature of Canada’s international commitments. Most costs incurred for the CNSC’s regulatory activities are recovered by the federal government from licensees under the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations (2003).

The CNSC expects to recover approximately 70 percent of its total cost of operations from fee-paying licensees. Fees are collected by the CNSC and deposited to the Consolidated Revenue Fund. Fees are not a source of revenue for the CNSC or for its use without Parliamentary authority. External charging information for the CNSC’s Cost Recovery Program is available in Table 7-A .

Some licensees, such as hospitals and universities, are exempted by the Government of Canada from paying fees, which account for approximately 10 percent of total CNSC operational costs. In addition, these licensees’ fees are not chargeable for activities that result from CNSC obligations that do not provide a direct benefit to identifiable licensees. This includes activities with respect to Canada’s international obligations, including the non-proliferation of nuclear weapons, public responsibilities such as emergency preparedness and public information programs, and maintenance of the NSCA and associated regulations. This work amounts to approximately 20 percent of the CNSC’s program costs.

The CNSC also administers the Nuclear Liability Act (NLA). It designates nuclear installations and sets the nuclear insurance requirements to be carried by the operators of such nuclear installations. The CNSC receives premiums paid by the operators for supplementary insurance coverage and credits these premiums to the Nuclear Liability Reinsurance Account in the Consolidated Revenue Fund. The NLA is currently undergoing review, which could change the role of the CNSC.

The CNSC and Results for Canadians

The CNSC is a key contributor to the Government of Canada’s outcomes, which are the long-term and enduring benefits to Canadians that federal departments and agencies are working to achieve. The CNSC contributes directly to assuring the health of Canadians, to the protection of the environment and to the protection of Canadian society from potentially harmful effects of nuclear materials, substances and processes.

The CNSC also plays a significant role in bringing Canada’s expertise and perspective to the international arena regarding the safety and security of nuclear materials and technology, in matters such as possession, use, transport and international transfer of high-risk radioactive sources, radiation protection, international safety approaches for research reactors and global safeguards concepts and approaches used by the International Atomic Energy Agency (IAEA). As a well-established, independent, world-class regulator covering the full nuclear cycle, the CNSC’s expertise is sought regularly by countries throughout the world and by international agencies such as the IAEA. The CNSC is the Canadian lead on many international Conventions, and serves as the focal point to prepare, deliver and monitor Canadian compliance with these undertakings.

CNSC Challenges and Risks

In 2004-2005, it came clear that the CNSC’s operating context was becoming increasingly complex. The Canadian nuclear industry has experienced significant growth in all segments of the nuclear cycle and in virtually all areas where nuclear substances are used for industrial, medical or other purposes. There is unprecedented demand across most nuclear sectors for regulatory decisions and oversight. At the same time, threats and challenges to the international nuclear non-proliferation regime are substantial. Some of the challenges the CNSC faced in 2004-2005 are outlined as follows:

CNSC 2004-2005 Performance Summary

The CNSC has established a strategic framework for planning, monitoring and reporting (see CNSC Logic Model ). Plans for future years are articulated in our annual Report on Plans and Priorities (RPP) at http://www.nuclearsafety.gc.ca . The plans for this reporting year were outlined in the 2004-2005 RPP ( http://www.tbs-sct.gc.ca/est-pre/20052006/cnsc-ccsn/cnsc-ccsnr56_e.asp ).

The CNSC’s strategic framework has the following five immediate outcomes:

1. A clear and pragmatic regulatory framework
2. Individuals and organizations that operate safely and conform to safeguards and non-proliferation requirements
3. High levels of compliance with the regulatory framework
4. CNSC cooperates and integrates its activities in national/international nuclear fora
5. Stakeholders’ understanding of the regulatory program

Underlying the CNSC’s strategic framework is its management and enabling infrastructure. This infrastructure consists of management, human resources, finance, information services and infrastructure programs that enable the CNSC to perform the activities required and meet the requirements of good governance with a high level of accountability.

For 2004-2005, the CNSC planned its expenditures for each immediate outcome. The 2004-2005 plan incorporated the CNSC’s logic model for the first time. The following table shows a comparison of actual expenditures incurred against planned spending.

The table below indicates the status of planned activities as set out in the CNSC’s RPP 2004-2005. More details concerning these activities can be found on the relevant section of this report, where indicated, or by contacting the CNSC.

Section II - Analysis of Performance by Immediate Outcome

The Canadian Nuclear Safety Commission – Performance Against Plans

The following section outlines the results achieved during 2004-2005 in implementing the 2004-2005 to 2006-2007 strategic plan.

1. A clear and pragmatic regulatory framework

The CNSC ensures its licensees are aware of and comply with all requirements respecting the protection of Canadians and the peaceful use of nuclear energy and materials.

The CNSC’s regulatory framework is composed of:

• The Nuclear Safety and Control Act , regulations and regulatory documents
• The Safeguards Agreement and Additional Protocol between Canada and the International Atomic Energy Agency (IAEA)
• Canada’s bilateral Nuclear Cooperation Agreements
• The Canadian Environmental Assessment Act
• The Nuclear Liability Act

The following highlights the key enhancements to the CNSC regulatory framework during the reporting year.

Ongoing review of the Nuclear Safety and Control Act and regulations

The Nuclear Safety and Control Act (NSCA), which gives the organization its specific regulatory authority, does not state a mandatory statutory review period. Nevertheless, the CNSC conducts an evergreen review of the NSCA and in 2004-2005, developed an ongoing list of possible amendments to the legislation should the Government of Canada decide to subject it to a review. No changes to the legislation are contemplated at this time.

The CNSC received recommendations for amendments to CNSC regulations from the Standing Joint Committee on the Scrutiny of Regulations (SJCSR). A list of amendments will be provided to the Department of Justice for inclusion in its miscellaneous amendment program for regulations.

Contribution to the Smart Regulation Initiative

Effectiveness and efficiency are principles that are central to the way the CNSC manages its business and regulates to protect health, safety, security and the environment, and to respect international obligations. The CNSC’s key priorities include commitment to an evergreen, risk-informed approach to regulatory strategies, regulations and licensing requirements, in line with the Government of Canada’s Smart Regulation initiative.

In 2004-2005, the CNSC contributed to the government-wide implementation of Smart Regulation by participating in interdepartmental meetings on the initiative, and monitoring the progress of the External Advisory Committee on Smart Regulation (EACSR). The CNSC assessed itself against the EACSR’s recommendations on Smart Regulation, and determined that it already adheres to many of its practices and objectives. These include transparency (public hearings and published decisions), public consultation, coordination of regulatory efforts across jurisdictions, and integration of international best practices and norms where appropriate to the Canadian context.

As part of its Smart Regulation effort in 2004-2005, the Commission Tribunal modified its processes and exercised its authority to vary the Rules of Procedure on several occasions to ensure matters were dealt with as informally and expeditiously as circumstances and the considerations of fairness permitted. For example, the Commission shortened or extended document submission deadlines, adjourned proceedings to allow the introduction of additional information, allowed interventions via video or teleconference, improved the scheduling of hearings, and generally showed increased flexibility in responding to the needs of stakeholders.

The Commission Secretariat began an analysis of the CNSC Rules of Procedure and By-laws , in 2003-2004 to benchmark the Commission’s hearing and meeting processes against those of 12 other Canadian federal and provincial administrative tribunals on 11 areas of service delivery. The benchmarking showed that the Commission’s existing rules and procedures compare favourably with those of other leading tribunals. An analysis of the CNSC Rules of Procedure and By-laws was completed in 2004-2005 and draft amendments will be proposed in 2005-2006 for legal review and consultation with key stakeholders.

The Commission has established a performance standard requiring that a comprehensive Record of Proceedings, including Reasons for Decision be published within six weeks of the close of the hearing 90% of the time. The Commission is demonstrating efficiency and responsiveness to stakeholder needs. In 2004-2005, the Commission achieved this performance standard (release of decision within six weeks) 93% of the time, excluding the records of proceedings (no decisions) for mid-term review hearings held in February 2005 where the average time was 12 weeks.

The Commission also revised its process for fulfilling its environmental assessment responsibilities under the Canadian Environmental Assessment Act (CEAA) to improve its efficiency, while preserving its effectiveness. Further revisions are being evaluated.

Regulatory amendments and improvements to the regulatory framework

• Published:
  • Policy on Regulatory Fundamentals (P-299)
  • Policy on Managing Radioactive Wastes (P-290)
  • Standard for Making Changes to Dose-Related Information Filed with the National Dose Registry (S-260)
  • Guide for Keeping Radiation Exposures and Doses As Low as Reasonably Achievable (G-129, rev.1)
• Nuclear Security Regulations : revised proposed amendments to the regulatory requirements for nuclear security in response to extensive stakeholder input. The proposed changes will make the regulations more consistent with international recommendations and best practices, take into account current security threats, and address stakeholder input. The proposed changes are scheduled to be pre-published in the Canada Gazette in the spring of 2005.
• Class II Nuclear Facilities and Prescribed Equipment Regulations : amendments proposed to the Class II regulations to address deficiencies in the current regulations, to enhance safety and to reflect the latest international standards, consistent with the CNSC’s risk-informed regulatory initiatives and the principles of Smart Regulation. Pre-consultation and publication in the Canada Gazette is scheduled for 2005.
• Nuclear Substances and Radiation Devices (NSRD) Regulations : amendments proposed to the NSRD regulations to introduce the latest international values for exemption quantities, surface contamination and clearance levels for regulating those who possess nuclear substances. Pre-consultation and publication in the Canada Gazette is scheduled for 2005.
• Thirty-nine consultative regulatory documents were issued with respect to various operational areas such as Type I and Type II inspection procedures, safety analysis for nuclear power plants, environmental protection policies, programs and procedures at Class I nuclear facilities and uranium mines and mills, and requirements for disposal of nuclear substances.

