35

 


First Session, 46th General Assembly

57 Elizabeth II, 2008

BILL 35

AN ACT TO AMEND THE ENERGY CORPORATION ACT

Received and Read the First Time............................................................................ May 26, 2008

Second Reading............................................................................................................ June 3, 2008

Committee................................................................................................ Amendment June 3, 2008

Third Reading.....................................................................................................................................

Royal Assent......................................................................................................................................

HONOURABLE KATHY DUNDERDALE

Minister of Natural Resources

Ordered to be printed by the Honourable House of Assembly

 

EXPLANATORY NOTES

This Bill would amend the Energy Corporation Act

             (a)  to facilitate the establishment of subsidiaries of the corporation;

             (b)  to provide safeguards for commercially sensitive information relating to the corporation, its subsidiaries and other corporations with which they have business dealings; and

             (c)  to provide reporting requirements for the corporation and its subsidiaries.

A BILL

AN ACT TO AMEND THE ENERGY CORPORATION ACT

Analysis


        1.   S.2 Amdt.
Definitions

        2.   Ss.5.1 to 5.5 Added
5.1   Annual meeting
5.2   Annual report
5.3   Form and content of
        reports
5.4   Records of
        commercially sensitive
        information
5.5   Report of auditor
        general

        3.   S.14 Amdt.
General powers

        4.   S.14.1 Added
Subsidiaries

        5.   Ss.17.1 and 17.2 Added
17.1 Public Tender Act
17.2 Intergovernmental
        agreements

        6.   S.19 Amdt.
Guarantee of payment

        7.   S.25 Amdt.
Performance guarantee

        8.   S.31 R&S
Audit and financial statement


Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

SNL2007 cE-11.01

        1. (1) Section 2 of the Energy Corporation Act is amended by adding immediately after paragraph (b) the following:

          (b.1)  "commercially sensitive information" means information relating to the business affairs or activities of the corporation or a subsidiary, or of a third party provided to the corporation or the subsidiary by the third party, and includes

                      (i)  scientific or technical information, including trade secrets, industrial secrets, technological processes, technical solutions, manufacturing processes, operating processes and logistics methods,

                     (ii)  strategic business planning information,

                    (iii)  financial or commercial information, including financial statements, details respecting revenues, costs and commercial agreements and arrangements respecting individual business activities, investments, operations or projects and from which such information may reasonably be derived,

                    (iv)  information respecting positions, plans, procedures, criteria or instructions developed for the purpose of contractual or other negotiations by or on behalf of the corporation, a subsidiary or a third party, or considerations that relate to those negotiations, whether the negotiations are continuing or have been concluded or terminated,

                     (v)  financial, commercial, scientific or technical information of a third party provided to the corporation or a subsidiary in confidence,

                    (vi)  information respecting legal arrangements or agreements, including copies of the agreement or arrangements, which relate to the nature or structure of partnerships, joint ventures, or other joint business investments or activities,

                   (vii)  economic and financial models used for strategic decision making, including the information used as inputs into those models, and

                  (viii)  commercial information of a kind similar to that referred to in subparagraphs (i) to (vii);

             (2)  Section 2 of the Act is amended by deleting the word "and" at the end of paragraph (h) and adding immediately after that paragraph the following:

          (h.1)  "public body" means a public body as defined in the Access to Information and Protection of Privacy Act;

          (h.2)  "record" means a record as defined in the Access to Information and Protection of Privacy Act;

          (h.3)  "subsidiary" means a subsidiary of the corporation except Newfoundland and Labrador Hydro; and

 

        2. The Act is amended by adding immediately after section 5 the following:

Annual meeting

      5.1 The corporation shall hold an annual meeting in the province, which shall be open to the general public, within 60 days of the publication by the minister of the annual report under subsection 5.2(3).

