Cost Recovery Advisory Group, Meeting Minutes: March 23, 2018 14:30–16:00, 280 Slater Street, Ottawa

Attendees from the Cost Recovery Advisory Group (CRAG)

Member	Industry represented	Work organization
Steve Coupland	Canadian Nuclear Association	Canadian Nuclear Association
Sherree Patterson, joined by Saad Haseen (both via teleconference)	Nuclear reactors	Ontario Power Generation
Michael Hare, joined by Brian Thorne (via teleconference)	Nuclear reactors	NB Power
Shaun Cotnam (via teleconference)	Nuclear research and test facilities	Canadian Nuclear Laboratories
Kevin Nagy (via teleconference)	Uranium processing facilities and uranium mines	Cameco
Stephen Walker (via teleconference)	Canadian Council of Independent Laboratories	Paterson Group Inc.
Dan Stunden (via teleconference)	Nuclear substances and prescribed equipment (portable gauges)	Stantec

Attendees from the Canadian Nuclear Safety Commission (CNSC)

Liane Sauer	Director General, Strategic Planning Directorate (CRAG Chair)
Colin Moses	Director General, Directorate of Nuclear Substance Regulation
Hugh Robertson	Director General, Directorate of Regulatory Improvement and Major Projects Management
Daniel Schnob	Director General, Finance and Administration Directorate
Nancy Sigouin	Director, Financial Resources Management Division (FRMD)
Claire Pike	Director, Regulatory Operations Coordination Division (ROCD)
Tetyana Panichevska	Senior Project Officer, ROCD
Chantale Dault-Beausoleil	Chief, Revenue Management, FRMD
Rachelle Millaire	Project Officer, ROCD
Lee Brunarski	Senior Policy Officer, Policy, Aboriginal and International Relations Division (CRAG Secretary)

14:30 – Meeting commenced.

Introduction and opening remarks

Liane Sauer opened the meeting and welcomed the participants. The participants then introduced themselves.

Review of minutes and action items

Liane noted that the minutes of the last meeting had been provided to all CRAG members and are available on the CNSC website. She identified the following actions and their status from the last meeting:

• Clarify how the costs of the CNSC’s Independent Environmental Monitoring Program are allocated into regulatory activity plans (RAPs)
  • Nancy Sigouin clarified that, currently, IEMP efforts are planned against a generic cost code, which encompasses all licensees, and are distributed proportionally among all licensees during the costing allocation process.
    Action closed
• Clarify how laboratories handling only naturally occurring radioactive materials factor into fees, specifically, whether the CNSC distinguishes between laboratories handling only NORM and those also handling non-NORM
  • Colin Moses clarified that fees are based on the information provided by licensees in their application. If there is no applicable exemption under section 10 of the General Nuclear Safety and Control Regulations or paragraph 5(1)(f) of the Nuclear Substances and Radiation Devices Regulations, then a laboratory is subject to CNSC regulatory oversight and the associated cost recovery fees.
    Action closed
• Review comments made by CRAG members and captured in the minutes on the future of CRAG, review the CRAG terms of reference and the membership list and provide comments by July 7, 2017
  • Liane clarified that only one response was received, which supported the current composition, and suggested more frequent meetings, ideally every six months. Liane suggested that she brief the incoming CNSC President and CEO on the CRAG and report back to the CRAG members at the next meeting the new President and CEO’s perspective on the CRAG. A new discussion on the future of the CRAG could be held during the next meeting, with formal comments invited after the meeting.
    Action ongoing

Looking back over the past year

Liane recounted some of the notable developments for the CNSC since the last meeting including:

• preparing for the transition to a new President and CEO
• the appointment of five new Commission members, two of who have previously served on the Commission
• Commission hearings on the Western Waste and Pickering waste management facilities Point Lepreau and Darlington nuclear generating stations and Chalk River Laboratories
• environmental assessments for three Canadian Nuclear Laboratories projects
• regulatory oversight reports on uranium and nuclear substance processing facilities, nuclear substances and nuclear power plants
• participation in Exercise Unified Control utilizing the full capabilities of the CNSC’s updated Emergency Operations Centre
• reviewing and understanding the impacts of the government’s environmental reform legislation on the CNSC
• updating or publishing 13 regulatory documents
• participation in 18 International Atomic Energy Agency review missions
• CNSC Executive-Vice President Ramzi Jammal’s presidency of the Convention on Nuclear Safety
• continued to work with licensees to ensure the safety of Canada’s nuclear industry

