Insurance costs for Nuclear Power - a closer examination

[JohnWxy]

http://www.citizen.org/print_article.cfm?ID=4912

Here are some excerpts from the article at link provided. It talks about the how the liability insurance for nuclear power plants is not fully covered by the nuclear power industry. If we really want to evaluate accurately the cost of nuclear power we have to figure in all the costs.

What is the Price Anderson Act?

The Price Anderson Act became law in 1957 as part of amendments to the Atomic Energy Act of 1954. The Act sets a limit on the monetary liability of companies for a nuclear accident, and defines the procedural mechanisms for the industry s insurance coverage.

The Act requires that nuclear reactor owners obtain $200 million in insurance liability coverage from a private insurer, referred to as primary financial protection. One company Connecticut-based American Nuclear Insurers provides 100 percent of this primary financial protection. In the event of an accident that exceeds $200 million in damages, all 103 nuclear reactor operators in America must pay up to $88 million per reactor to cover costs meaning the potential total insurance pool financed by private interests is $9.3 billion ($200 million primary financial protection + $88 million from each of the 103 reactor operators).

What are the Problems with Price Anderson?

Public Citizen s main concern with Price Anderson is that corporations are not liable for the entire costs of their own nuclear accidents. Since corporations under Price Anderson are only responsible for around two percent of the estimated cost of a serious accident, nuclear power corporations are largely immune from the responsibilities of operating an inherently dangerous facility in America s communities.

In the wake of the 1979 Three Mile Island accident, the federally-funded Sandia National Laboratory prepared a report on behalf of the Nuclear Regulatory Commission (NRC). This 1982 study estimated that damages from a severe nuclear accident could run as high as $314 billion or more than $560 billion in 2000 dollars. Since that study, the NRC has developed "more realistic" modeling improvements to the agency s probabilistic risk assessment. A review of their 1982 study "found that property damages would be twice as much as those calculated in 1982, solely on the basis of the modeling improvements made." In addition, the Chernobyl catastrophe has cost the nations of Russia, Ukraine and Belarus $358 billion. This Chernobyl total, however, is vastly understated, since it does not attempt to estimate the costs to other nations, which also experienced health costs from the far-reaching nuclear fallout.

Therefore, the $9.3 billion provided by private insurance and nuclear reactor operators represents less than two percent of the $560 billion in potential costs of a major nuclear accident. Since the nuclear reactor operators have their liability capped through Price Anderson, that means taxpayers would be responsible for hundreds of billions of dollars in costs from a foul-up by a private corporation or a terrorist attack.

NOw this is NOT to say that a major (or even a minor) accident will happen tomorrow, but what if the nuclear industry had to buy ALL of it's insurance coverage in the commercial market, what would it cost? The Energy Information Administration estimates that if the nuclear power industry bought it's insurance on the open market (NOTE: commercial insurance providers estimate the likelihood of an accident and charge for coverage accordingly) such coverage would cost them
3 Billion dollars per year.

Remember these figures are necessary to develop an accurate calculation of what this energy source ACTUALLY costs.

A third major problem with Price Anderson is that it distorts the economic viability of the nuclear power industry since taxpayers cover the industry s insurance costs. A 1990 study calculated that without Price Anderson, nuclear power corporations would pay more than $3 billion annually in order to fully insure their operations.

Not surprisingly, the nuclear industry has fought hard to keep the Price Anderson liability limit. In sworn testimony before Congress in May 2001, John L. Quattrocchi, senior vice-president of the company that provides most of the private insurance for the nuclear industry (American Nuclear Insurers) stated, "nowing the extent of one s liability provides economic stability and incentives that would not exist without a limit." Translation: taxpayers, not the nuclear industry, should bear the brunt of the potential risks of a severe nuclear accident, in order to make their company a stable investment for shareholders.

A fourth problem is that Price Anderson was originally intended by Congress to be a temporary solution to what they thought was a temporary problem the refusal of private insurers to underwrite the risks of nuclear power. In a 1957 report, the U.S. Senate wrote that Price Anderson would only be needed for ten years because "& the problem of reactor safety will be to a great extent solved and the insurance people will have had an experience on which to base a sound program of their own."

But the historical record debunks this initial optimism. Nuclear reactors continue to experience significant safety problems. These safety concerns have increased substantially in the wake of the September 11 terrorist attacks.

Now I'll put on my hard hat and bullet proof vest for the attacks. But what do I put on to protect myself from the vitriolic personal attacks? There's no armor for that.

[Dead_Parrot]

1. I'm shocked...

...to discover the US government is actually responsible for it's own population. Whatever next?