Annual report

      5.2 (1) The corporation shall, each year, no later than April 30, prepare and submit to the minister a report on the activities of the corporation and its subsidiaries, including Newfoundland and Labrador Hydro, in the previous fiscal year containing

             (a)  an audited consolidated financial statement of the corporation setting out the assets and liabilities of the corporation as of the end of the immediately preceding financial year and the results of its operations for the financial year;

             (b)  a report by the board giving an account of the activities of the corporation during the immediately preceding financial year and setting out other matters that may appear to it to be of a public interest in relation to the affairs or the activities of the corporation; and

             (c)  a report of each subsidiary giving an account of its activities during the immediately preceding financial year and including information that it believes may be of public interest relating to its activities but the report shall not be required to include commercially sensitive information.

             (2)  The minister may, on receipt of a report required under subsection (1), direct the corporation to provide additional information on its activities or the activities of one or more of its subsidiaries and the corporation shall provide the information in the form and detail and at the time the minister may direct.

             (3)  The report required under subsection (1) shall be made public by the minister by

             (a)  presenting the report to the House of Assembly; and

             (b)  other effective means, including electronically.

             (4)  Section 19.1 of the House of Assembly Act applies to a report required under subsection (1) as if the report were a report of an officer of the House of Assembly.

Form and content of reports

      5.3 The report required under section 5.2 shall be consistent in form and content with annual reports prepared by publicly traded companies.

Records of commercially sensitive information

      5.4 (1) Notwithstanding section 6 of the Access to Information and Protection of Privacy Act, in addition to the information that shall or may be refused under Part III of that Act, the chief executive officer of the corporation or a subsidiary, or the head of another public body,

             (a)  may refuse to disclose to an applicant under that Act commercially sensitive information of the corporation or the subsidiary; and

             (b)  shall refuse to disclose to an applicant under that Act commercially sensitive information of a third party

where the chief executive officer of the corporation or the subsidiary to which the requested information relates reasonably believes

             (c)  that the disclosure of the information may

                      (i)  harm the competitive position of,

                     (ii)  interfere with the negotiating position of, or

                    (iii)  result in financial loss or harm to

the corporation, the subsidiary or the third party; or

             (d)  that information similar to the information requested to be disclosed

                      (i)  is treated consistently in a confidential manner by the third party, or

                     (ii)  is customarily not provided to competitors by the corporation, the subsidiary or the third party.

             (2)  Where an applicant is denied access to information under subsection (1) and a request to review that decision is made to the commissioner under section 43 of the Access to Information and Protection of Privacy Act, the commissioner shall, where he or she determines that the information is commercially sensitive information,

             (a)  on receipt of the chief executive officer's certification that he or she has refused to disclose the information for the reasons set out in subsection (1); and

             (b)  confirmation of the chief executive officer's decision by the board of directors of the corporation or subsidiary,

uphold the decision of the chief executive officer or head of another public body not to disclose the information.

             (3)  Where a person appeals,

             (a)  under subsection 60(1) of the Access to Information and Protection of Privacy Act, from a decision under subsection (1); or

             (b)  under subsection 43(3) of the Access to Information and Protection of Privacy Act, from a refusal by a chief executive officer under subsection (1) to disclose information,

paragraph 62(3)(a) and section 63 of that Act apply to that appeal as if Part III of that Act included the grounds for the refusal to disclose the information set out in subsection (1) of this Act.

             (4)  Paragraph 56(3)(a) of the Access to Information and Protection of Privacy Act applies to information referred to in subsection (1) of this section as if the information was information that a head of a public body is authorized or required to refuse to disclose under Part II or III of that Act.

             (5)  Notwithstanding section 21 of the Auditor General Act, a person to whom that section applies shall not disclose, directly or indirectly, commercially sensitive information that comes to his or her knowledge in the course of his or her employment or duties under that Act and shall not communicate those matters to another person, including in a report required under that Act or another Act, without the prior written consent of the chief executive officer of the corporation or subsidiary from whom the information was obtained.