As part of its commitment to the safe and secure use of radioactive material, Canada has endorsed and continues to support the IAEA Code of Conduct on the Safety and Security of Radioactive Sources . This initiative will result in a comprehensive regulatory regime for the possession, use, transport and international transfer of high-risk radioactive sources.

In support of the international regulatory regime, the CNSC contributed its expertise and perspective towards the development of two additional IAEA documents, the Code of Conduct on the Safety of Research Reactors and Safety Requirements for Research Reactors . These documents will help strengthen the regulatory framework governing the safe operation of research reactors at home and abroad.

A more effective and efficient regulatory regime Environment Canada and the CNSC have determined that, under the Nuclear Safety and Control Act , CNSC will play a role to control or prevent the release of uranium, which has been deemed to be toxic in the environment, under the 1999 Canadian Environmental Protection Act . A 2003 Memorandum of Understanding (MoU) between the CNSC and Environment Canada committed these organizations to assist each other in certain activities to prevent duplication of effort. In 2004, an annex to this MoU was signed concerning the process for risk management of uranium releases from uranium mines and mills. For example, under this agreement, the CNSC, with the support of Environment Canada, will require the implementation of more stringent preventative or control measures for the Rabbit Lake Uranium Mine. The licensee will develop and implement measures to reduce the concentration of uranium effluents released from the facilities. Requirements for measures at other uranium mines and mills will be addressed based on the outcome of environmental assessments completed for each facility. This initiative supports Smart Regulation by reducing duplication and simplifying the regulatory process for licensees, while meeting the requirements of the CNSC and Environment Canada. The CNSC is committed to an evergreen, risk-informed approach to regulatory strategies, regulations and licensing requirements, in line with the Government of Canada’s Smart Regulation initiative. Modernizing the regulatory framework helps bring clarity and consistency to it, helps ensure that both the CNSC and licensees adhere to the Nuclear Safety and Control Act and associated regulations, and promotes efficient delivery of services to Canadians.

2. Individuals and organizations that operate safely and conform to safeguards and non-proliferation requirements

The CNSC ensures that licences and certifications are issued to those individuals or organizations who demonstrate they can operate safely and conform to international requirements.

Individuals or organizations must demonstrate to the CNSC that they are qualified to undertake the activities for which they are seeking a licence before they may:

1. Site, construct, operate or decommission a nuclear facility
2. Produce, possess or use nuclear substances in excess of prescribed quantities; or
3. Possess or use prescribed information or equipment in Canada.

Licence proceedings during the reporting period are listed in the Canadian Nuclear Safety Commission Annual Report of the Commission Tribunal 2004-2005 at www.nuclearsafety.gc.ca .

Licensing with respect to licences, other than those for major facilities, has been delegated by the Commission to senior staff, referred to as Designated Officers, for review. Designated Officers license more than 98% of applications received by the Commission, through streamlined processes commensurate with the level of risk and more limited public interest in these matters.

Implementing risk-informed licensing methodology

Nuclear substance regulation includes management of new licence applications, renewals, amendments and licence revocation, in addition to nuclear device certification, transport certification and registered user application. While the number of current licences, certificates and licensees changes throughout the year, the volume of licensing and certification activity in 04/05 involves approximately 4,000 licences/certificates and 2,500 licensees. The CNSC developed a risk-informed methodology for the allocation of resources for nuclear substance regulation which has resulted in increased operational efficiency and integration of all licensing and compliance requirements. Clear expectations of regulatory requirements have been developed with the goal to promote safety with nuclear substances.

In 2004-2005, the CNSC completed an automated verification planning tool and continued development of licence assessment worksheets to improve licensee understanding of licensing requirements. In addition, assessment summaries have been introduced for licensing and renewal of Class II Nuclear Facilities. These summaries provide licensees with a list of regulatory requirements and their assessed performance, thereby increasing the transparency of the process.

The CNSC also developed a risk-informed methodology to be incorporated into the authorization system for the import and export of nuclear substances and materials that will provide greater transparency and predictability of the process for stakeholders, including licensees.

Licensing basis for the design of new nuclear power plants

Canada’s regulatory framework for licensing major facilities such as nuclear power plants had not been updated comprehensively since the previous generation of facilities was licensed in the 1970s and 1980s. The CNSC has developed a regulatory document on the licensing basis for the design of power reactors. It will be also used to assess the licensability of any new reactors in Canada. It is a proactive initiative to modernize the regulatory framework in response to the nuclear sector’s potential interest in new power reactors.

This licensing basis document is being applied to the Advanced CANDU Reactor of the Atomic Energy of Canada Limited (AECL) and to any other proposed reactor design. Because operators may choose from a variety of nuclear power technologies, care is being taken to make the general requirements technology neutral and suitable to different reactor types.

Waste management

The new CNSC Regulatory Policy P-290, Managing Radioactive Waste , issued in July 2004, established as a key principle the minimization of radioactive waste through design measures, operating procedures and decommissioning practices. Licensees and CNSC staff will be guided by this principle when considering design, operating and decommissioning measures for new reactors.

Reactor refurbishment

With the age of Canada’s nuclear power reactors, the CNSC expects a number of life extension initiatives to take place in the next several years. The CNSC has established the following two key regulatory goals for life extension projects:

1. Obtaining assurance of the adequacy of the scope of refurbishment and safety upgrades proposed by the licensee, and
2. Verification of the proper execution of that work by the licensee, prior to return of the facility to service.

In 2004-05, the CNSC continued development and implementation of comprehensive regulatory oversight plans to achieve these goals. The following steps are required of licensees in establishing the scope of refurbishment work:

• An Environmental Assessment for the project, which must be completed before any regulatory approvals or licensing actions are given that enable the project to proceed.
• A safety review of the facility in accordance with the IAEA Periodic Safety Review guidance.
• Development of an integrated implementation plan for the necessary corrective actions, safety upgrades and compensatory measures to ensure the facility will pose no unreasonable risk to health, safety, security and the environment and will conform with Canada’s international obligations over the proposed life.

Having established the scope, requirements for project execution then include:

• an acceptable quality management program,
• worker health and safety and radiation protection programs, and
• measures for managing wastes and environmental impacts arising from the project.

CNSC’s regulatory verification of project execution will include assessment of engineering change submissions, and inspections of licensee procurement, construction, and commissioning activities. CNSC staff will verify the licensee’s completion assurance process before granting permission to re-start the reactor following the refurbishment work.

Extending licence periods

All licence periods for nuclear substances and radiation devices were extended from two to five years as they came up for renewal, resulting in better management of regulatory and licensee resources where greater focus is on compliance and safety rather than the licensing process. As a result, licence renewals have decreased, and CNSC resources have been redirected towards verifying licensee compliance and therefore safety.

Other licensing-related initiatives:

• The integration of radioactive substance licences with the power reactor operating licence at one facility on a trial basis, further reducing the administrative burden on licensees.
• Environmental assessments (EAs) of projects under certain licence applications are required to identify possible impacts and mitigation measures necessary to protect the health, safety and security of Canadians, and the environment. As an example, the CNSC’s conducting an EA of a proposal by Cameco Corporation for a slightly enriched uranium blending facility in Port Hope, Ontario, which includes the review of Cameco’s EA study report.
• CNSC staff began the comprehensive process to review the relicensing of the Pickering Nuclear Power Plant (NPP) for five years. This is the first of many planned NPP licence renewals and includes the operation of Pickering Unit 4, the restart of Pickering Unit 1, and the possible re-start of Pickering Units 2 and 3.
• To protect Canadian taxpayers and the federal government from potential liability should the licensee be unable to fulfill their regulatory obligations in the future, the CNSC requires the provision of the financial guarantees from licensees for certain types of activities, including decommissioning. In 2004-2005, the CNSC accepted financial guarantees from Canadian Light Source Inc., AECL Whiteshell Laboratories, and for five SLOWPOKE reactor facilities across Canada.
• A Tribunal Process Management Manual, including procedural guidelines for all processes, was initiated in 2004-2005 and is scheduled for completion in 2005-2006. This manual will clarify accountability of Secretariat and CNSC staff by allocating responsibility for each step of key processes, and will improve transparency.
• In accordance with Canada’s bilateral and multilateral nuclear non-proliferation obligations and to ensure that international transfers of nuclear and nuclear-related items are for peaceful purposes only, the CNSC continued to assess import/export applications and safeguards conditions relevant to licences to ensure peaceful international transfer of nuclear and nuclear-related items and Canada’s compliance with its safeguards obligations.

