Cost Recovery Advisory Group
Cost Recovery Advisory Group
Minutes of Meeting
December 9, 2004
Members in Attendance:
Canadian Nuclear Association
Nuclear Reactors and Heavy Water Plants
Allan Webster - Ontario Power Generation
Al Shpyth (for John Jarrell) - Cameco Corporation
Nuclear Substance Processing
Lloyd Hillier - MDS Nordion
Nuclear Substances and Prescribed Equipment
John Dyer - Nomad Inspection (industrial radiography)
Gérard Landry - ACLE (industrial radiography & gauges)
Jean St. Pierre - 129598 Canada Inc. (Portable gauges)
Rick Robichaud (for Gary Stuart) - Bretech Inspection (NDT) Ltd (nondestructive testing management association)
John Vanier - NorskeCanada (gauges)
Jim Clarke – Chair
Introduction and Opening Remarks
J. Clarke opened the meeting. The status of the action items raised at last year’s meeting were summarized and accepted. The agenda for this year’s meeting was approved.
Looking back over the past year– General discussion
Members were invited to provide comments or identify issues that have arisen over the past year with respect to CNSC cost recovery. The following is a list of the comments or issues raised:
- There is a desire for greater certainty in CNSC planning and related fee predictions.
- There was concern raised over CNSC’s ability to reallocate resources as priorities change over the course of a year.
- There was concern over how the cost recovery fees relate to the level of effort and the process used to charge for extra activities (surcharges).
Operational Management of Cost Recovery
Regulatory Activity Plans
D. Chaput made a presentation on Regulatory Activity Plans.
D. Chaput invited members to provide feedback on the optimum timing for regulatory activity plans. He cautioned members that typically, the earlier the plans are released, the less accurate they would be, so an appropriate balance needs to be struck between timeliness and expectations for accuracy. It was pointed out that risk information is used in generating the plans, although a formal risk-based approach is not in place in all licensing areas yet.
CNSC is working on strengthening its planning and reporting capacity with a focus on predictability, more accurate resource estimates and regular updates to licensees on progress against the plan throughout the year. Quarterly variance reporting was discussed. These reports would serve to compare the actual progress against the plan. Members were pleased to hear that CNSC was looking at developing a mechanism for quarterly variance reporting.
The 2005/06 plans and fee estimates will be issued in early January 2005.
CRAG members expressed the need for better communication with respect to generating the regulatory activity plans. They felt that there needs to be a better way, or process, that licensees could provide input into the plan, particularly with respect to special projects. One member felt strongly about this, as special projects contribute to a majority of their fees. D. Chaput said that while this type of licensee feedback has been sought, it may not have been done consistently. It was acknowledged that this is something that needs to be done more systematically. It was recognized that not all special projects can be predicted as some are reactive in nature, but there is the need to try to capture as many as possible to improve fee predictability.
D. Chaput also explained that CNSC is collecting time-accounting information collected from time sheets which, it is hoped will eventually result in more accurate resource estimates.
G. Lamarre made a presentation on Improvement Initiatives for the directorate of Nuclear Cycle and Facilities Regulation.
The goal of all improvement initiatives is to enhance the effectiveness and efficiency of CNSC programs which, should result in improved planning and fee predictions. Initiatives include implementing a more consistent and streamlined approach for licensing. A risk based compliance approach was put in place in 2003/04 and is being refined as more experience is gained in using it. The Environmental Assessment (EA) process has been made more efficient. For EAs of projects where a designated officer is authorized to make a licensing decision, EA screening reports are now being accepted at the Designated Officer level (as opposed to the Commission), resulting in reduced costs.
CRAG members acknowledged that CNSC is working on improvement initiatives and one member in particular recognized the work done on mapping the steps of the licensing process to be of value.
CRAG members raised questions with respect to the status of performance standards. D. Chaput said that CNSC is working on them.
A CRAG member suggested that the risk-based compliance approach adopted by CNSC should result in a higher degree of compliance and wanted to know if CNSC had any data to support this expectation. G. Lamarre said that he would expect that this could be done further down the line when performance indicators are available. While one would expect a higher degree of compliance it would not be something that is an immediate result.
G. Lamarre confirmed that some licensees should see a change in their regulatory activity plans in their new 2005/06 plans based on this risk-based approach.
Power Reactor Regulation
I. Grant made a presentation on Power Reactor Regulation.
Improvement initiatives for power reactor regulation have the goal of improved effectiveness and efficiency. There is a CNSC commitment to work proactively with licensees to facilitate timely services and more predictable planning.
A CRAG member identified communications as a key area that needs improvement.
R. Jammal made a presentation on the coefficient factor (the compliance coefficient) used in formula fee calculations (refer to Part 3 of the CNSC Cost Recovery Fees Regulations).
CNSC reported that more data needs to be collected before the compliance coefficient will be applied. The data collected to-date does not reflect a fair representation on how the coefficient should work. The compliance coefficient will stay at one until we have better information.