             (6)  Where the auditor general prepares a report which contains information respecting the corporation or a subsidiary, or respecting a third party that was provided to the corporation or subsidiary by the third party, a draft of the report shall be provided to the chief executive officer of the corporation or subsidiary, and he or she shall have reasonable time to inform the auditor general whether or not in his or her opinion the draft contains commercially sensitive information.

             (7)  In the case of a disagreement between the auditor general and a chief executive officer respecting whether information in a draft report is commercially sensitive information, the auditor general shall remove the information from the report and include that information in a separate report which shall be provided to the Lieutenant-Governor in Council in confidence as if it were a report to which section 5.5 applied.

             (8)  Notwithstanding the Citizens' Representative Act, the corporation, a subsidiary, another public body, or an officer, member or employee of one of them is not required to provide commercially sensitive information, in any form, to the citizens' representative in the context of an investigation of a complaint under that Act.

Report of auditor general

      5.5 (1) Where,

             (a)  during the course of an audit;

             (b)  as a result of a review of an audit report prepared by another auditor; or

             (c)  as a result of an internal audit procedure,

the auditor general becomes aware of an improper retention or misappropriation of funds by a director, officer, employee or agent of the corporation or a subsidiary, or of another activity that may constitute an offence under the Criminal Code or an Act of the province or of Canada, the auditor general shall, where the report includes commercially sensitive information, notwithstanding the Auditor General Act, provide the report to the Lieutenant-Governor in Council in confidence.

             (2)  In addition to the report required under subsection (1), the auditor general shall immediately provide a report to the House of Assembly that includes a general description, excluding commercially sensitive information, of the activity that is the subject of the report under subsection (1) and the dates on which those activities were reported to the Lieutenant-Governor in Council.

             (3)  Section 19.1 of the House of Assembly Act applies to a report under subsection (2) as if it were a report of an officer of the House of Assembly.

 

        3. Subsection 14(3) of the Act is repealed.

 

        4. The Act is amended by adding immediately after section 14 the following:

Subsidiaries

   14.1 (1) Except with the prior approval of the Lieutenant-Governor in Council, the corporation shall not organize or maintain a subsidiary of the corporation or purchase, sell, otherwise dispose of or deal in shares of a subsidiary of the corporation or of another company, and where the approval is given, the corporation may do the things referred to in this subsection only where it is expressly mentioned in and to the extent provided by the approval.

             (2)  The objects of a subsidiary shall be some or all of the objects of the corporation under section 5.

             (3)  A subsidiary shall not engage in an activity that, were it to be undertaken by the corporation, would require the prior approval of the Lieutenant-Governor in Council, including the creation of a subsidiary, without the prior approval of the corporation.

             (4)  The provisions of this Act, with the necessary changes, shall be considered to form the articles of incorporation, or a part of them, of a subsidiary.

             (5)  A subsidiary is not an agent of the Crown unless it is designated as an agent by the Lieutenant-Governor in Council when the Lieutenant-Governor in Council gives its approval of the incorporation of the subsidiary under subsection (1).

             (6)  Where a subsidiary is not designated as an agent of the Crown under subsection (5),

             (a)  the property of the subsidiary is not the property of the Crown or an agent of the Crown;

             (b)  the debts and obligations of the subsidiary are not the debts and obligations of the Crown or an agent of the Crown;

             (c)  the subsidiary shall be incorporated under the Corporations Act unless the approval provided under subsection (1) permits incorporation under the laws of another jurisdiction;

             (d)  the board of directors of the subsidiary shall be composed of not less than 5 and not more than 10 members;

             (e)  the board of directors of the subsidiary shall be composed of at least the following number of independent directors:

                      (i)  where the board has 5 or 6 members, 2 independent directors,

                     (ii)  where the board has 7 or 8 members, 3 independent directors, and

                    (iii)  where the board has 9 or 10 members, 4 independent directors; and

              (f)  the chief executive officer of the subsidiary shall be appointed by the board of directors of the subsidiary.