Licensing protects health, safety, security and the environment The CNSC plays a key role in protecting health, safety, security and the environment by regulating, monitoring and inspecting licensed activities. Among other activities, this role includes conducting the CNSC’s comprehensive and risk-informed system of licensing. Examples of results in this area during 2004-2005 include the licensing of the decommissioning of the Cluff Lake uranium mine in Northern Saskatchewan, the licensing of the Canada’s first Gamma Knife facility and the licensing of Canadian Light Source Inc., a world-class research and development synchrotron facility in Saskatoon. Decommissioning the Cluff Lake mine The first of its generation of Northern Saskatchewan uranium mines to move into decommissioning, the Cluff Lake mine received a decommissioning licence in July 2004. The granting of this licence by the Commission Tribunal followed five years of environmental assessment, public consultations and regulatory review, and marked the initial phase of efforts by COGEMA Resources Inc. to return the Cluff Lake site to a natural state. Dismantling the mill by COGEMA Resources Inc. began in 2004, with most major decommissioning activities to conclude in 2005. This will be followed by many years of CNSC monitoring to ensure compliance with the Canadian Environmental Assessment Act (CEAA) and the NSCA. The unique nature of Gamma Knife facilities A licence was issued in 2004-2005 for a Canada’s first Gamma Knife facility, located in Winnipeg, Manitoba. When the CNSC conducted a compliance inspection of the Winnipeg facility in 2004, it recognized the unique nature of stereotactic gamma teletherapy, determining and documenting adequate radiation safety standards. For example, the main radiological hazard in the facility results from scattered gamma radiation, thus reducing the need for primary barriers to shield the facility. As a result, new licensing requirements for Gamma Knife facilities were fully implemented during the reporting period. Also known as stereotactic radiosurgery, Gamma Knife is a precise, non-invasive procedure that can destroy deep-seated vascular malformations and brain tumours once considered inoperable. The technology does not require any incision; instead it uses a concentrated radiation dose of 201 Cobalt-60 sources with a total activity of 244 TBq to beam radiation at a specific area and destroy only abnormal tissue. In addition to the Winnipeg facility, another is licensed and operating in Sherbrooke, Québec, and another is under construction in Toronto. Operation of Canadian Light Source begins Owned by the University of Saskatchewan, the Canadian Light Source Inc. (CLS) is a national facility for synchrotron light research that brings together academic and industrial researchers to conduct materials R&D, and is subject to oversight of the Canadian Nuclear Safety Commission. A synchrotron produces infra-red, ultraviolet and X-ray light which scientists use to see the microscopic nature of matter, down to the level of the atom. Information obtained with this technology can be used for many applications such as developing new drugs, building more powerful computer chips, and helping with mining clean-up. The CLS met the requirements of commissioning – conceptualizing, designing and constructing a facility that is safe for use – and the Commission Tribunal granted an operating licence for routine operation in June 2004.

3. High levels of compliance with the regulatory framework

The CNSC rigorously enforces its regulatory requirements through a variety of measures. Licensee compliance is verified through inspections, reviews, audits and assessments. The CNSC requires any licensee found to be non-compliant with either its licence conditions or the regulatory requirements to resolve the issue and demonstrate improvement by a specified deadline, or face enforcement action.

During the reporting year, the CNSC continued to conduct its compliance program that involved ongoing monitoring of the production, use, storage and flow of nuclear material at Canadian nuclear facilities, and the maintenance of a national nuclear materials accountancy system. CNSC staff report on licensee operations through mid-term performance reports, status reports, significant development reports and annual industry reports. This is in addition to performance information provided in licensing hearings, transcripts of which are available to the public along with records of proceedings. The CNSC Annual Industry Report on the Safety Performance of the Canadian Nuclear Power Industry is prepared on an annual basis, and contains the Report Card on Nuclear Power Plant Performance. The most recent Report Card is an evaluation of safe and secure installations, and is available in Section IV . CNSC staff observed, through inspections and reviews, that the power reactor industry operated safely in 2004. No worker at any power reactor station or member of the public received a radiation dose in excess of the regulatory limits.

Compliance planning and management

Designed to administer, promote and assess compliance, the CNSC has commenced the use of risk-informed formulas to determine inspection frequency and resource requirements. The CNSC is implementing the new Type I and Type II ² inspection planning program, along with associated compliance tools, working cooperatively with licensees to improve transparency, communication, performance and safety. During the reporting year, the CNSC also conducted extensive training of staff in the various facets of the new risk management program, reviewed the risk-profile of certain nuclear facilities, and revised baseline compliance plans.

In March 2004, the CNSC initiated the Power Reactor Regulation Improvement Program (PRRIP), intended to ensure a power reactor regulation program delivers the best possible performance for licensees and the public. The PRRIP will achieve this by examining and improving all relevant aspects of the regulation program, from planning and problem-solving to communication and management methods. The goal of the PRRIP is to facilitate the CNSC’s management of the risk to public health, safety, security and the environment arising from the operation of nuclear power reactors in Canada. For more information see "An Improved Program for Regulating Power Reactors" .

² *Type I inspections are on-site audits and evaluations of a licensee’s programs, processes and practices. Type II inspections are routine (item-by-item) checks and rounds that typically focus on the outputs, or performance of licensee programs, processes and practices. Findings from Type II inspections play a key role in identifying where a Type I inspection may be required to determine systemic problems in licensee programs, processes or practices.

Nuclear security

CNSC staff continued to monitor potential threats to Canadian nuclear facilities, and inspected and evaluated licensees’ physical security programs, placing priority on higher-risk facilities. Specifically, security inspections were conducted at nuclear power plants, nuclear research facilities, fuel fabrication and tritium processing facilities, radioisotope facilities and waste management areas. Security inspections of other facilities such as hospital and university laboratories that use, process or store high-risk radioactive sources were also conducted and resulted in measures to improve security. Overall, CNSC staff were satisfied that licensees are taking appropriate measures to meet the requirements for physical protection of their facilities.

Radiation protection for carriers

During the reporting year, the CNSC continued to actively promote the new international requirements for radiation protection for licensed and non-licensed carriers, which came into effect in June 2004. These requirements improve radiation safety of transport carriers and other stakeholders. To build awareness of the new requirements, the CNSC prepared a supporting guide (G-314) to help carriers establish their own radiation protection programs. It also undertook numerous activities such as conducting awareness sessions and encouraged carriers to submit their radiation protection programs to the CNSC for review and follow up as to whether or not their programs will meet the new requirement if subjected to a compliance inspection.

As of May 31, 2004, carriers not licensed by the CNSC were required to have work procedures and a radiation protection program in place based on the risk of worker exposure to radiation. Visits to approximately 30 transport companies were conducted to promote compliance with this new requirement and Transport Type I inspections have been conducted at approximately 10 sites. Implementation of the Radiation Protection Program for these transport carriers not licensed by the CNSC is underway.

Sealed source tracking

The CNSC played a significant role in developing the IAEA Code of Conduct on the Safety and Security of Radioactive Sources , which has been endorsed by the Government of Canada. It also played a significant role in developing the IAEA Technical Document 1344 entitled The Categorization of Radioactive Sources .

In support of this Code of Conduct , the CNSC began to build a national sealed source registry database and tracking system for high-risk radioactive sources. Under the new system, radioactive sources are ranked and assigned to one of five categories to provide an internationally-harmonized foundation for making risk-informed decisions. Implementation of tracking the highest risk categories is scheduled for January 2006. The completed system will enhance the CNSC’s regulatory control of radioactive sources used in medical, industrial and research activities throughout Canada. The system will be available to stakeholders through a Web-enabled user interface. Licensees will update inventory data electronically, enabling the CNSC to track the movement of high-risk sources.

Safeguards, non-proliferation and the Nuclear Material Accounting System

In response to safeguards measures introduced in Canada in 2000, IAEA verification objectives have undergone a major shift including extension to include facilities not previously subject to safeguards requirements. To establish national-level safeguards in Canada, the CNSC has worked collaboratively with the IAEA in areas such as:

• Installation of new safeguards equipment at facilities.
• Implementation of an enhanced nuclear material accounting system allowing licensees to make submissions electronically and allowing the CNSC to meet its international non-proliferation and safeguards obligations more effectively.
• Development of a new safeguards approach at Canada’s uranium refining and conversion sites.
• Exchange of bilateral nuclear inventory reports with other countries, and reconciliation of inventories with them. Such activity ensures that international transfers of nuclear items are for peaceful purposes only, and in accordance with Canada’s bilateral and multilateral nuclear non-proliferation obligations.
• Provision to the IAEA of periodic nuclear material accounting reports and other information required under Canada’s Safeguards Agreement and Additional Protocol with the IAEA
• Facilitation of access by IAEA safeguards inspectors to nuclear facilities and other locations in Canada.

In a major effort by the CNSC to ensure that Canadian uranium conversion and refining facilities conform to new safeguards requirements, the CNSC conducted ongoing negotiations with the IAEA and industry to establish a system of accountancy for nuclear material and a plan for IAEA verification of initial inventories in mid-2005 at refining facilities.

