USA’s nuclear insurance places the big responsibility on the tax-payer

The US government insurance scheme for nuclear power plant accidents no longer makes sense, Bulletin of the Atomic Scientists, By Victor Gilinsky, February 26, 2020   The Japan Center for Economic Research, a source sympathetic to nuclear power, recently put the long-term costs of the 2011 Fukushima accident as about $750 billion. Contrast that with the maximum of $13 billion that could be available after a catastrophic US nuclear accident under the plant owners’ self-insurance scheme defined by the Price-Anderson Act. The Act will have to be renewed before 2025; Congress should seize the opportunity not only to reflect on the lack of insurance in the event of a catastrophic accident, but also to reconsider our approach to nuclear power plant safety altogether.

 frees nuclear plant operators and all firms involved in nuclear construction and maintenance of any liability for offsite accident damage. The only chance for additional compensation lies in the act’s declaration that if accident damages exceed the legal limit “Congress will thoroughly review the particular incident” and will “take whatever action is determined to be necessary” to provide full compensation to the public. In short, a Fukushima-level accident would toss the costs of compensation and cleanup unto the lap of Congress. ……….

The main public risk of nuclear power plants comes from rare but devastating nuclear accidents. Because data on such accidents is sparse, the probability of their occurrence has to be calculated on the basis of a model, rather than obtained from experience. Moreover, the extent of an accident and its monetary consequences are postulated on the basis of models that are limited by analysts’ imagination. Who would have imagined, for example, that the Fukushima accident would involve several reactors? Or that Japan would subsequently shut down all its other nuclear power plants?……….

Curiously, from the chairman on down, the NRC misstates the legal standard for its safety decisions. The NRC and its staff claim their job is to provide “reasonable assurance of adequate protection,” whereas the standard in the Atomic Energy Act is “adequate protection.” Under the law, their job is to provide adequate protection, period. Do the commissioners think the extra cushion of “reasonable assurance” justifies weaker regulation?

To return to the Price-Anderson Act: As we’ve seen, a catastrophic accident would render the US self-insurance scheme for nuclear power plants pretty much irrelevant. But the indemnification of all industry participants would remain highly relevant: The industry would be free of any liability for offsite death or damage, whereas the victims would have to go hat in hand to Congress for restitution. This is an enormous subsidy—consider, again, the $750 billion and counting tab for Fukushima—that the federal government provides the nuclear industry, one without which not a single US nuclear power plant would or could operate. Freedom from liability also has had a perverse effect on nuclear safety. Without the liability protection of Price-Anderson, industry incentives to develop nuclear designs safer than light water reactors would surely have been higher.

Freedom from liability was put into law in the 1950s to get the US commercial nuclear power industry off the ground. It was meant to be temporary, until industry and insurers got some experience with the new technology. But even as time went on, industrial organizations like General Electric and Westinghouse would not participate in the civilian nuclear program if they risked responsibility for offsite damage from a nuclear plant accident………

What is clear is that the nuclear firms—the largest of which possess an understanding of nuclear safety far beyond that of the public—do not believe the NRC safety conclusions that the risk of a catastrophic nuclear accident is infinitesmal. Nor do they accept that probable risk—probability of an accident times the consequences, were one to occur—as the right measure of risk to their companies. They don’t want to risk their companies, period.

If they don’t believe the NRC numbers, why should the rest of us accept them?

Why shouldn’t we have the same protection from physical harm that the nuclear industry has from financial liability? And just as the nuclear vendors will not participate on terms that do not include indemnification from the overwhelming cost of a severe accident, so should the public have the analogous power to only accept future nuclear designs that can demonstrate that they preclude offsite harm. And the designs should demonstrate that level of safety in a clear way, based on physical principles, not on complicated probabilistic calculations put forward by interested parties.

Such new designs would eliminate the current dilemma of a federal nuclear self-insurance scheme that cannot, as a practical matter, cover the financial consequences to the public of catastrophic nuclear power plant accidents. But how to get there? One of the disincentives is the Price-Anderson Act’s limitations on industry liability for offsite accident consequences. That should get phased out.

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