1. Rod,

    While this post and your previous one are excellent, as something of an “outside observer”, I notice that anti-nukes and pro-nukes tend to “talk past each other”, and I think this is one of those times.

    What do I mean? While I’ve occasionally heard people who are confused and think the industry doesn’t provide *any* insurance for itself, most of the people who criticize Price-Anderson implicitly acknowledge that the industry does provide *some* coverage.

    Usually, their statements are something along the lines of, “the nuclear industy’s liability is capped at X Billion dollars, but one serious nuclear accident at a plant near a major urban population could cost up to Y Trillion dollars – and the Tax Payers are on the hook for everything over the cap”.

    It would be good if you did a follow-up post that addressed that specific criticism – that the damages are likely to far exceed the industries insurance cap.

    One thing I would say, personally is that, basically, nuclear power is still a startup industry, and that there are too few nuclear plants in the insurance pool. That if we built more nuclear plants, the chances of such a large scale, expensive event still remains extremely low, but we are able to have more payees in the pool. Thus, Price-Anderson is justified by giving the industry a chance to mature to the point where there are, instead of 100 participants, maybe 500-1000 participants.

    I think we could even amend Price-Anderson to raise the liability cap as the number of operating nuclear plants increases – if we ever reached 1000 nuclear plants, it seems reasonable we could have 10X higher cap, without increasing the individual plant burden any.

    1. The anties seem to attract really lousy engineers, but some really sharp lawyers.

      All else having failed (except in Germany) lawyers for the “Energy Fair” group are now attacking nuclear liability caps as illegal “subsidies”.


      “One of the largest subsidies in the complaint is the cap on liabilities for nuclear accidents.”
      “If it is upheld, it unlikely that any new nuclear power stations will be built in the UK or elsewhere in the EU.”

      Look for a similar tactic in an American courtroom or legislature near you.

  2. The informed anti-nukes are critical of the cap, the mis- or uninformed anti-nukes don’t realize there is private insurance coverage at all.

    In any event, each reactor pays premiums to provide for $375M of coverage for that reactor. In the event that an accident exceeds the coverage, each reactor has agreed to pay a retrospective premium to provide an additional $117.5M of coverage for the accident. Since there are 104 reactors, this provides a pool of over $12B.

    So any additional operating plants would add to the pool(but would also add to the risk).

    Any claims exceeding the pool are covered by the U.S. government.

    Anti-nukes often make the point that commercial nuke power wouldn’t exist if not for the P-A Act. They are probably right, but many laws exist for the promotion of various economic interests. The laws reflect the will of the people.

    1. @Bob Applebaum,

      What do you mean by a “retrospective premium?” Isn’t the coverage for the $117.5 Million included in the premiums a reactor pays each year (an average of $830,000 per year, according to the NRC fact sheet)?

      And why do you feel the nuclear industry would not exist without Price Anderson? Wouldn’t nuclear plants still be able to buy coverage for specificed amounts of liability, as they do now?

      It’s true that without Price Anderson they would not be indemnified for liability exceeding a cap, as they are now, so there would be a small risk of being under-insured for a catastrophic accident. But in that case, if they were unable to pay the extra damages, they would simply go bankrupt.

      The additional risk that nuclear operators and investors would therefore bear in the absence of Price Anderson is simply the very small chance that in the future some exceedingly improbable accident might bankrupt the company. But the risk of future bankruptcy is something that all companies and investors bear with every investment. Why do you feel that kind of risk would have a crippling effect on investment in the nuclear industry, whose bankrupty risks are surely no higher than those of, say, GM, Chrysler, Eastman-Kodak, Lehman Brothers, etc.?

      (Note that from the perspective of the government, the possibility of bankruptcy is perhaps the main risk that Price-Anderson is meant to address. That is, Price Anderson is there primarily to ensure that the government doesn’t get stuck with the entire bill for a nuclear accident, as it might if a nuclear operator were drastically underinsured and then declared bankruptcy after an accident.)

    2. Any claims exceeding the pool are covered by the U.S. government.

      That’s close, but not quite correct.

      If the total amount of the claims exceeds the combination of the first-tier and second-tier (pooled) insurance, the matter goes to Congress to decide what to do. It is likely that the US government will cover the remainder, but the option still remains to go after the plant owners for more money.

    3. Bob, just as a matter of interest, have you ever witnessed an “informed anti-nuke” correcting an “uninformed anti-nuke” on this insurance point?

      You understate the wrongness of the uninformed anti-nukes’ position, though. Typically they are passionately adamant that there is no insurance cover whatsoever for nuclear facilities, and that this is an outrage and a massive burden on the backs of the public. Merely being unaware of insurance is not in the playbook.

      In many ways this is a case study in the process of false activism. Somebody who actually knows something observes that the action on very large losses is not fully defined; they state this in as extreme a way as possible, perhaps without technically overstepping the bounds of reality, but this extreme position is then subjected by others to the same treatment of restating in ever more extreme terms without reference to the original reality, ending up as “no insurance”, or indeed as “subsidies”.

      1. @Joffan – in other words, the activists engage in a game of “telephone” where the initial message is completely distorted. However, the message originator in this case does not bother to try to educate and correct, because the distorted message suits their purposes anyway.

  3. Does anyone know if the per reactor insurance premiums will be lower for small modular reactors?

    1. Well, I don’t know for sure, but it sounds like the laws currently do not take into account the size of the reactor, so if nothing is changed, then I think the premiums would *not* be smaller.