Safety culture and management

The CNSC encourages licensees to embrace a safety culture that results in behaviour that exceeds expectations of the regulator. Safety culture refers to the characteristics of the work environment, such as the values, rules, and common understandings that influence employees’ perceptions and attitudes about the importance that the organization places on safety. During the reporting year, the CNSC participated in workshops in Canada and internationally on safety culture and management. This involvement allows the CNSC to influence the direction of the nuclear industry on safety culture at home and abroad, and to adopt successful practices deployed elsewhere.

The CNSC held a safety culture symposium for industry in 2004. The workshop highlighted the significant progress the industry has made in the area of safety culture and the recognition of its importance. For example, some facilities have developed safety culture frameworks, while others have developed and piloted evaluation methods for performing safety culture self-assessments. The CNSC has been developing a safety management program that will address information requirements to be presented to the Commission Tribunal, providing a complete picture of operators’ performance and safety trends.

Other compliance-related initiatives:

• The CNSC conducted compliance inspections of high- and moderate-risk licensed activities, which included 959 of the 2380 planned inspections of medical, academic and industrial licensees. In the 2005-2006 fiscal year, the CNSC will be requesting additional resources to enable us to ensure an appropriate level of compliance inspections while handling to an increase in regulatory workload. Compliance efforts identified and responded to 117 reportable occurrences, of which 10 involved the transportation of nuclear substances, 27 involved the recycling industry and 24 involved lost or stolen material. The reportable occurrences in these activity areas resulted in the issuance of four orders related to health and safety and six incidents of exceeding dose limits to nuclear energy workers.
• The CNSC continued to emphasize integrated audits at licensed facilities. Multi-disciplinary teams carrying out audits of more than one safety area can identify more comprehensively potential risks to workers, the public and the environment, and set priorities for remedial actions.
   

4. CNSC cooperates and integrates its activities in national/international nuclear fora

The CNSC works cooperatively on an ongoing basis with a number of national and international organizations to advance nuclear safety and security at home and abroad, and to provide benchmarking information.

The President of the Commission Tribunal is an active member of the Tribunal Heads, a group consisting of 22 federal tribunals, as well as the Council of Canadian Administrative Tribunals. In addition, she is a member of the Heads of Agencies steering committee and co-chair of the Heads of Agencies Governance sub-committee. The work has enhanced the visibility of the Commission and its image as a leader among Canadian administrative tribunals.

Cooperative frameworks

The CNSC developed a framework for establishing and reviewing domestic cooperative arrangements with federal and provincial organizations, departments and agencies. The framework enhances cooperation and integration ensuring that administrative arrangements are consistent with the CNSC mandate and remain effective.

The CNSC also developed a framework for tracking and coordinating Memoranda of Understanding, cooperative undertakings with foreign governments/agencies and international organizations, and a framework for assessing the value of participating in international activities and subsequently evaluating the results. Targeted involvement with international fora is essential to achieving the CNSC’s commitment to promote nuclear safety, non-proliferation and safeguards objectives in Canada and worldwide.

International nuclear non-proliferation activities

In Canada, the CNSC is responsible for implementing the international nuclear non-proliferation obligations agreed to by Canada. It does so through its regulatory programs under the Nuclear Control and Safety Act (NSCA) and through its participation in multilateral non-proliferation initiatives on behalf of the Government of Canada. The CNSC acted as technical advisor to the Nuclear Non-Proliferation Treaty (NPT) 2004 Preparatory Committee and inactively preparing for the May 2005 Review Conference.

The CNSC advised the Vienna Permanent Mission to the IAEA, Foreign Affairs Canada and other Canadian stakeholder organizations in order to advance Canadian positions on safeguards, export controls and non-proliferation with a view of strengthening the nuclear non-proliferation regime.

The CNSC also held consultations on the implementation of bilateral non-proliferation trade agreements with Argentina, Australia, Brazil, EURATOM, the Russian Federation, Spain, the United Kingdom and the United States for the purpose of assuring that Canadian exports of nuclear items are for peaceful purposes only, and to contribute to the international non-proliferation regime. For example, in 2004, the CNSC amended an Administrative Arrangement with the Russian Federation to assure adequate non-proliferation verification measures are in place for Canadian transfers of uranium to Russia.

The CNSC continued its ongoing international work on multilateral guidelines with the Nuclear Suppliers Group and the 35-nation NPT Exporters (Zangger) Committee to toughen nuclear export controls, particularly in response to emerging non-proliferation challenges.

IAEA Safeguards - Domestic and international

In 2004-2005, the CNSC participated in numerous activities with the IAEA to address domestic safeguards challenges and provide support for strengthened IAEA safeguards. Key cooperative activities included:

• Participation in a major international review of the IAEA’s safeguards system to provide recommendations aimed at maintaining the credibility of the safeguards system and enhancing its effectiveness and efficiency.
• Continued installation of new, technologically advanced safeguards equipment at Canadian nuclear facilities, to be completed at all locations by the end of 2005. Assistance has been provided at Pickering and Gentilly-2 to replace aging video surveillance systems with digital ones that include remote surveillance capabilities. Assistance was also provided to the IAEA to find secure, cost-effective methods to gain remote access to safeguards data collected at facilities. This cooperation with the IAEA in both planning and funding, and the ability to remotely monitor activities relevant to safeguards, are crucial to establishing a state-level safeguards approach in Canada.
• Completed a major software upgrade to the equipment used by the IAEA to remotely monitor the discharge of spent fuel from CANDU reactors. The ability to collect and review this data at the IAEA offices reduces expense and disruption at the facilities and also allows the IAEA to review and analyze data more quickly.
• Continued work with the Swedish nuclear regulator on improvements to the Digital Cerenkov Viewing Device used by the IAEA to verify long-cooled, low burn-up fuel held in storage pools. It is a more cost-effective technology.
• Co-operation with the IAEA and its member states to improve safeguards implementation by providing input into the IAEA revision of a safeguards publication on State System of Accounting for and Control of Nuclear Material (SSAC) guidelines.
• Ongoing formal consultations with the IAEA and the Canadian nuclear industry on a Canadian integrated safeguards approach.

Other cooperative activities

• Consultation with other government stakeholders to develop mechanisms that support efficient, effective and accountable assessment and licensing of applications for the import and export of controlled nuclear and nuclear-related dual-use substances, materials, equipment and technology.
• Provision of technical support for a major G8 initiative aimed at preventing the acquisition of weapons and materials of mass destruction by terrorists or those who shelter them.
• Publication in 2004 of Canada’s Third Report on the Convention on Nuclear Safety by the CNSC in consultation with industry representatives and other Government of Canada departments. In April 2005, the President and CEO of the CNSC, Ms Linda J. Keen, will preside over the Third Review Meeting of the IAEA Convention on Nuclear Safety, the first Canadian to chair a nuclear safety convention review meeting.
• As President of the Commission Tribunal, Ms. Keen was active in many international nuclear fora during the reporting period, including the International Nuclear Regulators’ Association meetings in Japan, the International Atomic Energy Agency (IAEA) International Conference on Topical Issues in Nuclear Installation Safety in Beijing, the IAEA International Conference on Nuclear Security in London, a visit to the United States Nuclear Regulatory Commission in Washington, D.C., the Global Nuclear Energy Summit 2004 in Toronto, the G8 Heads of Regulators Meeting in Moscow and the Nuclear Energy Agency’s Regulatory Forum in Paris.

Domestic cooperation

• The hosting of a three-day annual meeting of the Federal Provincial Territorial Radiation Protection Committee, whose purpose is to harmonize regulation and standards across the industry by sharing progress, new ideas and priorities.
• The co-hosting of a Canadian forum on the 2005 International Committee on Radiation Protection (ICRP) Recommendations, attended by the public industry and other regulatory and government bodies. Such activities provide the CNSC with the opportunity to communicate regularly with various government and industry stakeholders and ensure that Canadian needs and viewpoints are taken into account in developing international standards. They also allow the CNSC to influence the development and application of international standards and to adopt best practices from our peers around the world.

Nuclear Emergency Management

The CNSC is employing a collaborative approach in developing a new Nuclear Emergency Management (NEM) policy and upgraded programs. It is being developed in partnership with external stakeholders, and has included extensive consultations with licensees, provincial, municipal and federal government organizations involved in emergency preparedness management.

The CNSC NEM policy provides the foundation for all CNSC emergency management activities. Specifically, it outlines responses consistent with the risks at hand, clarifies roles and responsibilities, and helps maintain current capacity while taking future requirements into account. The policy will be adopted following public consultation.

In addition to developing the policy, key elements of an improved nuclear emergency management program have been identified and updated emergency plans and procedures are under development.

In addition, the CNSC Emergency Operations Centre (EOC) has been redesigned and reorganized to increase reliability and functionality and enhance back-up resources. Extensive training on roles, responsibilities, procedures and emergency response to chemical, biological, radiological and nuclear-related events has been conducted for staff and other Government of Canada departments. A wide variety of activities have been undertaken, ranging from creating a federal-provincial-territorial committee on radiological/nuclear emergencies to the installation of an emergency power generator at CNSC headquarters to maintain the CNSC’s capacity in the event of an outage.

