AECL Releases Auditor General's Report

Our special examination of AECL looked at the systems and practices we considered essential to providing the Corporation with reasonable assurance that its assets are safeguarded and controlled, its resources are managed economically and efficiently, and its operations are carried out effectively. Among the areas of AECL that we examined were governance, risk management, research and development, product and service management, and the Corporation’s environmental and sustainable development practices. We did not do a technical assessment of the safety and security of the Corporation’s nuclear research facilities or waste management practices, as they are monitored by the Canadian Nuclear Safety Commission. Nor did we assess any of the technical design aspects of the Corporation’s products and services, whether nuclear or non-nuclear. Why it’s important AECL operates in a complex environment. As a Crown corporation, it has not only commercial objectives but also a public policy role, which includes sustaining and enhancing nuclear technology to safely and securely support Canada’s nuclear energy supply—CANDU reactors supply about 16 percent of Canada’s electricity. AECL’s research also supports nuclear non-proliferation, nuclear medicine, environmental initiatives, and basic scientific research in various industries including agriculture and non-destructive testing. In addition, AECL is a major producer of medical isotopes for the diagnosis and treatment of disease. The Corporation is also responsible for managing the federal government’s nuclear wastes and legacy obligations. In a highly regulated nuclear industry, AECL must work diligently to comply with standards and regulations set by regulatory bodies in Canada and abroad. At the same time, it needs to capitalize on the emerging nuclear market, attract new business, and replace some of its aging facilities. AECL’s ability to succeed depends on how effectively it safeguards and controls its assets, manages its resources, and carries out its operations. What we found Our examination found a significant deficiency with respect to the risk that the Corporation may be unable to resolve three strategic challenges that, in particular, entail long-term funding requirements and that together would impair its ability to achieve its mandate. These challenges are the completion and licensing of the Dedicated Isotope Facility (DIF), the development and licensability of the Advanced CANDU Reactor (ACR) in time for the market requirement, and the replacement of aging facilities at Chalk River Laboratories (CRL): * Dedicated Isotope Facility. In 1996, AECL signed a contract with a customer to develop and construct two 10 MW Maple reactors and a new processing facility at the Chalk River Laboratories to produce medical isotopes. AECL originally planned to produce isotopes after a four-year development and construction period at the new Facility. Completion of the two reactors has been delayed and the contract re-negotiated, with completion of the two reactors now expected in 2008 and 2009. As at 31 March 31 2007, significant investments were still needed to complete the Facility. Moreover, the Canadian Nuclear Safety Commission, AECL’s regulator, has identified technical compliance issues that AECL has yet to fully resolve. * Advanced CANDU Reactor. AECL’s ability to market nuclear power reactors domestically and abroad depends on its ability to fund and develop the next-generation CANDU reactor, the ACR. Initially, AECL planned to develop an ACR 700 MW reactor for the US market, with an in-service date of 2011. Market conditions changed in 2005 and, to meet Canadian market requirements, the Corporation changed its design product to an ACR 1000 MW reactor, with an in-service date of 2016. The design change, more stringent licensing requirements, and enhanced project management approach resulted in a significant increase in the cost estimates. As at 31 March 2007, costs to complete the ACR were estimated at $400 million. In addition, the Canadian Nuclear Safety Commission withdrew its service of providing pre-licensing assessments for AECL, citing resource constraints. The loss of this pre-licensing statement puts AECL at a competitive disadvantage in marketing the ACR. * Aging facilities at Chalk River. Some of the building infrastructure at CRL is 50 to 60 years old, well past the end of its originally intended useful life. AECL has indicated that it will cost $600 million in the next 5 years (about $850 million over 10 years) to replace or refurbish this infrastructure. Over the past 5 years, the government has provided $34 million to address urgent health, safety, security, and environmental issues. A source of funding for the other significant costs has not yet been identified. (~35 more pages) http://www.aecl.ca/Assets/Publications/Reports/OAG-AECL-07.pdf

Note: http://www.aecl.ca/Asse...