Debate on nuke plant act is revived

Benjamin Grove and Mary Manning

Friday, May 18, 2001 | 10:58 a.m.

WASHINGTON -- Congress should renew an obscure act that provides affordable insurance rates to nuclear power plants, according to one recommendation in President Bush's newly released National Energy Policy.

The Price Anderson Act, approved in 1957, was just one of 105 recommendations in Bush's strategy outline. But it is a vital to his goal of expanding nuclear power in America -- which Nevada policymakers oppose because the state is the proposed home for the nation's nuclear waste.

The act protects nuclear power companies from paying sky-high accident insurance premiums by capping liability policies at $200 million per reactor.

Nuclear utility officials say that without the law they'd be forced to seek private insurance and forced to pay exorbitant rates -- possibly to be driven out of business.

But critics say the act amounts to handing the industry a government subsidy. Environmental and consumer group Public Citizen called it "corporate welfare."

Sen. Harry Reid, D-Nev., plans to muster a diverse coalition of lawmakers, including green-leaning Democrats and free-market Republicans, to oppose the act's renewal this year, Reid spokesman Nathan Naylor said.

"This is an incentive to build ... nuclear power plants," Naylor said. "In the case of a catastrophic accident, the American taxpayer gets caught holding the bag."

Here's how the act works:

* Cost estimates for a worst-case nuclear accident are nearly impossible to predict, but the Chernobyl accident in 1986 cost about $200 billion for clean up, evacuation and other long-term expenses, the Associated Press said. Environmental groups say the cost of a nuclear accident could be as much as $300 billion.

* Under Price Anderson, companies that own the nation's 106 nuclear reactors (three are closed and inactive) carry insurance policies capped by the government at $200 million. So if an accident occurred, the company would pay up to $200 million for damages.

* After that, owners of the other 105 reactors, by agreement, would share the cost of additional damages -- up to about $88 million per reactor. If the accident were bad enough that the companies owning the 105 other reactors had to ante up their $88 million each, it would add up to nearly $9.5 billion in compensation.

* But what if accident liabilities cost more than that? Taxpayers would pay.

"Our concern is that no other special interest in Washington gets this kind of assurance," said Keith Ashdown, spokesman for Taxpayers for Common Sense. "We don't think taking on this kind of liability is the role of the federal government."

Congress has renewed the act three times, and lawmakers again must consider renewal because it expires in August 2002. If the act were not renewed, plants already under steam would still be covered, but any new plants would be on their own to find insurance, congressional sources say.

Proposals to renew the act already are hemmed into three energy bills pending in Congress. For emphasis, Vice President Dick Cheney also recommended it in the Bush adminstration's energy strategy, which he drafted.

"It needs to be renewed," Cheney said in a Reuters interview this week. If not, he said, "Nobody's going to invest in (new) nuclear power plants."

But Price Anderson is controversial.

Taxpayers for Common Sense is gearing up a lobby campaign to convince Congress not to renew it.

"There are a lot of conservatives in Congress who believe the free market needs to work when it comes to energy policy," Ashdown said.

Consumer and environment groups say Price Anderson is evidence that nuclear power is dangerous.

"Our whole argument is: If these plants are so safe, why should we need a taxpayer-backed insurance plan?" said Anna Aurilio, scientist with U.S. Public Interest Research Group.

But others disagree. Nuclear power is enjoying a resurgence in public opinion and in Congress, pro-nuclear groups say.

Price Anderson should be renewed "indefinitely," Oliver Kingsley, president of the nuclear utility Exelon Corp., told a Senate panel this month.

Industry officials argue that the chances of a nuclear accident are remote.

Despite decades of nuclear power production, only about $180 million has been paid in claims and legal transactions in Price Anderson money since the law was enacted, according to the Nuclear Energy Institute, an industry trade group.

About $70 million was paid as a result of Pennsylvania's Three Mile Island accident in 1979, although no one died.

Proponents add that even the Nuclear Regulatory Commission, the body charged with regulating nuclear plants, says that no new plants could be constructed without renewing Price Anderson.

"Price Anderson is up for reauthorization during this Congress, and we must address liability and disaster-preparedness issues to send a signal that new nuclear plants are welcome in this country," Rep. Joe Barton, R-Texas, a key lawmaker on energy issues said at a congressional hearing in March.