Price-Anderson and Nuclear Safety Good Buys (or Good Byes?)

August 26, 2014 | 6:00 am
Dave Lochbaum
Former Contributor

Fission Stories #169

U.S. nuclear power plant owners are spending millions of dollars on measures to reduce vulnerabilities revealed during the March 2011 disaster at Fukushima in Japan. These are only latest in a series of costly safety upgrades.

For example, when I worked as a consultant in the early 1990s on the power uprate project for the two reactors at the Susquehanna nuclear plant in Pennsylvania, I learned that the company had just spent about $100 million (in 1990 dollars) to install a fifth emergency diesel generator. Each reactor was originally equipped with two emergency diesel generators. The fifth emergency diesel generator was configured such that it could substitute for any one of the four. The additional emergency diesel generator, and its sizeable cost, was not required by the NRC—the agency was fully content with the original four. The investment improved safety by lessening the chances that emergency equipment would lack electrical power. Fukushima reminded us of the consequences when emergency equipment cannot be used.

Juxtaposed against such recurring safety investments are recurring accusations that the nuclear industry places profits paramount. Announcements about staffing and budget reductions at nuclear power plants are frequently accompanied by suggestions that such actions are driven by thirst for profits and will likely compromise safety levels. Despite having worked within the nuclear industry for nearly two decades, I could not reconcile the nuclear industry’s hefty safety investments with its reputation for placing profits foremost.

Then I read Tritium on Ice: The Dangerous New Alliance of Nuclear Weapons and Nuclear Power, a fine book authored by Kenneth D. Bergeron and published by the MIT Press in 2002.

FS169 Figure 1 Tritium on Ice

In Chapter 3, Bergeron covered the vulnerabilities of smaller containment buildings to certain types of accidents. He described costly measures undertaken by owners to lessen the likelihood that such accidents occur. He also described the owners’ reluctance to take steps to improve containment performance should such accident occur. Specifically, Bergeron wrote:

When it came to the “back-end,” that is, those events that might occur after core melting, the industry’s motivation to make changes was not as strong. The costs reactor owners would incur to modify the containment buildings to better protect the public would do nothing to restore the lost revenue stream from the ruined plant.

Bergeron’s words enabled me to finally understand between the nuclear industry’s safety good buys and its good byes.

Two Sides of Risk Reduction

Risk depends on the probability of something bad happening and its consequences. Risk is lowered by reducing the chances of a bad event happening and/or by lessening its consequences. Nuclear safety good buys are made on the probability side of risk management.

As Bergeron noted, nuclear safety good byes are more common on the consequence side.

The additional emergency diesel generator at Susquehanna protected the reactor by reducing the likelihood that a power outage would cause overheating damage of the reactor core. It did little to better protect the public should reactor core damage actually happen.

One cannot count the number of reactor core meltdowns avoided by this and similar nuclear safety good buys. Thus, it is hard for owners to properly value something providing the intangible lessening of the meltdown risk. But Susquehanna’s owner could evaluate the cost savings that could be realized from the additional emergency diesel generator. Because of the important role emergency diesel generators play in preventing core meltdowns, the NRC only allows reactors to operate for short periods (typically 3 or 7 days) with an emergency diesel generator broken. If a broken emergency diesel generator cannot be repaired within that time, the reactor must be shut down. Looking at past data on emergency diesel generator performance, Susquehanna’s owner could estimate how many years it would take a $100 million installation of the additional emergency diesel generator to be recouped by avoiding forced shut downs. This analysis justified the nuclear safety good buy.

Investments to lessen the consequences of postulated accidents lack similar payback mechanisms and hence become nuclear safety good byes.

Filters for containment vents illustrate this situation. During the Fukushima accident, workers needed to reduce the pressure inside containment in order to lower the pressure inside the reactor vessel and allow external systems to supply makeup cooling water. Considerable amounts of radioactivity were released through the unfiltered vent pipes. The NRC staff recommended that filters be installed at similar U.S. plants to significantly reduce the amount of radioactivity discharged to the atmosphere. The cost of adding filters was estimated to be around $15 million per reactor. But whether the cost was $15 million, $15 billion, or 15 cents, it was a nuclear safety good bye. Installing a filter does nothing to lower the probability of a meltdown and protect the reactor. The radioactivity removed by a filter comes from a severely damaged reactor core—meaning the plant’s electrical generation, and revenue producing, days are over. Filters “only” lower risk by lessening the consequences from core meltdowns.

Owners would rather invest $15 million on things that lower risk by lessening the chances of core meltdowns, thereby protecting their money makers. In response to Fukushima, owners of U.S. nuclear plants are spending many millions of dollars on FLEX equipment—portable pumps, portable generators, and associated equipment—intended to enable reactor cores to be cooled following extreme natural events.

They are not spending any nickels on filters and other measures that reduce the consequences of reactor lifetime-ending accidents.

Our Takeaway

To be sure, a dollar spent lowering risk by reducing the chances of a meltdown is no less valuable than a dollar spent reducing the consequences from one. A buck is a buck.

Equally sure are the federal policies that bias nuclear safety investments towards the probability side and away from the consequence side.

When I purchased my house, I installed dead-bolt locks on all exterior doors and purchased a dry chemical fire extinguisher. My investment was a safety good buy—my annual homeowner’s insurance policy was reduced more than these devices cost. My safety and security investment paid for itself in less than a year and keeps rewarding me every year.

But a nuclear plant owner spending $15 million to install a filter on containment vent lines will not have annual insurance premiums lowered by even a nickel. A federal law enacted in September 1957, called the Price-Anderson Act, requires plant owners to obtain private liability insurance to cover up $375 million of damages outside the plant resulting from reactor accident. The average annual premium for this private liability insurance is $830,000. If an accident causes more than $375 million in damage, Price-Anderson requires owners of other nuclear plants to provide up to $111.9 million each for a secondary tier of coverage. If an accident causes even greater damage, as happened at Fukushima, the Congress would determine how further coverage is provided.

But unlike safety and security investments that lower homeowners’ insurance premiums, investments that lower the consequences of reactor core meltdowns do not lower nuclear plant liability insurance premiums. It makes perfect business sense why owners would prefer to invest $15 million in FLEX rather than that amount, or less, on filters. In the former case, they get a return on their investment. In the latter case, their investment never returns.

This arcane federal law should be revised to encourage rather than impede nuclear safety good buys. Sound and responsible federal laws would enable $15 million investments in containment vent filters to lower annual liability insurance premiums and pay for themselves within a few years.

The federal government should promote nuclear safety good buys and discourage nuclear plant safety good byes.


“Fission Stories” is a weekly feature by Dave Lochbaum. For more information on nuclear power safety, see the nuclear safety section of UCS’s website and our interactive map, the Nuclear Power Information Tracker.