Is nuclear industry guilty of “Failure to Launch?”
Following the afternoon session of the public meeting about the Lee nuclear power station draft environmental impact statement, I had an interesting conversation with a man from the Physicians for Social Responsibility (PSR). He had spoken during the meeting about the large amount of taxpayer money that had been wasted on building and then not using Yucca Mountain. He also complained about the insurance subsidies provided under the Price-Anderson Act. His comments indicated that he had read some inaccurate sources of information. (In other words, he was dead wrong on the facts.)
He had introduced himself as a retired project manager, so I thought that he might be willing to listen to more accurate information. As luck would have it, Dan, a USNA classmate who had heard me speak, came up to say hi as the two of us were starting to talk. Dan has been working for a company specializing in providing insurance to the nuclear power industry for most of his career; I invited him into the conversation as a backup source of information.
We started with a discussion about transportation safety. The project manager from PSR expressed concern about the effect on a community if a truck carrying highly radioactive material was involved in an accident. Dan and I described the rigorous tests required in order to obtain a license for transportation casks. I promised to send him links to information about the transportation cask testing.
He then asked why the industry did not handle its own waste products and why it was dependent on government funding. That question provided me the opportunity to describe the Nuclear Waste Fund and the 1 mil per kilowatt hour fee that is assessed on all nuclear generated electricity in the US. I told him how that tiny per unit fee still added up to more than $750 million per year from the industry and how the accumulated fund is listed as a $24 billion asset on the US books.
He was surprised and wondered aloud why he had never heard that explained before.
We then talked about the used fuel plan now that Yucca Mountain had been cancelled. He asked if I was comfortable with leaving the material on site for decades. I told him that plan was fine with me. The material is not hurting anyone; it does not take up much space; and it does not cost much compared to the value of the electricity it produces. I also told him that future generations would thank us for our foresight in saving that valuable material and putting it into such easily accessed locations.
I shared my long held position that the Yucca Mountain project was misdirected and was, at best, the right answer to the wrong question. Dan and I described how the industry’s initial plan was to recycle and reuse fuel. We explained how that option had been made fiscally risky by the Carter Executive Order that outlawed recycling just as the first real commercial facility was getting ready to start operating.
Aside: Yes, I know that Reagan changed the law, but what investor in their right mind would be willing to risk billions on an industry that could be made illegal with the stroke of a pen following a close election decided on unrelated issues? Before they would be willing to invest in used fuel recycling, the industry needs some legal protections that such an action will not happen again. End Aside.
He asked why the government had to be so involved with the decision in the first place; I tried to help him recognize that it is our elected government’s choice to maintain control over the used nuclear fuel because of an ill-advised assumption that a company that actually owned its fuel (with all rights that ownership implies) might decide to sell it to a customer who would attempt to use it to produce a weapon.
The final topic of our conversation was a discussion about the profitable insurance pools that the nuclear industry uses to meet its liability obligations. He was a little skeptical about my assertion that the US federal government had never had to pay a dime for coverage or in any claims. Dan told him that a dirty little secret is that even the companies who write the insurance policies have never had to pay out any claims for liability; they simply keep on collecting the premiums.
I walked away from that conversation feeling like there was a possibility that I had planted some seeds of doubt in a man who just might follow through with some additional reading. A terrific outcome would be if he started asking hard questions at PSR gatherings.
Now I guess it is time to explain the title I selected for this post. All of the objections that my new friend from the Physicians for Social Responsibility raised were related to a fundamental question about the perceived need for continued government support for the nuclear industry.
The phrase “Failure to Launch” is an allusion to a 2006 movie staring Matthew McConaughey and Sarah Jessica Parker in which a talented man in his thirties is still living at home. It is not because he is socially or financially inept, it is because living with his parents seems less risky and more comfortable than going out on his own.
Maturely declaring independence is not easy, especially for an industry that is heavily regulated by the government. However, the industry would do itself and its advocates a favor if it accepted more responsibility and declared its ability to handle its own challenges without direction and financial support from the government. It would also be nice if the industry took the lead in explaining – repetitively – that it is already paying its own way in nearly every respect.
PS: Paying our own way includes paying $4.7 million per reactor per year for operating licenses from the NRC and paying $273 per regulator hour for the cost of any “services” associated with applying for a new reactor design certification or construction and operating license.
The recently announced $67 million for SMR licensing assistance is aimed at defraying some of those license application costs. It is being appropriated for the DOE to pay the NRC costs associated with the new development under the reasonable assumption that it is not fair to ask applicants using advanced technology to pay the federal government $273 per hour for regulators to travel and attend classroom sessions to learn how to understand and regulate that newer technology.
Not only is $67 million decimal dust in the DOE budget, but it is less a subsidy for SMR vendors than a small effort to reduce the barriers to entry that have been erected by such decisions as the Reagan era regulatory “user fee” that has to be paid long before a new project has any hope of generating revenues.
Disclosure: I am speaking strictly for myself and not for my employer, who happens to be a company that is one of the US’s leading SMR designers.
Rod,
Do you know how much, if any, of other countries nuclear wastes is being shipped and stored on US soil?
I know Mr Blees joined on one of my thread and was supposed to get back but never did. It had to do with some sort of international anti proliferation treaty.
I think DV82XL has some material on this.
“Dan told him that a dirty little secret is that even the companies who write the insurance policies have never had to pay out any claims for liability; they simply keep on collecting the premiums.”