      I suppose that’s one of those things that SMR companies will try to lobby to have changed by Congress, when the time comes – scale the premium by size of the reactor. Or, perhaps, all reactors smaller than X (say, 400MW) pay one level, anything larger than that pays another level.

    2. Price-Anderson also covers such stuff as DOE facilities (national laboratories), the USEC uranium enrichment plants.

      Small reactors (e.g., university research reactors) are also covered, but IIRC, they have lower requirements for insurance.

      1. The insurance rquirements for URRs are lower but the P-A pool still provides coverage. The thing that gigs universities is the deductible, which I think is $800,000, but it may be higher since that’s the number I remember from a few years ago. When I was in the URR business we’d always gloss over that point with the Dean. If anyone pursued the manner I’d always manage to mumble my way out of it, alluding to lower risk profiles, reduced inventory of fission products, lack of stored energy, etc. All that is true, and that kind of techno-jargon is usually enough to satisfy university administrators.

  4. I think everyone, including Rod and Bob (I thought you comments were a good contribution to the discussion, BTW) simply miss the bigger picture.

    The problem with all this is this: every industry is required to provide or obtain insurance for an accident that effects either it’s own business or the public. That’s a good thing. What the problems is that it is the *law* that defines for ONLY nuclear what that harm might be, what happens in a ‘worse case’ scenario. This is why airline companies have asked for limited liability, *just like P-A* to prevent lawsuits emanating from terrorist hijacked planes flying into sports stadiums or office towers.

    The law as it was discussed and *since*, has been a totally political football about ‘worse case scenarios’ instead of *likely* worse case scenarios. In the US, in 50 years or longer, the “worse case” is TMI. If we used this as THE standard, then P-A would not be needed at all. But it’s not. The old Sandia National Lab (I think circa 1957) came up with this “half of Pennsylvania” scenario used in the movie China Syndrome).

    It is not the right way to do commercial insurance. So nuclear is exempted from the standard practice of determining what might happen and they use either Chernobyl or Fukushima as an example.

    P-A works, as Rod says, as it addresses a non-existent problem.


  5. On the phone mentioning it, my uncle recalls our Grumman relative saying that Eisenhower (after stung by Sputnik) regarded building nuclear plants in the same vein as the Interstate Highway System; that it’d be there for “federal forces” to use domestically and undisrupted in the event of an international emergency (Arab states boycott, Russian navy blockades headed oil tankers our way, etc.). So is states investing in nuke infrastructure similar how they invested in a Federal highway? Just a thought of the times.

    James Greenidge
    Queens NY

  6. Sorry! I meant “national emergency” above, not “national energy”! Can’t edit your posts here after spell-correctors jump the gun!

    James Greenidge
    Queens NY

    1. James – I changed “energy” to “emergency”, but it looks to me like you really wanted to say “international energy emergency”.

      Let me know if you want me to fix it or if you want me to delete it so that you can start over again.

  7. Regarding this comment;

    ““the nuclear industy’s liability is capped at X Billion dollars, but one serious nuclear accident at a plant near a major urban population could cost up to Y Trillion dollars – and the Tax Payers are on the hook for everything over the cap”.

    It is possible to design reactors such that the cost to the public is far less than X billion dollars for the worst possible accident. This can be accomplished by including a robust containment building capable of withstanding the maximum possible release of energy from the reactor, including a full meltdown, and the maximum credible external impact or earthquake, flood etc.

    The design would include battery backed igniters (in designs where hydrogen production is a possibility) and accident rated vent filters capable of removing all fission products from vent gas except noble gasses, which are not a serious hazard to the public, see #5.


    A plant designed to this standard could be built faster and cheaper than a conventional plant because the minimum acceptable core melt probability can be much higher, as determined by the economic impact on stockholders, not loss of human life considerations. The amount of safety rated equipment that has to be purchased, installed and maintained is dramatically reduced.

    All future plants should be designed to this standard, and Price Anderson should be eliminated.

    1. @Bill:

      With the exception of the filtered vents, I am pretty sure that all new reactors are already designed to the standards that you listed.

  8. Right Rod. Adding vent filters and taking full advantage of a relaxed core melt would result in higher public safety and cheaper quicker kWh’s.

    If Japan had accident rated vent filters, operators could have vented containment at low pressure, preventing hydrogen leakage into the buildings. The exclusion zones would be smaller or most likely non existent.

  9. If you priced Chernobyl and Fukushima both at 400 Billion in damages, and apportioned that 800 billion among all the nuclear power ever generated so far (some 70 trillion kWh produced by nuclear) you’d get about 1.14 cents per kilowatt hour. However, if you actually paid for the cost of the money (about 6.6% a year) and you expect a 400 Billion even every 25 years (so 6.6% for 25 years), then the cost goes to about 2.34 cents per kilowatt-hour.

    Now to be more fair, you apportion this “insurance tax” based on reactor design and location risk to the “global pool”.

    It quickly becomes obvious that Gen III AP1000s in seismically safe zones shouldn’t pay much “insurance tax” at all but that it is probably too expensive for Indonesia to build nuclear power plants on the “Ring of Fire” and that all BWR/1 with Mark I containment nuclear plants in even remotely dodgy earthquake zones should be shut down immediately.

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