Strengthening Safeguards The verification approaches and measures utilized by the IAEA to verify that nuclear material is not diverted from peaceful uses to nuclear weapons or other nuclear explosive devices, are commonly referred to as ‘safeguards’. In 1972, Canada was the first country to bring into force a comprehensive safeguards agreement with the IAEA for such verification as required by the Nuclear Non-Proliferation Treaty (NPT). The CNSC also is cooperating with the IAEA in developing new safeguards approaches for Canadian facilities and contributes to efforts to strengthen safeguards internationally. Through its regulatory process, the CNSC ensures that all relevant licensees have in place policies and procedures that include the reporting and monitoring of nuclear material and nuclear activities and the provision of access to nuclear facilities for IAEA safeguards inspectors. The CNSC performs compliance and auditing activities to ensure that these policies and procedures remain sufficient to meet safeguards requirements. Through its Safeguards Support Program, the CNSC also assists the IAEA in developing advanced safeguards equipment or techniques aimed at strengthening the effectiveness and efficiency of safeguards implementation. The Program also supports domestic needs in resolving specific safeguards issues related to Canadian nuclear facilities and the use of nuclear material. At all stages of the nuclear cycle, from uranium refining and conversion sites to nuclear power plants and waste management facilities, the CNSC has been actively working with the IAEA to design better approaches for meeting Canada’s international obligations. For example, since 2002, as a result of strengthened safeguards, there has been a dramatic increase in the resources required to track transfers of spent fuel to dry storage at multi-unit power reactor sites in Canada. To address this issue, the CNSC collaborated with the IAEA and Ontario Power Generation on a successful field trial at the Pickering reactor site in April-May 2004 to test a more cost-effective approach to track transfers of spent fuel to dry storage. All participants agreed that the trial provided a feasible approach that could be implemented at any multi-unit CANDU station. The CNSC’s experience in this area led to an invitation to participate in a similar field trial in April 2005 at a single-unit CANDU station in the Republic of Korea. Participation in this field trial reflects the CNSC’s ongoing efforts to optimize the national and international implementation of safeguards.

5. Stakeholders' understanding of the regulatory program

The CNSC is committed to openness and transparency. This commitment requires the CNSC to engage stakeholders above and beyond the public hearings and meetings process, through a variety of appropriate consultation processes, effective information sharing and communications activities.

Commission public hearings and meetings are a key element of the CNSC’s outreach activities. The Commission publishes Records of Proceedings, including Reasons for Decision , to explain the basis of licensing decisions. These Records of Proceedings, and information about the Commission’s proceedings, are available on the CNSC’s Web site at www.nuclearsafety.gc.ca . To facilitate access to public hearings and meetings, the Commission has made a number of improvements during the reporting period, including more opportunities to participate in the proceedings through teleconference and videoconference. Although most proceedings are held in Ottawa, more affected communities are using videoconferencing as a cost effective way to participate in public hearings.

Web casting is a promising technology for communicating Commission proceedings, and pilots of this technology in 2004 were highly successful. The CNSC will evaluate the feasibility of it in 2005-2006. The technology would be consistent with the Government of Canada’s Government On-Line objectives, and would benefit Canadians by ensuring that citizens interested in viewing public hearings in real-time could do so via the Internet from their homes or offices.

In another demonstration of the Commission’s commitment to increased participation in its proceedings, the Commission periodically holds hearings in the communities where the concerned nuclear facility or activities are located. In June 2004, the Commission held public hearings in Saskatoon and La Ronge, Saskatchewan to facilitate access to the public hearing process by local citizens on licensed activities in their communities. There was considerable participation by members of the public, local organizations and Aboriginal communities at these hearings.

Surveying stakeholder awareness and perceptions

The CNSC increased its knowledge of key stakeholder issues and concerns by undertaking a variety of survey activities in 2004-2005.

Stakeholder groups and 1,055 Canadian citizens were surveyed in 2004 to evaluate their knowledge of, level of confidence in and satisfaction with the performance of the CNSC as a nuclear regulator. The results indicated that more than half of Canadians feel confident that the nuclear industry in our country has effective regulation. In addition, the CNSC undertook an environmental scan to obtain a clearer picture of the climate in which it operates. An analysis was also conducted of how media coverage presents the CNSC, nuclear regulation, and nuclear energy in general, in order to further understand the environment and the needs and perceptions of stakeholders. The knowledge acquired through these activities has contributed to the CNSC improving its communications and outreach strategies to meet the needs of citizens and other stakeholders more effectively.

Developing a Sustainable Outreach Program

Building on tools and initiatives already in place, an Outreach Program was launched on June 4, 2004 to heighten public awareness and understanding of regulated nuclear activities and the CNSC’s role in protecting health, safety, security and the environment. Outreach activities undertaken in 2004-2005 include meetings with mayors in communities near nuclear facilities, meetings with licensee boards of directors, and providing affected communities with the opportunity to participate directly during public hearings by electronic means or through visits by the Commission.

Other activities, such as speaking engagements for the President and CEO and other CNSC staff, in Canada and abroad, offer opportunities to interact with stakeholders about the organization’s role, responsibilities and priorities.

Based on results of outreach activities and stakeholder surveys, the CNSC is identifying where outreach can be enhanced in 2005-2006.

Other activities

• Publication of a new brochure series to provide stakeholders with information about the CNSC’s work and its public hearing process.
• Improved information on the CNSC’s international activities and research and support program was developed and posted to the CNSC’s Web site. Other activities to improve the user-friendliness of the Web site included work to develop a subscription service to allow the public and stakeholders to receive automatic e-mail notification when new information is available on the site, and a redesign of the Commission hearings and meetings Web site, to be launched in the spring of 2005.
• Coordination of a joint CNSC-IAEA-industry meeting on the implementation of integrated safeguards in Canada. The goal was to ensure that stakeholders developed a common understanding of regulatory requirements and industry challenges.
• Development of an e-learning initiative to support licensee understanding of and compliance with nuclear non-proliferation import/export regulations. The first electronic modules are scheduled to be launched in the fall of 2005.
   

6. Management and Enabling Infrastructure

The CNSC’s management and enabling infrastructure ensure that CNSC staff have the necessary support to fulfill their mandates and to meet or exceed the accountability requirements of central and parliamentary agencies.

Integrated planning for results, efficiency and consistency

In 2004-2005, the CNSC developed and implemented comprehensive results-based planning as well as corporate strategies and processes to enhance the effectiveness, efficiency and consistency of its operations and management. This included the introduction of strategic and business plans for the CNSC and its major business lines, and linking them to results, budgets, and performance. The CNSC also developed a planning and reporting cycle to better align the strategic, business, work plan and budget cycles. The planning and reporting cycle is part of the CNSC’s management system.

Human resources

The CNSC continued to implement key components of its workforce sustainability strategy. This strategy is driven by the CNSC’s operational business needs.

For example, the CNSC has implemented a Leadership Development Program to build a strong team of managers and leaders. The program offers courses in leadership, resourcing, financial management, contracting, privacy, staff relations, health and safety, etc. The program also includes use of 360-degree performance evaluations for senior management, armchair discussions and access to coaching. In addition, the leadership team assembles two to three times a year to address key issues such as values and ethics and communications.

In 2004, part of the CNSC workforce was certified by the Public Service Staff Relations Board to be represented by the Professional Institute of the Public Service of Canada (PIPSC). The collective bargaining process with newly unionized staff began in 2004, and was ongoing as of March 31, 2005.

A survey of CNSC staff on internal communications was conducted in 2004, and was followed-up with targeted focus groups. The survey identified opportunities for improvement and efforts will continue in 2005-2006 to address the findings.

Values and Ethics Strategy

A clearly-articulated values and ethics strategy is a key component of a sound governance structure. The CNSC’s Values and Ethics Strategy reflects the organization’s values, provides practical tools for ethical decision-making by CNSC staff, includes a formal process for receiving information about alleged wrongdoing in the workplace and supports staff in fulfilling their responsibilities in regulating nuclear energy and materials. It also strengthens the CNSC’s relationships with licensees and stakeholders.

Tailored specifically for the CNSC, the values and ethics strategy under the theme “ Helping good people do the right thing ” was formally launched in March 2005. The strategy meets government requirements, and reflects the spirit and intent of the draft Public Servants Disclosure Protection Act (Bill C-11).

Other improvement initiatives

• A benchmarking study comparing the CNSC’s corporate services against services in four similar organizations and two international regulators was completed. The results indicated that the CNSC’s costs of common services (i.e., human resources, information management and technology, finance and administration, legal services, etc) are well within the range of those found in comparable federal organizations and “sister” international agencies.
• Developing a business continuity planning program to ensure minimal or no interruption to the availability of critical services and assets in the event of unforeseen circumstances.
• Developing the first phase of an internal management system manual that articulates the role of the CNSC and its staff, the organization’s governance structure and its fundamental business processes. The manual also provides a framework for supporting documentation such as policies, procedures and instructions.