Without parcing “claims for liability”, they paid around $71M for TMI. More recently they’ve paid $44M and may have to pay more:
http://www.post-gazette.com/pg/11276/1178804-499-0.stm
@Bob – I am willing to be proven incorrect, but Dan told me that even the TMI claim came out of the mutual pool that the industry has set aside, not from insurance companies.
Here is a link to the NRC fact sheet on Price Anderson. Its section on TMI also states that the funds expended came out of the first tier insurance pools, not from the insurance companies.
http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/funds-fs.html
@Daniel – as far as I know the only nuclear “waste” that is returned to the US is research reactor fuel.
According to the NRC, ANI is the only mutual pool:
http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/funds-fs.html
The pool may have evolved into “ANI”, but ANI is just a volunteer, joint association of insurance companies.
They also have a Foreign Sydicate which provides reinsurance, “Reinsurance is assumed on a facultative basis except in Japan, where third party liability business is assumed under a quota share treaty.”
I don’t know how that translates regarding Fukushima.
Great article Rod,
Glad to see you had a chance to speak one-on-one with a PSR rep and speak to the facts, not the diet of anti-nuclear power claptrap this individual has been fed over the years. It also appears the individual you spoke to was willing to listen, which if true is big news as well.
Further to Rod’s point, why is that the industry never points out that the DOE holds almost $80B in nuclear industry funds ostensibly for decommissioning, waste and insurance very little of which is likely to be used. When the DOE uses a teeny tiny portion of those funds for nuclear research or regulatory assistance it is always portrayed as a giant federal subsidy. What it is in fact is an odious dereliction of federal duty to support an industry with its own funds.
Here is Dan’s more complete explanation – sent after I asked him for clarification of his comment:
Rod – All claims have been paid by the reserve fund – 75 percent of annual premiums set aside to pay claims. On a rolling 10 year basis anything not used is returned to the plant owners. The annual premium paid – less 25 percent for profit and expenses – has never been insufficient to cover claims (meaning no insurer has ever had to dip into its coffers to support the industry). Sorry for mislead – they do pay 3 to 4 claims per year, and TMI is largest with 75 mil over about 15 years. Incidentally, insurers get all interest on the reserve fund and count that toward additional profit.
Rod is correct. The US repatriates used HEU that it supplies to other nations for use in research and isotope production reactors. This demand has generally formed part of the initial supply contract.
As a side note, most of these reactors have been modified ti operate on fuel enriched to 20% which is at the upper end of LEU. It is my understanding the the US no longer supplies HEU to fuel foreign reactors.
Yep.
The only “foreign” spent fuels admitted in the US are the old HEU cores for research reactors that were supplied by the US to foreign countries, starting in the 50s under the Atoms for Peace program then its successors over time. The first return took place in 1963.
Returning those spent fuel elements to the US is not only authorized but actually mandated by the US and it was a condition for foreign countries to be admitted in those programs in the first place.
“Failure to launch”
Best summary of the nuclear industry’s position towards anti-nuclear attitudes, the Federal government and regulations in general. It’s cozy in there. No point going outside and taking risks.
In a way, I’d nearly wished the state level efforts to shutter Vermont Yankee and Indian Point would succeed and push their operator into a mess. It would be a wake up call for all operators if their long paid-off, nice little atomic cash cows were at risk from being suddenly taken away from them. They would have to leave mommy’s place and go out to defend and promote nuclear power for real.
Interesting thought, Friakel.
There really is nothing close to a unified nuclear industry, in Public Relation terms.
Here is a decent recent effort to get some positive press.
http://timesfreepress.com/news/2012/jan/14/tva-plans-more-nuclear-openness-to-counter-worries/
This doesn’t really apply to this post at all, but does anyone have any thoughts on this letter from Markey regarding USEC?
http://markey.house.gov/document/2012/rep-markey-letter-secretary-chu-regarding-usec
In many ways, it would behoove the U.S. government to maintain some enrichment capacity, but with the privatization of USEC, the issue seems pretty murky. When I initially saw that this letter had been written, my first thought was “Markey really is anti-nuke to the core”. Then I read the letter.
It seems to me that there is still some rather significant conflict between USEC being privatized and being available to the government at the drop of a hat if needed.
I know there are many readers here much more seasoned than I that can probably parse some additional insights from this.
Upon further though, I guess it does relate indirectly to the post, and may indirectly give one example of why “the industry” might be somewhat reluctant to spreading its wings and flying on its own.
And to put myself fully at risk of appearing to be arguing with myself, I will add this.
The lack of success of USEC is also a great example of what has happened with a segment of the nuclear industry being allowed to spread its wings and enter the free market. It seems that USEC’s centrifuge technology is struggling to have any hope of competing with the Urenco/Louisiana Energy Services plant in New Mexico or with the Areva Eagle Rock plant being built in Idaho, to say nothing about the SILEX technology that GE-H may deploy in the not-too-distant future.
So from that perspective, USEC’s failure(s) as a private entity could be construed as being indicative of the free market succeeding in one avenue of nuclear technology (enrichment services).
USEC bought the rights to the AVLIS (Atomic Vapor Laser Isotope Separation)
technology from Lawrence Livermore National Laboratory in 1994, to commercialize this advanced technology for enrichment. At the time, LLNL had a full-scale working system. USEC told me in an interview that it then decided that it would not be “cost-effective” for the company to invest in developing this new technology, because it could more cheaply go with the older technology. At the time, I thought this was a short-sighted (stupid) decision, effectively killing a new technology that a U.S. national lab had fully developed.