Financial guarantees

The Canadian Nuclear Safety Commission’s (CNSC) mandate requires that extensive measures be implemented to protect health, safety, security and the environment. To fulfill this mandate, the CNSC requires licensees to make sufficient provisions – even before operations begin – for the eventual decommissioning and termination of licensed activities. Financial guarantees are an essential tool that helps enforce this mandate.

The Nuclear Safety and Control Act (NSCA) stipulates that every licence application must include a description of a proposed financial guarantee. This means that licensees of all nuclear facilities, including those for used nuclear fuel and radioactive waste management, as well as nuclear power plants, and uranium mines and mills, must provide a guarantee that sufficient financial resources are available to fund all approved decommissioning activities should the licensee not be available to fulfill its obligations. These include:

• dismantling, decontamination and closure of the facility
• any post-decommissioning monitoring or institutional control measures that may be required
• subsequent long-term management or disposal of all wastes, including used fuel

If a licensee is not available to fulfill its obligations for decommissioning, the CNSC must be assured that it can access adequate funding measures upon demand. These measures may involve several types of financial guarantees, including cash, letters of credit, surety bonds, insurance and legally binding commitments from either the provincial or federal government. The acceptability of these measures is determined by the CNSC, based on the following general criteria:

• Liquidity: The proposed funding measures should allow the financial vehicle to be drawn upon only with the approval of the CNSC, and payout for decommissioning purposes should not be prevented, unduly delayed or compromised for any reason.
• Certainty of value: Licensees should select funding, security instruments and arrangements that provide full assurance of their value.
• Adequacy of value: Funding measures should be sufficient, at all or predetermined points in time, to fund the decommissioning plans for which the funds are intended.
• Continuity: The required funding measures for decommissioning should be maintained continually. This may require periodic renewal, revision and replacement of securities provided or issued for fixed terms. For example, during a licence renewal, the preliminary decommissioning plan may be revised and the financial guarantee updated. Where necessary, to ensure continuity of coverage, funding measures should include provisions for advance notice of termination or intent to not renew.

Since 2000, the CNSC has focused on financial guarantees for large complex facilities. It has required all major licensees with Class I operating facilities, such as nuclear generating stations, and fuel manufacturing facilities, and uranium mines and mills, to have financial guarantees in place. In recent years, the financial guarantee program has been broadened to cover users of sealed sources and radiation devices.