Nuclear watchdog loses teeth, industry just loses?

Corpobligation: At the time turning points in corporate/operational risk management can be difficult to define but one has certainly been crossed in the case of Canada's nuclear industry.

• Background: Canadian Nuclear Safety Comission (CNSC) shut down the Chalk River, medical isotope, reactor run by Atomic Energy Canada Limited (AECL) in November 2007, because of AECL's failure to meet certain safety regulations.
• This led to a shortage of medical isotopes and an eventual Federal legislative override of the regulations to reopen the nuclear plant. Subsequently, the Linda Keen, president of CNSC, was removed from the presidency, although she still sits on the CNSC committee.
• In a world facing global warming, nuclear energy is hot but controversial.
• The new President of the CNSC is considered "good news for everybody."
• The media has a challenge in covering an issue like the nuclear industry and the spin has been rich on both sides of the safety issue - how can CSR help?

Safety Spin

Nuclear plants have many levels of security to prevent meltdowns or venting of nuclear radiation. The technical questions are far beyond the scope of this article and beyond the capacity of most members of society, including Members of Parliament. The creation of a Crown corporation, AECL, and an arms-length regulator, the CNSC, is designed to ensure that the interests of nuclear power creation and public safety are balanced. But, what happens when the regulator's head is chopped off and the AECL is then let loose?

New attitude of the regulator (Globe and Mail )

The Canadian Nuclear Safety Commission has indicated to industry officials that it plans to get back into the business of prelicensing new reactor designs, removing a major roadblock for the sector, sources familiar with the talks said.

The regulator has also made a specific commitment to Atomic Energy of Canada Ltd. to review the company's proposed ACR-1000 reactor, an industry official said.

The move is enormously important for Crown-owned AECL, because it once again gives the company a hometown advantage as it competes against global rivals to build the first new reactors in Ontario in more than two decades.

Prelicencing gives an edge to domestic nuclear producers like AECL, even though they have not met their regulatory obligations. The new President of the CNSC is considered "good news for everybody," according to the Globe and Mail's sources. This calls into question the role of an independent regulator, who is presumably meant to be a thorn in the side of uncooperative entities that fail to meet their regulatory obligations.  

Power plants are often natural monopolies and this leads to a great deal of government regulation. Government regulators are often seen to be a drain or hindrance to private sector innovation, but the repeated failure of AECL to follow through on its safety commitments despite repeated assurances that it had done so suggests that the regulation was acting reasonably. 

This is an example where the CSR discourse can teach lessons to public/private partnerships. High levels of CSR expectations and practices would help to create a nuclear industry that encompasses the best aspects of government regulation (safety, public accountability) and private industry (efficiency and access to capital), rather, than a model where government accountability is avoided while private companies cut costs and take greater risk. The latter was the unfortunate result of parliamentary interference in the regulatory processes of the CNSC.

The Future of Nuclear

Good news for anyone worried about the parties not learning anything from the outage, nuclear industry:

The joint review will cover all action taken by each organization, as well as the lessons learned by both organizations from the event. The review will examine the performance of the CNSC and AECL staff over the period leading up to and pursuant to the Commission Tribunal decision to renew the NRU reactor licence in 2006, as well as the subsequent period leading up to the extended outage of the NRU in November and December 2007.

Talisman International LLC, which was retained by the CNSC on December 15 to conduct its lessons learned project, will also be retained by AECL in a separate contract. A joint report will be completed this spring and will be made publicly available.

Not as good of news on the conflict of interest front. But who would worry about an arcane industry investigating itself by hiring a firm that employs over 25 Senior Managers at the U.S. Nuclear Regulatory Commission (see Talisman International LLC site).

New sources of medical isotopes

The US is looking for its own source of medical-isotopes. (G & M)

Finance, Nuclear Power and Responsibility

When we are trying to find a solution for global warming, nuclear is an important alternative to fossil fuels. Financing nuclear power is a challenge, given the hort term extremely unlikely risks of meltdown or radiation leak + the longterm certain challenge of dealing with nuclear waste. Private insurers are unwilling to cover losses due to nuclear disaster because of these factors. A responsible approach to nuclear power and finance will require both the private/public partnership discussed above along with a realistic assessment of the full costs of insuring against disaster and the costs of future cleanup. Only with all of this information can a responsbile decision be made about the financial and environmental viability of nuclear power.

- UPDATE -

MDS Nordion, the distributor of the Chalk River medical isotopes, saw its profits rise despite the shutdown by the CNSC:

Despite a "perfect storm" at medical isotope supplier MDS Nordion, parent MDS Inc. reported a small increase in profit and a 23-per-cent rise in revenue for the fiscal 2008 first quarter, the life sciences company said yesterday.

"It was a perfect storm for MDS Nordion which had a tough quarter given the supply disruptions in November and December and light cobalt shipments in the first quarter," president and chief executive officer Stephen DeFalco told a conference call with analysts.

- Globe and Mail 

---