Helping good people do the right thing Values and ethics are increasingly recognized as a cornerstone of good governance and leadership in the public and private sectors. How we achieve results for Canadians has become as important to public confidence as the results themselves. Since the CNSC holds a significant responsibility for public trust in the safe, effective regulation of nuclear energy and materials, having an active, clearly-articulated ethics strategy reinforces our commitment to our mandate. In 2004, the CNSC’s Audit and Ethics Group was mandated in addition to its rigorous internal audit role, to develop such a strategy, and receive and investigate disclosures of wrongdoing as required by the draft Public Servants Disclosure Protection Act (Bill C-11). Designed especially for the CNSC with extensive input from leaders, staff and subject experts, the values and ethics strategy was launched in March 2005. It meets government requirements, reflects the spirit and intent of the draft Bill C-11, and includes a formal process for receiving information about alleged wrongdoing in the workplace. An active, clearly articulated values and ethics strategy is a key component of sound governance, and provides all CNSC staff with practical tools for making ethical decisions in the course of their work. The strategy also provides guidance for strengthening the CNSC’s relationships with licensees and stakeholders. It also reinforces the CNSC’s longstanding culture of employee openness, integrity, and commitment, encourages new channels for workplace dialogue, and provides protection against any reprisals. To help implement the strategy, leaders and staff have been provided with practical tools and advisory services to guide their ethical decision-making. These include publications for staff and management that offer a model for ethical decision-making and case studies. As the strategy unfolds, the next focus of the CNSC’s attention will geared towards our relationships with licensees and the public. The values and ethics initiative will work towards preparing guidance for licensees, contractors, and other stakeholders to guide them in their relationships with the CNSC.

Measures of Performance

The CNSC recognizes the importance of being able to measure both the effectiveness and the efficiency of its programs, and has initiated the development of an integrated performance management framework. Effectiveness will be measured by way of selected outcome measures relating to the collective impact of the activities on meeting the mandate of the CNSC.

Efficiency, on the other hand, will be measured through ongoing monitoring of the CNSC’s performance against external and internal performance standards relating to individual activities undertaken and their associated outputs.

Outcome Measures

In 2004-2005, the CNSC developed an initial set of seven non-financial indicators based on feasibility, relevance and availability of data. The initial set of indicators is as follows:

These indicators will be further defined, base-level data will be collected, and potential target levels will be explored to monitor the performance of the CNSC against the above-noted outcomes. Under this initiative, the CNSC is also contributing to the Expenditure Management Information System (EMIS) project, coordinated by Treasury Board.

The CNSC currently publishes two significant measures of safe and secure nuclear installations and processes used only for peaceful purposes, the first part of the CNSC’s stated ultimate outcome (see the logic model ). These measures are the Radiation Index for nuclear stations, and the CNSC Report Card on Nuclear Power Plant Performance. See the CNSC Report Card on Nuclear Power Plant Performance as of January 2005 . For more information on these significant measures, please consult the CNSC’s Web site at www.nuclearsafety.gc.ca .

Performance Standards

Performance standards have been developed for the CNSC’s relationships with stakeholders. It is very important to note that as an independent regulator, it is inappropriate for the relationship between licensees and the CNSC to be considered a service; hence there are no service standards. A list of performance standards focusing on the needs and expectations of external stakeholders has been developed and work is progressing on implementing such standards. Internal performance standards have been put in place to monitor and report on the ability of corporate service functions to meet the needs and expectations of internal CNSC clients in supporting the delivery of the overall regulatory program.

External performance standards for the following activities were developed in 2003-2004, and were implemented in 2004-2005. These include:

External performance standards for operational activities were developed in 2004-2005, and will be implemented in 2005-2006. These include:
 

Activity	Performance standard	Target
Compliance
Verification: upon completion of the verification activity, the CNSC will:
Issue Type I Inspection Report	within 60 business days	80%
Issue Type II Inspection Report 3	within 40 business days	80%
Issue Desktop Review Report	within 60 business days	90%
Enforcement - upon an order being made, the CNSC will:
Confirm, amend, revoke or replace the order (see CNSC Regulatory Guide G-273)	within 10 business days	100%
Licensing - for requests pertaining to an existing licence, the CNSC will:
Screen the request for completeness and issue notification that the licensing request is / is not complete	within 20 business days	90%
Issue a licensing decision when a public hearing is not required (assuming an environmental assessment under the Canadian Environmental Assessment Act (CEAA) is not required)	within 80 business days	80%
Issue a licensing decision when a public hearing is required (assuming an environmental assessment under the CEAA is not required) (see CNSC document INFO-0715)	within 160 business days	90%

³ In Power Reactors, unless major issues arise, findings from Field Inspections and Control Room Inspections will be reported on a quarterly basis, within 40 business days of end of quarter.

Section III - Supplementary Information

The Canadian Nuclear Safety Commission - Operating Context

The CNSC Strategic Framework

The CNSC Strategic Framework uses this logic model for planning, for focusing activities and programs, for evaluating the contribution of initiatives to the CNSC outcomes and for illustrating the role of the CNSC as an agency committed to achieving results for Canadians.

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Governance at the CNSC

The Commission is an independent, quasi-judicial administrative tribunal and court of record, and is separate from CNSC staff. Both the staff organization and the Commission operate in a transparent manner. The CNSC is known as one of the most open and transparent nuclear regulators in the world.

The CNSC’s governance includes a clear vision with articulated outcomes, a focused mission and mandate, strong leadership as well as strong and professional corporate services providing information and internal controls that enable good stewardship of resources.

Integrated planning and performance management is an important aspect of the CNSC’s governance. It promotes vigorous and responsible management of resources with an emphasis on results. The CNSC defines desired results, delivers regulatory programs and activities, evaluates performance and makes necessary adjustments. The CNSC conducts mid-year and year-end corporate reviews of results achieved against plans and reallocates resources to the highest priorities. In addition, regulatory activities are reviewed and monitored quarterly.

Performance agreements that are specific, results-based, and clearly identify accountability continued to be in place in 2004-2005 for the top two levels of management. The next level of management will prepare 2005-2006 performance contracts. Performance agreements include Modern Management, Workforce Sustainability as well as commitments under the business planning and budgeting process.

A high level of oversight and scrutiny is provided by an independent internal audit program, complemented by regular audits by the Office of the Auditor General (financial and performance) and other officers of Parliament including the Canadian Human Rights Commission (employer obligations under the Employment Equity Act ) and the Privacy Commissioner of Canada ( Privacy Act ). The CNSC also abides by a “Conflict of Interest and Post-Employment Code for the CNSC”, modeled on the Values and Ethics Code for the Public Service.

Organizational Information

The CNSC operates as two separate organizations as follows:

1. a Commission of up to seven members; and
2. a staff organization of approximately 530 people.

i. Commission

The Nuclear Safety and Control Act (NSCA) provides for the appointment of up to seven Commission members by the Governor in Council. Members serve for a term not exceeding five years. One member of the Commission is designated as the President of the Commission. This position is held by Linda J. Keen.

Supported by the Secretariat, the Commission functions as an independent, quasi-judicial administrative tribunal and court of record. It sets regulatory policy direction on matters relating to health, safety, security and environmental issues affecting the Canadian nuclear industry. It makes independent decisions on the licensing of nuclear-related activities in Canada, and establishes legally-binding regulations. The Commission takes into account the views, concerns and opinions of interested parties and intervenors. The Commission delegates to Designated Officers the authority to render licensing decisions for certain categories of nuclear facilities and activities in accordance with the requirements of the NSCA and its associated regulations. The Commission retains for its own consideration licensing matters related to major nuclear facilities, for which it holds public hearings, in accordance with the CNSC Rules of Procedure .

ii. CNSC Staff

CNSC staff are located at a headquarters in Ottawa, site offices at each of the five nuclear power plants in Canada, and five regional offices. CNSC staff are located at each nuclear power plant in Canada to assess performance against regulations and specific conditions of operating licences. Regional offices conduct compliance activities for nuclear substances, transportation, radiation devices and equipment containing nuclear substances. They also respond to unusual events involving nuclear substances.

CNSC staff support the Commission by:

• developing regulatory frameworks;
• carrying out licensing, certification, compliance inspections and enforcement actions;
• coordinating the CNSC’s international undertakings;
• developing CNSC-wide programs in support of regulatory effectiveness;
• maintaining relations with stakeholders; and
• providing administrative support.

In addition, staff prepare recommendations on licensing decisions, present them to the Commission for consideration during public hearings and subsequently administer the Commission’s decisions. Where so designated, staff also render licensing decisions.

Organizational Chart

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Financial Summary Overview

The following summary tables represent an overview of the CNSC’s financial performance for 2004-2005. Financial information presented in most tables includes four figures:

• “Main Estimates” represent the reference level in CNSC’s 2005-2006 Main Estimates
• “Planned Spending” represent the CNSC’s appropriations on April 1, 2004 plus any anticipated funding adjustment;
• “Total Authorities” includes planned spending plus additional spending approved by Parliament during the fiscal year; and
• “Actual Spending” represents the actual expenditures incurred by the CNSC for the fiscal year and publish in the Public Accounts of Canada for 2004-2005.