Operational management

Update on RAPs

Claire Pike gave an update on RAPs. She reminded CRAG members of facilities and activities to which RAPs apply, what factors are considered when preparing RAPs, and what information RAPs include, such as estimated effort for technical regulatory activities and internal support services, total estimated effort and fee, and the list of major activities. It was noted that RAPs and fee estimates for the the fiscal year 2017–18 were issued in April 2017.

Reports on the number of licensing and compliance activities completed by the CNSC in fiscal year 2016–17 were issued in June 2017 to fee-paying licensees for Class I nuclear facilities and uranium mine and mill facilities. As applicable to a given facility, the reports include the number of licensing decisions for new licences, licence renewals and licence amendments, as well as the number of Type I and Type II inspections conducted and the number of orders issued.

The CNSC’s target is to issue 2018–19 RAPs and fee estimates by the end of March 2018 and that the format and level of detail of 2018–19 RAPs will remain the same as the 2017–18 RAPs. Claire added that the report on the number of licensing and compliance activities completed by the CNSC in 2017–18 will be issued to Class I nuclear facilities and uranium mine and mill facilities around the time the final invoices are issued. RAPs licensees were encouraged to contact CNSC regulatory program directors or project officers for detailed information related to licensing and compliance activities at their facilities and CNSC finance officers for fees-related questions.

A CRAG member asked whether the draft legislation Bill C-69, which proposes changes to federal environmental assessments, would have a fee impact that would get factored into the environmental scan information referenced on slide 3. Liane clarified that the reference on the slide is to the CNSC’s environmental scanning work conducted in house. It informs the CNSC of what is going on in the external environment that could impact the work the CNSC does, and does not have cost recovery implications.

In response to a question about the CNSC’s targets for providing licensees with their RAPs and fee estimates Claire replied that the RAPs and fee estimates are typically sent out in early April, and are followed up on in June with a report describing the CNSC’s licensing and compliance activities from the previous fiscal year.

Some CRAG members expressed an interest in having more detailed information included in the RAPs to better understand how the fee estimates are determined. Some members expressed concern related to difficulties in obtaining information on their RAPs from CNSC regulatory program directors.

Liane noted that concerns related to the level of information included in the RAPs on technical regulatory activities and internal support services have been raised previously by CRAG members. She confirmed that the level of information currently provided is supported by CNSC management and provides predictability of fees.

Tetyana Panichevska added that the CNSC is trying to strike the right balance between the information on CNSC activities provided to licensees and the predictability of fees. If the CNSC were to begin to provide more information in RAPs and fee estimates it would result in more administrative costs for the CNSC and those additional costs would be passed onto RAPs licensees. Tetyana reminded CRAG members that licensees can get information on their individual regulatory plans, specifically on licensing and compliance activities, by communicating directly with their regulatory program directors or project officers. With respect to fee estimates, licensees should contact CNSC finance officers. A CRAG member suggested that a CRAG meeting is an appropriate forum for discussions of specific interest or concern to a particular CRAG member. Liane clarified that CRAG is a forum to represent the various areas of the nuclear industry that pay cost recovery fees.

During the 2017 CRAG meeting, a CRAG member asked a question about how the costs of the CNSC’s Independent Environmental Monitoring Program (IEMP) are allocated into the RAPs. Nancy Sigouin clarified after that meeting that IEMP efforts are planned against a generic cost code, which encompasses all licensees, and are distributed proportionally among all licensees during the costing allocation process. A CRAG member asked whether “proportional” distribution is applied to those licensees studied in a given year.

Tetyana responded that IEMP costs are allocated proportionally to all licensees because all licensees benefit from the program, even if sampling and analysis is not done at each facility each year.

A CRAG member asked whether CRAG members would be able to see the relevant documentation to understand how the fees are arrived at, including CNSC staff timesheets, so licensees can better project how much they are likely to be charged in future years. Daniel Schnob replied that there is no subjectivity in the costs recovered; they are associated directly with the level of effort anticipated for each facility. He added that he understands the importance for licensees of being able to project costs but clarified that licensees will not be part of the CNSC’s internal planning process.

