Unsafe at Any Price

If Terrorists Take Down Nuclear Plants, You Pay—By the Hundreds of Billions

Even as the human tragedy of two jets smashing into the World Trade Center tore at the hearts of energy traders, their minds were turned to two things: the oil and the nukes, both seeming suddenly more vulnerable than ever to hostile forces from abroad.

For the foreseeable future, America's energy policies will remain wedged between Iraq and an irradiated place. But while soldiers might be asked to die protecting fuel supplies beneath the feet of despots, it's civilians who'll suffer the immediate death or homelessness, lingering cancers, and future birth defects if terrorists smash into any of our 103 active nuclear reactors.

This scenario feels very real—and it's very costly. Indeed, the September 11 hijackers used the Hudson River as a path to New York City, flying over the Indian Point nuclear power plant. Locals in Westchester County demonstrating for the plant's immediate closure can see the problem clearly enough. They know the burden of protecting facilities like that from what had been unthinkable now falls on them, the rate payers and taxpayers who foot the bill for sustaining the industry.

Without their help, nuclear power might sink into obsolescence in a competitive power market, observers say. Nuclear proponent Alan Blinder, an economist with the Institute for Advanced Study in Princeton, New Jersey, concedes that likelihood but notes "sometimes salmon swim upstream."

Blinder has reason for optimism. Electricity deregulation was expected to sound a death knell for nuclear power, but the industry eked out a renaissance of sorts through better management, consolidation into fleets run by a handful of more capable operators, and a government-mandated bailout—by ratepayers—of capital costs.

Another significant government boost comes through insurance. The Price-Anderson Act, enacted in 1957 and now up for renewal, limits the industry's financial liability for accidents, either in a reactor or research facility, in storage, or in transit. The House has already passed it, and the Senate is due to pick it up in 2002.

Under Price-Anderson, utilities carry the maximum private insurance of $200 million per reactor. If damage exceeds that coverage, other industry players chip in up to $83.9 million for each reactor they run. If those hundreds of millions aren't enough, it's up to you. As of August 1998, catastrophe scenarios predicted taxpayers would have to pony up $9.43 billion as the reinsurer—the insurer of insurance companies. And that's just the start of it.

Nuclear operators have long understood the dangers. A 1982 Argonne National Laboratory report found protections against airplane collisions highly suspect, and they aren't much better now. "If you postulate the risk of a jumbo jet full of fuel," International Atomic Energy Agency spokesman David Kyd said in a September 17 speech, "it is clear that [commercial reactor] design was not conceived to withstand such an impact."

The inability of the industry to protect and insure itself has drawn critics, among them Congressman Edward J. Markey of Massachusetts, who has confronted the Nuclear Regulatory Commission over the issue. In addition to the Argonne report, Markey has cited expert opinions that waste pools on-site are still radioactive and far less shielded, and that cooling systems might also be vulnerable, making safe shutdown in the event of an attack problematic. "In light of the current risk, we cannot afford a 'business as usual' mentality," he told the Voice in a written statement. "We need a top-to-bottom reorganization of our nuclear security efforts to beef up our defenses against terrorist attacks."

He recently challenged the NRC to show any improvements to address the concerns. After 40 years, Markey argued, the industry shouldn't rely on federal help for insurance. When he suggested that perhaps reactor owners could get private insurance based on their safe operations and rigorous security, unless the market was sending a message about the state of that industry, "the entire Energy and Commerce Committee broke into hysterics," recalls an aide.


A senate energy committee staff member tells the Voice nuclear power remains politically viable because not only does the Bush administration favor it, but plants tend to be situated in Northern Democratic strongholds. More broadly, though, big power plants of any type are falling out of favor. "September 11 changed a lot of thinking about what we can reasonably protect," the staffer notes.

Big power plants make big targets. That goes for coal and hydroelectric generators, as well as nuclear. Distributed generation—a strategy that calls for microturbines, fuel cells, and solar panels—would be safer, if the technology ever catches up. For now, these alternatives can't replace centralized sources and would need massive amounts of research funding or government subsidies to stimulate a market.

That leaves advocates for nuclear power free to cast their opponents in terms that smack of the Taliban. "I suspect the people who issue the scares about nuclear plants and oppose their construction are really opposed to electricity and our modern society as a whole," Tom Randall, director of the John P. McGovern, M.D., Center for Environmental and Regulatory Affairs, told the National Reviewin October.

But insurance companies soberly confirm Markey's doubts.

"Over time, 125,000 people are expected to die or get cancer from the Chernobyl accident, as compared with 3500 from the September 11 attacks," says Dr. Robert Hartwig, chief economist of the Insurance Information Institute, a trade association. "So if September 11 cost $40 billion, imagine that amplified by a factor of at least 35. The costs that would come out of a nuclear event or successful terrorist attack far exceed the claims-paying ability of all insurance companies in the world combined."

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