Not that I'm arguing mind - I'm sure the big power companies could afford it without too much grief. Just for fun, I worked out that without PAA, the insurance companies would now be sitting on $220 billion skimmed off your electric bills over the years.

Heads they win, tails you loose. :)

(PS - on your last point - A thick skin is always handy ;))

[JohnWxy]

2. Just should be part of the calculation to determine what nuclear

power actually costs. There is an economic argument for letting the private sector pick up it's costs.

[Dead_Parrot]

3. In that case...

I take it you also are opposed to rebates for PV installations and federal money for ethanol research? :P

If that $3 billion in 1990 mentioned is for all companies (call it $5 billion today) It would involve a massive price hike of, err, 0.6 cents/KWh. Like I said, I'm sure it's affordable :)

I suspect the only people winning here are the lawyers and lobbyists.

[JohnWxy]

5. I'm very 'gung-ho' on research - very much so -

for ressearch. Now when you talk about support for expanding the market share of a product it gets a little more complicated. As you know if a technology is a worthy one, because of market forces and inefficiencies when you can't reach a decent scale of production there are certainly instances where it makes for good public policy to help 'boost' a technology to commercial viability with some public support of capital expansion by helping with market penetration (i.e. help make the price more competitive so people buy it).

ONce the industry gets its sales volume up then we should be able to cut 'em loose and let them make it on their own (this, by the way, is the source of much consternation over subsidies to oil - a very mature industry).

I don't really know if the PVCs (you're talking about Photo-Voltaics I'm assuming) are in a position to really get on their own after some support by the Government. Now, this particular technology of course has a lot of appeal as it is completely non-polluting (although I don't really know about the manufacturing process - I'm not really knowledgeaable about PV technology except that it is still quite expensive). So I can understand the appeal.

Frankly I don't know enough to comment (although, what the hell, I will anyway) I suspect the money probably could be better spent helping wind power get going faster. this is not to say aggressive research shouldn't be continued in Photo-voltaics but there seems to still be considerable fundamental design tinkering ahead. (for example ther eis acompany Energy Conversion Devices which manufactures a photo-voltaic which looks like roof shingles. It's pliable and can even be nailed to your roof and it still works. In fact it produces more power in dimmer sunlight (cloudy days) than the traditional box solar panels.http://www.ovonic.com/sol_srv/3_1_solar_sol/solar_solutions.htm) I guess I am not totally against it, this is a technology I think, that has considerable trial an error efforts ahead and I'm not against accelerating that process - but it's possible, at this stage, to over-due that. It's my impression, this technology has quite a way to go before becoming commercially viable or even worth the extra cost due to environmental benefits.

Now supporting ethanol which is a proven superior fuel to gasoline, and which can really benefit society with support to bring it to more efficient production volume - that is a well placed investment. That is the pay-off is worth it and the pay off will come right away as soon as the ethanol production increases. Also, INcreasing availability will be met with widespread acceptance. I think if people could FIND it you'd have no trouble selling it. (HOwever, GM and Ford would help the situation a lot if they would build their FFVs to take advantage of the higher octane of ethanol (105 vs 92-93 for high test gas)). Then their FFVs would get just as good as mileage on Ethanol 85 as they do on Gasoline (SAAB 9-5 Bio Power does this with turbo charging. BTW GM OWNS Saab and they were consulted with by Saab engineers when they were designing the 9-5 BioPower)

Of course the other nice thing about ehtanol is you can make it more available even as 10% ethanol (called gasohol) and everybody can start reducing our demand and for fossil fuel (and usage) and THEY DON'T HAVE TO BUY A EXPENSIVE NEW CAR TO TAKE ADVANTAGE OF IT. Every dollar that ceases to go for imported oil and is instead spent on a renewable domesticly sourced fuel is worth MORE than 1 dollar to the economy. We would be strengthening our economy and our security too at the same time for every gallon of oil we replaced with ethanol.

Now will ethanol replace ALL the oil - NO - (or "Probably not" would be the best answer) but that is no rationale for not even taking advantage of a technology that will certainly help and help significantly. As I hve pionted out in other postings resaearch which looks promising is proceeding to make fuel cells that use hydrocarbons to provide the hydrogen. I think this is the way we will see fuel cells come to fruition. Ethanol is superior to gasoline in this regard too. But automobile apps are 10 yrs or more away. But when (and if) this comes to pass fuel cells will be 2 to 3 times as efficient and ICEs and then we've got some real progress being made (on reducing fossil fuel use for transportation anyway).

[JohnWxy]

4. oh, re the armor comment - not to worry. - that was just a device for

highlighting the rampant ad hominem argumentation going on. It doesn't bother me, it's just very adolescent. ( My hat's off to people who can teach Junior High,.. they are there all day!) LOL.