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.