Some CRAG members felt that there should be a financial incentive to go from a “B” (meets expectation) grading to an “A” (exceeds expectation) grading. CRAG members felt that a program that “exceeded expectations” would not need as much attention, based on risk. CNSC explained the fees are based on meeting expectations and that the same level of CNSC effort would be required regardless of whether a licensee is graded at a “B” or an “A” level. The same amount of preparation time, inspection time, and reporting time is required regardless of whether the licensee is at an “A” or a “B” level.
CNSC confirmed that the compliance coefficient is always one or above, it will never go below one.
CNSC Benchmarking Study on Corporate Services Activities
G. Bergeron made a presentation on Benchmarking Results in the Corporate Services Branch.
It was pointed out that benchmarking is not a precise comparison. There are significant differences in how organizations carry out common services (e.g. centralized vs. de-centralized). There are also significant differences in what is included in common services and the degree of service provided (e.g. transparency and outreach have a price). CNSC Benchmarking Study on Corporate Services Activities showed that CNSC common services costs are comparable to other similar-sized government organizations. Regardless of this result, CNSC is constantly looking at ways to improve. Recently, the Corporate Services Branch has started to generate corporate service standards against which the services provided can be evaluated.
G. Bergeron and D. Chaput assured CRAG members that they both are working together to improve CNSC’s effectiveness and efficiency.
A CRAG member expressed his support of benchmarking studies and hoped that more would be done in the future.
Review of the OAG Financial Audit of Costing Methodology
Presentation was made by K. Gillis on the Audit of Cost Recovery.
No issues were found with respect to the Office of the Auditor General’s (OAG) audit of the Costing Methodology. It was pointed out that this audit was requested by CNSC. CNSC has asked that this audit be done on an annual basis and so far the OAG has agreed.
A CRAG member wanted to know who covered the cost of this audit. CNSC confirmed that the costs for such audits are charged back to CNSC. It is anticipated that the costs of future audits should not be as significant as the work will be combined with the annual audit of CNSC financial statements.
Financial Update (including hourly rate)
K. Gillis made a presentation on CNSC Financial Update.
A CRAG member expressed his concern over the cost of the application fee for the certification of exposure device operators. (Subsequent to the meeting this CRAG member was directed to the appropriate CNSC staff member to follow-up with his concerns).
A CRAG member expressed an interest in getting the breakdown of indirect costs. The member was invited to submit his request by email to J. Clarke.
Action: CRAG members: For those members wanting a more detailed financial breakdown, submit their request by email to J. Clarke.
CNSC said that they would hopefully be using the compliance coefficient next year.
The federal government is now determining the impact of the new User Fees Act (Bill C-212) for its departments and agencies. As with most legislation, subordinate documents are required for clear interpretation. It is CNSC’s opinion that we comply with the new User Fees Act. The one area that it is recognized we need to continue to work on is the development of performance standards.
Dispute Resolution Mechanism
K. Gillis made a presentation on the Dispute Resolution Update.
CRAG members are not surprised that there have not been any formal Regulatory Activity Assignment disputes submitted to CNSC, as there are not any avenues for the independent review of such disputes. Since disputes are to be handled by CNSC, this reaffirms the importance of establishing regulatory performance standards to provide neutral grounds on which a dispute could be evaluated. CRAG members want the status of performance standards to be on next year’s agenda.
Action: J. Clarke. Put the status of performance standards on next year’s agenda.
A CRAG member also asked the CNA to follow-up on the issue of performance standards as well.
D. Chaput acknowledged the importance of performance standards as a management tool. He added that the timeline for the implementation of performance standards is to parallel the gradual implementation of cost recovery.
CRAG members were invited to voice any outstanding comments or concerns. Issues raised were:
- The efficiency of inspections.
- The need for better communication between licensees and CNSC.
- Appeals for dispute resolution are virtually impossible without any avenues for independent assessment, such as through performance standards.
- There appears to be no consistency among CNSC staff on the interpretation of what a particular licensing activity consists of.
- There appears to be a problem with the inconsistent interpretation of CNSC requirements between inspectors.
- How well did CNSC perform against what we did and what we said we were going to do?
- Are we getting better as an industry (e.g. feedback on accidents)?
- How did or does the pilot NEA project on performance indicators influence ongoing work on performance standards?
- Are there other valid benchmarking studies that can be done?
CNSC acknowledged these issues and will keep these issues in consideration as it moves forward. CNSC recognized it has received strong messages in particular for better communication and for the development of performance standards. CRAG members are invited to approach the immediate CNSC supervisor in question concerning inconsistencies they observe in the conduct of inspections or the interpretation of requirements.
A CRAG member said that he and the licensees he represents receive many documents that are not relevant to their licensing area. This member was invited to provide J. Clarke with a list of the documents he does not want to receive.
A CRAG member representing nuclear substance licensees, wants to be informed of any significant developments with respect to the compliance coefficient or gradings. CNSC will make attempts to keep licensees adequately informed and if there is a need for a meeting before next year’s annual meeting, an additional meeting would be scheduled.
Action: All CRAG members are invited to send follow-up notes to J. Clarke outlining any outstanding issues or items for future agendas.