In 2004-2005, the CNSC’s planned spending of $70.6 million consisted of an operating budget of $70.0 million (includes statutory employee benefits of $8.4 million) and a transfer payment budget (Grants and Contributions) of $0.6 million. The transfer payments budget consisted of a $0.6 million contribution to the IAEA for the Canadian Safeguards Support Program and several smaller grants and contributions to other international and non-profit organizations.

In addition to the $70.6 million planned spending, the CNSC received additional supplementary funding of $5.0 million, for a total authority of $75.6 million. The supplementary funding includes the Generator ($2.0 million); the Operating Budget Carry Forward ($2.6 million); Cost Recovery Phase-In and other adjustments ($0.4 million).

In 2004-2005, the CNSC recovered $48.8 million in non-respendable revenues, which represents approximately 60% of the $80.8 million of full cost of expenditures. Full cost includes services without charge, and all other expenditures as shown within the Statement of Operations of the Audited Financial Statements.

CNSC Tables

Table 1: Comparison of Planned Spending and Actual (incl. FTE)
Table 2: Use of Resources by Business Lines (or Program Activities)
Table 3: Voted and Statutory Items
Table 4: Net Cost of Department
Table 5: Contingent Liabilities
Table 6: Sources of Non-Respendable and Respendable Revenue
Table 7-A: 2004-05 User Fee Reporting Template – User Fees Act
Table 7-B: 2004–05 User Fee Reporting Template – Policy on Service Standards for External Fees
Table 8: Major Regulatory Initiatives
Table 9: Financial Statements of Departmental Corporations and Agents of Parliament
Table 10: Response to Parliamentary Committees, Audits and Evaluations for FY2004–2005
Table 11: Travel Policies

Table 1: Comparison of Planned Spending and Actual (incl. FTE)

Table 2: Use of Resources by Business Lines (or Program Activities)

Table 3: Voted and Statutory Items

Table 4: Net Cost of Department

Table 5: Contingent Liabilities

Claims have been made against the CNSC in the normal course of operations. Legal proceedings for claims totaling approximately $55,250,000 were still pending at March 31, 2005. The final outcome is presently not determinable and, accordingly, no provision has been recorded in the accounts for these contingent liabilities. Settlements, if any, resulting from the resolution of these claims will be accounted for in the year in which the liability is considered likely and the cost can be reasonably estimated.

Table 6: Sources of Non-Respendable and Respendable Revenue

Non-Respendable Revenue

Respendable Revenue - Not applicable

Table 7-A: 2004-05 User Fee Reporting Template - User Fees Act

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Table 7-B: 2004-2005 User Fee Reporting Template - Policy on Service Standards for External Fees

Table 8: Major Regulatory Initiatives

Table 9: Financial Statements of Departmental Corporations and Agents of Parliament

See Audited Financial Statements .

Table 10: Response to Parliamentary Committees, Audits and Evaluations for FY 2004-2005

Table 11: Travel Policies

Audited Financial Statements

Management Responsibility for Financial Statements

The accompanying financial statements of the Canadian Nuclear Safety Commission (CNSC) for the year ended March 31, 2005 and all information included in its annual report are the responsibility of management.

These financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles for the public sector and, where appropriate, they include amounts that have been estimated according to management’s best estimates and judgement. Management has prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with that provided in the financial statements.

Management has developed and maintains books, records, financial and management controls and information systems. They are designed to provide reasonable assurance that the Government’s assets are safeguarded and controlled, that resources are managed economically and efficiently in the attainment of corporate objectives, and that transactions are in accordance with the Financial Administration Act and regulations as well as CNSC policies and statutory requirements such as the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations .

The Commission’s external auditor, the Auditor General of Canada, has audited the financial statements and at the specific request of the Commission, compliance with the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations . The Auditor General has reported on her audit and compliance findings to the Commission and to the Minister of Natural Resources.

The paper version was signed by

Ottawa, Canada
June 3, 2005

AUDITOR'S REPORT

To the Canadian Nuclear Safety Commission
and the Minister of Natural Resources

I have audited the statement of financial position of the Canadian Nuclear Safety Commission as at March 31, 2005 and the statements of operations, deficit and cash flows for the year then ended. These financial statements are the responsibility of the Commission’s management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In my opinion, these financial statements present fairly, in all material respects, the financial position of the Commission as at March 31, 2005 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Further, in my opinion, the Canadian Nuclear Safety Commission has complied, in all significant respects, with the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations pursuant to the Nuclear Safety and Control Act .

The paper version was signed by

Crystal Pace, CA
Principal
for the Auditor General of Canada
Ottawa, Canada
June 3, 2005

Canadian Nuclear Safety Commission
Statement of Financial Position as at March 31

Commitments and Contingencies ( Note 11 )

The accompanying notes are an integral part of these financial statements.

Approved by:

The paper version was signed by

Statement of Operations for the year ended March 31

Statement of Deficit for the year ended March 31

The accompanying notes are an integral part of these financial statements.

Statement of Cash Flows for the year ended March 31

The accompanying notes are an integral part of these financial statements.

Notes to Financial Statements as at March 31, 2005

1. Authority and Objectives

The Canadian Nuclear Safety Commission (CNSC) was established in 1946 by the Atomic Energy Control Act . Prior to May 31, 2000, when the federal Nuclear Safety and Control Act (NSCA) came into effect, the CNSC was known as the Atomic Energy Control Board (AECB). The CNSC is a departmental corporation named in Schedule II to the Financial Administration Act and reports to Parliament through the Minister of Natural Resources.

The Nuclear Safety and Control Act provides comprehensive powers to the CNSC to establish and enforce national standards for nuclear energy in the areas of health, safety and environment. It establishes a basis for implementing Canadian policy and fulfilling Canada's obligations with respect to the non-proliferation of nuclear weapons. The NSCA also provides CNSC compliance inspectors with clearer, fuller powers and brings penalties for infractions in line with current legislative practices. The CNSC is empowered to require financial guarantees, order remedial action in hazardous situations and require responsible parties to bear the costs of decontamination and other remedial measures.

The objectives of the CNSC are to:

• regulate the development, production and use of nuclear energy and the production, possession and use of nuclear substances, prescribed equipment and information in order to: a) prevent unreasonable risk to the environment, to the health and safety of persons and to national security; and b) achieve conformity with measures of control and international obligations to which Canada has agreed; and
• disseminate scientific, technical and regulatory information concerning: a) the activities of the CNSC; b) the development, production, possession, transport and use of nuclear energy and substances; and c) the effects of nuclear energy and substances use on the environment and on the health and safety of persons.

The CNSC also administers the Nuclear Liability Act , including designating nuclear installations and prescribing basic insurance to be carried by the operators of such nuclear installations, and the administration of supplementary insurance coverage premiums for these installations. The sum of the basic insurance and supplementary insurance totals $75 million for each designated installation ( Note 13 ). The number of installations requiring insurance coverage is 14 (2004 – 14).

The CNSC's expenditures are funded by a budgetary lapsing authority. Employer contributions to employee pension and non-pension benefits are authorized by a statutory authority.

The CNSC established a cost recovery program as provided for by the NSCA. The intent of the program is the recovery of CNSC's expenditures related to its regulatory activities from users licensed under the Act. These expenditures include the technical assessment of licence applications, compliance inspections and the development of licence standards. On July 1, 2003 new CNSC Cost Recovery Fees Regulations were implemented which replace the former AECB Cost Recovery Fees Regulations 1996. The new fees are being phased in over a three-year period through application of fee reductions amounting to 15% in the first year, 10% in the second year and 5% in the third year.

2. Significant Accounting Policies

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles for the public sector. The significant accounting policies are:

a) Parliamentary appropriations

Appropriations are based in large part on cash flow requirements. Consequently, items recognized in the statement of deficit and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 shows the reconciliation of net cost of operations, parliamentary appropriations voted and net cash provided by government to parliamentary appropriations used.

b) Due from the Consolidated Revenue Fund

The CNSC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the CNSC is deposited to the CRF and all cash disbursements made by the CNSC are paid from the CRF. Due from the Consolidated Revenue Fund represents the amount of cash that the CNSC is entitled to draw from the Consolidated Revenue Fund, without further appropriations, in order to discharge its liabilities.

c) Revenue

Licence fee revenue is recognized on a straight-line basis over the period to which the fee payment pertains (normally three months or one year). All other revenue is recognized in the period in which the underlying transaction or event occurred that gave rise to the revenue. Licence fees received for future year licence periods are recorded as deferred revenue. Revenue from licence fees, contract projects and other sources is deposited to the Consolidated Revenue Fund and is not available for use by the CNSC. Legislative authority allows for the respending of amounts received on the disposal of surplus assets.

d) Vacation pay

Vacation pay is expensed as the benefit accrues to employees under their respective terms of employment using the salary levels at year end. Vacation pay liability payable on cessation of employment represents obligations of the CNSC that are normally funded by appropriation when paid.

e) Pension benefits

All eligible employees participate in the Public Service Pension Plan administered by the Government of Canada. The CNSC’s contributions reflect the full cost as employer. This amount is currently based on a multiple of an employee’s required contributions and may change over time depending on the experience of the Plan. The CNSC’s contributions are expensed during the year in which the services are rendered and represent the total pension obligation. The CNSC is not currently required to make contributions with respect to actuarial deficiencies of the Public Service Pension Plan.

