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."

Just the "remote chance of a singular high-severity event" rules out fully privatized insurance for nuke plants, he concludes. And don't go looking to your homeowner's insurance for help if you live downwind of a reactor—read the fine print. "In nearly every insurance policy there are nuclear exclusions and acts-of-war exclusions," Hartwig adds.

Gretchen Schaefer, spokeswoman for the American Insurance Association, agrees Price-Anderson is destined for extension, because "I can't imagine any insurer out there willing to take on the risk."

Already, reinsurers are sending out a wave of nonrenewal notices on contracts that expire at the start of 2002, Schaefer says. For businesses that might become targets of terrorism—think skyscrapers and shopping malls—the idea of using Uncle Sam as a backstop looks more and more attractive. Companies across the board want to form pools specifically to cover terrorism losses, she says, and in the end the federal government is going to have to become the "reinsurer of last resort."


Just months ago, those whispering of desire for new reactors were gaining greater voice in Washington, thanks to high oil prices. Then the pinch at the pump began loosening just when it seemed suburbia might realize the truly patriotic response would be to turn that American flag-festooned SUV into a backyard shed.

But more, at least cheaper, oil won't provide an easy out for the United States. Washington can't blow smoke in the face of its allies for the war on terrorism. By replacing coal, nukes might cut greenhouse emissions enough to gain goodwill internationally. At present, nuclear power plants generate 700 billion kilowatt hours of electricity per year, or 20 percent of U.S. needs, or two-thirds of the nation's emissions-free output. We'll need even more of that juice as we wean ourselves off gasoline with electric cars, or turn toward fuel cells powered by hydrogen, the production of which requires copious electricity.

Nukes, bolstered by new technology and steady market forces, are coming back.

"An obvious major alternative . . . is nuclear power," Federal Reserve Chairman Alan Greenspan told a Rice University gathering on energy policy two months after the attacks. "Its share of electricity production in the United States increased from less than 5 percent in 1973 to 20 percent about a decade ago and has since maintained that share. Given the steps that have been taken over the years to make nuclear energy safer and the obvious environmental advantages it has in terms of reducing emissions, the time may have come to consider whether we can overcome the impediments to tapping its potential more fully."

Then Greenspan added monumental caveats, acknowledging a few flakes in a blizzard of ifs. "Up front, of course, are the concerns of making plants safe from terrorist attacks. More difficult is the challenge of finding an acceptable way to store spent fuel and radioactive waste. If this problem can be resolved and if some of the long-deferred research and development efforts to make nuclear power more economical were to bear fruit, the potential for this source of energy could doubtless be much enlarged."

Greenspan doesn't factor in public opinion, but the pro-nuke Blinder anticipates it may be a major factor in the bottom line. "Additional security costs are obvious," he said. "If serious efforts to expand nuclear energy are made, I imagine there will be high legal costs as well."

The Nuclear Energy Institute is still bullish on its prospects. The group emphasizes the flip side of a world awash with radicals—"In a volatile world, you'd damn well better have reliable energy supplies," says spokesman Steve Kerekes.

A report from the lobbying group foresees by 2020 "the addition of 50,000 megawatts of electricity to the U.S. power supply from new nuclear plants and an additional 10,000 megawatts from improvements to existing nuclear plants."

But even before September 11, bringing a new plant on-line was projected to take five years, "much as we'd like a faster timeline," says Kerekes. During the delay, he says, engineers could work on "some enhanced design elements to safeguard the reactor."

A presidential study to determine how companies and the federal government might protect nukes is under way, Kerekes says. No-fly zones have been established around reactors. Senator Hillary Clinton has joined senators Harry Reid and Joe Lieberman and Representative Markey in proposing that sodium iodide be distributed to communities surrounding power plants to protect against radiation poisoning in the event of an attack. They're also asking that security at plants be federalized, to prevent attacks or the theft of radioactive material that could be used for dirty bombs. Markey asked President Bush to assign National Guard troops in the meantime, but hasn't gotten a response.

Some proposals are startlingly simple and require great faith, like one to construct cages that would block or shred incoming planes.

Officials at Exelon, the largest reactor operator in the United States, think the public holds overblown fears about reactor vulnerability. "You would be amazed how many people are calling for antiaircraft," says spokesman Craig Nesbit. "The notion of having antiaircraft missiles aimed at commercial airlines' planes is not a comforting thought for me."

While no one can guarantee that a brutal assault won't breach a reactor wall, he's confident "nothing built by man is stronger than these containment structures. It's almost inconceivable to me that [a September 11-style attack] would be successful."

And making that assault is tougher than ever, advocates say. Aiming a plane at a low-lying reactor is hard—the high profile people see is the cooling tower—and now fighter planes scramble when anything in the air looks suspicious. Small planes have been escorted down, and even a medevac helicopter was grounded when it suddenly changed course. Nor are airline passengers the patsies they once were, Nesbit notes. When word spread of the ongoing attacks, people on Flight 93 took on the terrorists and brought the plane down from within.

Not everyone in Washington is comforted. Public Citizen, a group founded by Ralph Nader, has wanted reactors shut long before September 11. "Nuclear power is dangerous and unsafe and unclean and uneconomical, and it was on September 10," asserts Hugh Jackson, a policy analyst with the group.

The worst may be yet to come, he fears, as spent fuel from decommissioned plants gets shipped to a central storage facility—Yucca Mountain in Nevada is the prime candidate. One of the state's senators, Harry Reid, is the powerful majority whip. Capitol Hill sources say Reid might run interference on Price-Anderson. He's been growling about the Yucca plan, noting the seismic activity in the area.

To say nothing of getting the material there safely. With the NRC admitting that highly radioactive spent fuel rods sometimes go missing, as at Connecticut's Millstone plant, that's a lot of time on the open road.


Related Article:
"I'll Cut the Fence, You Grab the Plutonium" by Geoffrey Gray

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