First

Session, 46th General Assembly

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,

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

S.2 Amdt.

Definitions

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

S.14 Amdt.

General powers

4. S.14.1 Added

Subsidiaries

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

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) 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 .

Section 19 of the Act is amended by adding

immediately after the word "corporation" where it twice occurs the

words "or a subsidiary".

Section 25 of the Act is amended by adding

immediately after the word "corporation" where it twice occurs the

words "or a subsidiary".

Section 31 of the Act is repealed and the

following substituted:

Audit and financial

statement

(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.

Earl G. Tucker,

Queen's Printer