There’s plenty of disagreement over whether U.S. nuclear power plants are ready to face disasters and run responsibly. The industry says they are, while critics maintain some plants are just like the ones in Japan that melted down and they are poorly monitored to boot.
But whatever the situation of any single U.S. reactor, the disaster in Fukushima has laid bare one truth on which experts and officials from the Nuclear Regulatory Commission agree: A disaster here would result in losses requiring the government to make payouts of epic proportions.
That’s because Fukushima will cost anywhere from $74 billion to $260 billion, according to Japanese experts, while the U.S. nuclear insurance fund, established by a 1957 law called the Price-Anderson Act, only has around $12.6 billion in reserve.
"If you have an accident or something like Fukushima, then Price-Anderson can’t handle those kinds of losses," said Wharton School professor Howard Kunreuther, who specializes in public policy.
Kunreuther co-wrote a paper on potential catastrophic nuclear plant costs to the U.S. government for a National Bureau of Economic Research conference in 2007.
"The Japan power plant failure is far worse than almost anything we’ve ever had," Kunreuther said last month. "Maybe Chernobyl, from the point of view of people affected, but certainly not in the case of economic damage."
Costs from the Japanese nuclear accident could be more than a quarter of a trillion dollars, the Japanese newspaper Asahi Shimbun reported earlier this summer. That estimate was prepared for the government by a Japanese research institute, and it included decommissioning costs, purchases of land within a 20-kilometer radius of the plant and compensation to residents who are forced to move.
The result in Japan is the government has moved to pay a large part of damages, with hopes of being repaid by utilities in years to come.
Could a similar situation unfold on this side of the Pacific?
Even though U.S. plants aren’t threatened by tsunamis like Japan’s, they still be damaged by hurricanes, terrorist attacks or earthquakes.
The Associated Press reported this month that although the risk of an earthquake causing an accident at a U.S. nuclear plant is small, it’s far greater than previously thought — 24 times as high in one case.
Last week, staff at the NRC recommended nuclear power plant owners immediately re-evaluate earthquake and flooding hazards at their plants, following the advice of a task force created after Fukushima.
"The Nuclear Regulatory Commission calculated that Fukushima had a one in 1,000 years chance of having a tsunami larger than its sea wall," said David Lochbaum, director of a nuclear-safety project for the Union of Concerned Scientists, and a former NRC staff instructor.
"There are six reactors in the U.S. that the NRC figures have a one in 1,000 (years) chance or greater of having an earthquake larger than they’re designed to withstand," Lochbaum said.
If a catastrophe did strike and a nuclear accident rose to the level of Fukushima, who would pay the tab?
The insurance mandated by the Price-Anderson act has more than $12 billion in it, an amount that has been raised over the years since the law was implemented in 1957.
But staff at the Nuclear Regulatory Commission said the amount of insurance mandated was an arbitrary number not originally based on calculations of costs a disaster could wreak.
The fund was tapped in 1979 when the Three Mile Island accident took place in Pennsylvania. Although no one was hurt in the accident according to the NRC, the nuclear insurance pool paid out a total of $71 million in claims in the decades since the accident.
A Fukushima-type accident on American soil would dwarf both the Three Mile Island claims and the totality of the insurance fund.
"If you broke down what the damage was, the cost of Fukushima, business interruption, supply chain problems, my guess is the (United States) government would not step in on any of that," said Kunreuther. "At the end of the day, there may very well be lawsuits or some kind of settlements with respect to what the government would have to do or the utilities would have to do."
One group that feels Price-Anderson does work is the nuclear industry’s policy organization, the Nuclear Energy Institute, which represents more than 350 companies — including Exelon and PSEG Nuclear — that run the four nuclear reactors in the state.
The institute explains the act on its website with the following headline: "Price-Anderson Act provides effective liability insurance at no cost to the public."
The $12.6 billion in reserve "seems highly appropriate," said Ellen Ginsberg, vice president and general counsel for the group. "It would be very speculative at this point to identify a different number based on an event in Japan."
Ginsberg also said modifications to Price-Anderson state that nothing in the law precludes Congress from going after nuclear companies for more money.
"It’s important not to speculate here, because the circumstances would dictate what Congress does," Ginsberg said, adding "I don’t expect that Congress would walk away from its ability to increase the amount from the industry."
But Neil Sheehan, an NRC spokesman, said it wasn’t clear how Congress would deal with the issue, but it could compensate victims, as in other major disasters.
He said it would be impossible to say if that money would be a loan to the industry or an outright bailout.
"What happens next is Congress would have to look at allocating additional funds much as they’re going to do now in response to Hurricane Irene damage, as they did after 9/11," Sheehan said. "The federal government becomes the insurer of last resort. Once these numbers are exceeded, the federal treasury would help to cover any additional costs."
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