Financial management

Prior to beginning the presentation, Nancy Sigouin was asked a question about refunds under the CNSC’s fixed proportion model for RAP licensees. Nancy explained that year-end adjustments are determined once the CNSC’s full costs are verified by the Office of the Auditor General and the audited financial statements have been signed. Refunds or invoices represent the difference between the estimated annual fee and the actual CNSC costs. Under the fixed proportion model, all RAP licensee refunds or invoices use the same proportion as the initial RAPs.

In response to a question about the size of refunds in recent years Nancy replied that the average refund has been between 3 and 7% for the last five years.

A question was asked about why 2012–13 was used as a reference year regarding RAP increases and why there was a big jump between 2017–18 and 2018–19. Nancy responded that 2012–13 was used as a reference because the RAPs licensee population has not changed since then, and that one of the reasons for the jump was the collective agreement signed in 2018 and the associated cost of four years of retroactive pay.

A CRAG member asked a question about the types of CNSC activities that are included in the internal support services category in the RAPs, which comprises approximately 30% of the total RAP fee, and whether CRAG members could be provided with more information. Liane replied that the CNSC would endeavour to provide more information on what activities are included in the internal support services.

Action: The CNSC will provide CRAG members with more information on the activities included in the internal support services category in the RAPs.

Financial overview

Nancy provided a financial overview and noted that:

• the CNSC’s overall spending increased by $16 million or 10.27% over the last five years (2013–14 to 2017–18)
• A new collective agreement signed in 2017–18 included salary increases for the previous four years, which resulted in $13 million in retroactive pay
• the CNSC’s Workforce Of The Future Initiative is in place to ensure that regulatory work will continue when key employees retire
• the CNSC faces some financial pressures related to information technology investments Government of Canada expenditures, such as the CNSC contribution to support the Phoenix pay system (not the implementation costs, only the management of the system)
• apart from inflation-related increases, the CNSC anticipates costs to be fairly stable in future years

RAPs

Nancy then discussed RAPs and highlighted that RAP licensees have represented 64% of CNSC activities since 2013–14; licensees’ individual RAPs fluctuate based on direct efforts required for their facilities and CNSC overall plans allocated on the basis of the direct effort. Year-end RAP refunds since 2013–14 have been between 3 and 7%, and that the CNSC’s actual fees for 2017–18 would be within 0.5% of the initial forecast of $102.9 million.

An additional RAPs-related slide was table dropped during the meeting. The slide indicated that RAPs fees were projected to increase $3.7 million from 2017–18 to 2018–19. The increase represented a difference of $3,239,000 (or 3.13%) since 2013–14. The average yearly increase between 2013&ndash14 and 2018–19 would be $648,000 (or 0.6%), which was well-below the inflation rate over the same period.

Formula fees

Nancy then gave an overview of formula fees. The fees are calculated based on the formulas set out in Part 3 of Schedule 1 of the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations (CRFR), and are composed of base hours, variable hours, a compliance coefficient and an hourly rate. The hourly rate is reviewed and calculated yearly according to the CRFR, and that it would increase from $260 per hour to $265 per hour effective April 1, 2018. The increase to the hourly rate was due to cost of living increases.

Nancy clarified that the formula fees licensees continue to be subsidized between $2.2 million and $3.3 million per year from the CNSC’s Parliamentary appropriated funding. This is the result of CNSC invoicing being bound by the formulas written in the CRFR in 2003 when the industry and CNSC regulatory effort were significantly different. The CNSC is continuing to address this gap through a progressive increase in base and variable hours beginning in 2014–15, which is reviewed annually and adjusted as required, to better reflect the CNSC’s actual level of regulatory effort. At the current pace, the formula fees revenues should align with the CNSC’s actual regulatory costs by 2023–24.

Nancy concluded that the CNSC continuously reviews its budgets and costs by starting with a rigorous planning process, a review and challenge function provided by the CNSC management committee, audited financial statements by external auditors (Office of the Auditor General) and yearly budget approvals by the Treasury Board Secretariat.

16:00 – L. Sauer thanked attendees for their presence and adjourned the meeting.