f) Employee severance benefits

Employees are entitled to severance benefits, as provided for under their respective terms of employment. The cost of these benefits is accrued as employees render the services necessary to earn them. Employee severance benefits represent obligations of the CNSC that are normally funded by appropriation when the benefits are paid. The cost of the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

g) Services provided without charge by other government departments and agencies

Services provided without charge by other government departments and agencies are recorded as operating expenses at their estimated fair value. These include services such as: accommodation provided by Public Works and Government Services Canada, contributions covering employers’ share of employees’ insurance premiums and costs paid by Treasury Board Secretariat, salaries and associated legal costs of services provided by Justice Canada, audit services provided by the Office of the Auditor General, and workers’ compensation benefits provided by Human Resources and Skills Development Canada. A corresponding amount is credited directly to the Deficit.

h) Grants and contributions

Grants are recognized in the year in which entitlement of recipients has been established, while contributions are recognized in the year in which the conditions for payment are met.

i) Capital assets

Capital assets with an acquisition cost of $10,000 or more are recorded at cost less accumulated amortization. Amortization commences on the first day of the month following the month of acquisition and is calculated on a straight-line basis over the estimated useful life of the asset as follows:

  j) Nuclear Liability Reinsurance Account

The CNSC administers the Nuclear Liability Reinsurance Account on behalf of the federal government. The CNSC receives premiums paid by the operators of nuclear installations for the supplementary insurance coverage and credits these to the Nuclear Liability Reinsurance Account in the Consolidated Revenue Fund. Since the CNSC does not have the risks and rewards of ownership, nor does it have accountability for this account, it does not include any of the associated financial activity or potential liability in its financial statements. Financial activity and liability is however reported in Note 13 of these financial statements.

k) Use of estimates

These financial statements are prepared in accordance with Canadian generally accepted accounting principles. The preparation of accrual financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and contingencies during the reporting period. Actual results could differ from the estimates. The most significant items where estimates are used are employee severance liabilities and amortization of capital assets.

3. Parliamentary Appropriations

The CNSC receives its funding through parliamentary appropriations, which are based primarily on cash flow requirements. Items recognized in the statement of operations and the statement of deficit in one year may be funded through parliamentary appropriations in prior and future years. Accordingly, the CNSC has different net results of operations for the year on a government funding basis than on a Canadian generally accepted accounting principles basis. These differences are reconciled below.

a) Reconciliation of net cost of operations to total parliamentary appropriations used

b) Reconciliation of parliamentary appropriations voted to total parliamentary appropriations used

c) Reconciliation of net cash provided by government to total parliamentary appropriations used

4. Accounts Receivable

5. Capital Assets

Amortization for the current year amounts to $481,056 (2004 - $408,792) and is included in other expenses on the statement of operations.

6. Deferred Revenue

Generally, licence fees are paid in advance of the fee period. Since revenue is recognized over the duration of the fee period, fees received for future year licence periods are recorded as deferred revenue.

7. Summary of Expenditures and Revenues by Cost Recovery Fee Category

8. Related Party Transactions

The CNSC is related in terms of common ownership to all Government of Canada departments, agencies, and Crown corporations. The CNSC enters into transactions with these entities in the normal course of business. Certain of these transactions are on normal trade terms applicable to all individuals and enterprises, while others are services provided without charge to the CNSC. All material related party transactions are disclosed below.

During the year, the CNSC expensed $18,547,219 (2004 - $17,025,131) which include services provided without charge of $8,138,745 (2004 - $7,783,155) as described in Note 9. The CNSC recognized revenue of $4,072,168 (2004 - $7,508,925) which include accounts receivables in the amount of $774,719 (2004 - $745,842).

9. Services Provided Without Charge

During the year, the CNSC received services that were obtained without charge from other government departments and agencies. These are recorded at their estimated fair value in the financial statements as follows:

10. Licences Provided Free of Charge by the CNSC

The CNSC provides licences free of charge to educational institutions; not-for-profit research institutions wholly owned by educational institutions; publicly funded health care institutions, not-for-profit emergency response organizations; and federal departments. The total of these licences amounted to $6,927,694 (2004 - $5,580,320).

11. Commitments and Contingencies

a) Commitments

The nature of the CNSC’s activities results in some multi-year contracts and obligations whereby the CNSC will be committed to make some future payments when the services and goods are received. These commitments are subject to there being an appropriation by Parliament for the fiscal year in which the payment is made and the CNSC has the right to terminate these commitments. As of March 31, 2005 the CNSC has future years contractual obligations for the following:

b) Contingencies

Claims have been made against the CNSC in the normal course of operations. Legal proceedings for claims totaling approximately $55,250,000 (2004 - $55,250,000) were still pending at March 31, 2005. The final outcome is presently not determinable and, accordingly, no provision has been recorded in the accounts for these contingent liabilities. Settlements, if any, resulting from the resolution of these claims will be accounted for in the year in which the liability is considered likely and the cost can be reasonably estimated.

12. Employee Future Benefits

a) Pension Benefits

The CNSC and all eligible employees contribute to the Public Service Pension Plan. This pension plan provides benefits based on years of service and average earnings at retirement. The benefits are fully indexed to the increase in the Consumer Price Index. The employer’s and employees’ contributions to the plan were as follows:

b) Employee Severance Benefits

The CNSC provides severance benefits to its employees based on years of service and final salary. This benefit plan is not pre-funded and thus has no assets, resulting in a plan deficit equal to the accrued benefit obligation. Benefits will be paid from future appropriations. Information about the plan, measured as at the statement of financial position date is as follows:

13. Nuclear Liability Reinsurance Account

Under the Nuclear Liability Act (NLA), operators of designated nuclear installations are required to possess basic and/or supplementary insurance of $75 million per installation for specified liabilities. The federal government has designated the Nuclear Insurance Association of Canada (NIAC) as the sole provider of third party liability insurance and property insurance for the nuclear industry in Canada. NIAC provides insurance to nuclear operators under a standard policy.

The policy consists of two types of coverage: Coverage A and Coverage B. Coverage A includes only those risks that are accepted by the insurer, that is, bodily injury and property damage. Coverage B risks include personal injury that is not bodily, for example psychological injury, damages arising from normal emissions and damage due to acts of terrorism. Effective in 2003, the federal government agreed to provide coverage for damage due to acts of terrorism which was previously provided under Coverage A.

NIAC receives premiums from operators for both coverages, however, premiums for Coverage B risks are remitted to the federal government which reinsures these risks under a Reinsurance Agreement between NIAC and the federal government. The federal government, through the Reinsurance Agreement also pays the difference (supplementary insurance) between the basic insurance amount set by the CNSC and the full $75 million of liability imposed by the NLA. As of March 31, 2005 the total supplementary insurance coverage is $584,500,000 (2004 - $584,500,000).

All premiums paid by the operators of nuclear installations for the supplementary insurance coverage are credited to a Nuclear Liability Reinsurance Account in the Consolidated Revenue Fund. Premiums received in respect of coverage for damage due to acts of terrorism amount to $140,523 (2004 - $134,055). Claims against the supplementary insurance coverage are payable out of the Consolidated Revenue Fund and charged to the Account. There have been no claims against or payments out of the Account since its creation.

As explained in Note 2 j), the CNSC administers the Nuclear Liability Reinsurance Account on behalf of the Government of Canada through a specified purpose account consolidated in the Public Accounts of Canada. During the year, the following activity occurred in this account:

Section IV - Other Items of Interest

Report Card on Nuclear Power Plant Performance as of January 2005

CNSC staff assesses licensee programs (“P”) and their implementation (“I”) separately, according to five ratings. As of January 2005, Pickering A Units 1, 2 and 3 remained fuelled and in a guaranteed shutdown state, and Unit 1 was undergoing restart work. Bruce A Units 1 and 2 remained defuelled and in a lay-up state.

Legend:

A = Exceeds requirements
B = Meets requirements
C = Below requirements
D = Significantly below requirements
E = Unacceptable

Information Sources

For further information or to request publications, contact:

Canadian Nuclear Safety Commission
Office of Communications and Regulatory Affairs
280 Slater Street, P.O. Box 1046, Station B
Ottawa, Ontario K1P 5S9

Telephone: (613) 995-5894 or 1-800-668-5284 (within Canada)
Fax: (613) 995-5086
e-mail: info@ccsn-ccsn.gc.ca

The following information is available on the CNSC Web site at www.nuclearsafety.gc.ca

Information on the plans, priorities, and activities of the CNSC may be found in:

Canadian Nuclear Safety Commission, Annual Report
Canadian Nuclear Safety Commission, Report on Plans and Priorities
Canadian Nuclear Safety Commission, Departmental Performance Report

The CNSC administers the following Acts and associated regulations:

Nuclear Safety and Control Act, 1997, c.9
Nuclear Liability Act, 1985, c. N-28

For further information you may also consult the CNSC Web site at www.nuclearsafety.gc.ca

Date Modified: 2005-10-26