             (7)  In paragraph (6)(e), "independent director" means a person who is not a member of the board of directors of the corporation or another subsidiary or an employee or officer of the corporation, another subsidiary or the Crown.

             (8)  Subsection (6) does not apply to

             (a)  Churchill Falls (Labrador) Corporation Limited;

             (b)  Lower Churchill Development Corporation Limited;

             (c)  Gull Island Power Corporation; or

             (d)  Twin Falls Power Corporation.

 

        5. The Act is amended by adding immediately after section 17 the following:

Public Tender Act

   17.1 (1) The Public Tender Act does not apply to the corporation or a subsidiary.

             (2)  Notwithstanding subsection (1), the Lieutenant-Governor in Council may declare that a subsidiary is subject to the Public Tender Act and in that event the Act applies to the subsidiary.

             (3)  Subject to the prior approval of the Lieutenant-Governor in Council, the corporation shall develop and adopt procurement principles that follow best industry practices for procurement and contracting, including transparent supplier development, monitoring and reporting and those principles shall apply to the corporation and its subsidiaries.

             (4)  The corporation and its subsidiaries shall report to the minister on their procurement activities and shall include a summary of contracts entered into and the identities of suppliers to whom the contracts have been awarded every 6 months.

             (5)  A summary of the procurement principles adopted under subsection (3) and the reports required under subsection (4) shall be made public by the minister by

             (a)  presenting them to the House of Assembly; and

             (b)  other effective means, including electronically.

             (6)  Section 19.1 of the House of Assembly Act applies to a summary required under subsection (5) as if the summary were a report of an officer of the House of Assembly.

Intergovernmental agreements

   17.2 (1) An agreement between the corporation or a subsidiary, including Newfoundland and Labrador Hydro, and an agent of the Crown in right of Canada, or of the Crown in right of another province or of another sovereign government is not an intergovernmental agreement.

             (2)  In this section, the terms

             (a)  "intergovernmental agreement"; and

             (b)  "sovereign government"

have the meaning given them in the Intergovernmental Affairs Act.

             (3)  An intergovernmental agreement entered into by the corporation or a subsidiary, including Newfoundland and Labrador Hydro, before the coming into force of this section is considered binding on the corporation or a subsidiary notwithstanding the agreement may not have been signed by the minister responsible for intergovernmental affairs or his or her designate as required by section 7 of the Intergovernmental Affairs Act.

 

        6. Section 19 of the Act is amended by adding immediately after the word "corporation" where it twice occurs the words "or a subsidiary".

 

        7. Section 25 of the Act is amended by adding immediately after the word "corporation" where it twice occurs the words "or a subsidiary".

 

        8. Section 31 of the Act is repealed and the following substituted:

Audit and financial statement

      31. (1) The board shall annually appoint an auditor who shall annually audit the financial statement of the corporation.

             (2)  The financial statement referred to in subsection (1) shall be signed by 2 directors and shall have attached to it the auditor's report.

             (3)  The remuneration of the auditors referred to in subsection (1) shall be fixed annually by the board and shall be paid by the corporation out of its funds.

             (4)  The report of the auditors shall state whether the financial statements present fairly the financial position of the corporation and the results of its operations for the period under review and whether the financial statements were prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding period.

             (5)  The Lieutenant-Governor in Council may, by order, designate or appoint other auditors for carrying out the specific audit of the corporation's accounts and business that the Lieutenant-Governor in Council may specify in the order, and the auditor general may conduct the additional examination and investigation of the records and operations of the corporation that he or she considers necessary.

             (6)  For the purposes of an audit, examination or investigation conducted under subsection (5), the person designated or appointed by the Lieutenant-Governor in Council, or the auditor general, may request and shall be supplied by the board with all books, vouchers, records, schedules, working papers and other documentation which he or she considers necessary.

             (7)  This section applies, with the necessary changes, to a subsidiary.

             (8)  Subsection 5.4(5) and section 5.5 apply to an audit conducted under this section by an auditor who is not the auditor general as if he or she were the auditor general.