The true cost of disaster insurance makes nuclear power uncompetitive
Nuclear energy becomes uncompetitive once the costs of completely insuring against disasters are fully integrated into its price.The continuing nuclear disaster at Fukushima has concentrated minds on the risks of nuclear catastrope in Europe - all the more so as estimates of Fukushima's cost rise towards a giddying US$500 billion.
And so it is that the European Commission is considering whether, and how, it should amend the insurance of nuclear power plants on European territory. In the event of the unthinkable taking place in a European reactor, who will pay the cost?
The focus is timely. For these three observations on nuclear power seem indisputable:
We will continue to operate nuclear power stations for many decades to come.
There is no exemption from nuclear disasters in the future.
We will have to decide on the best ways to compensate victims of nuclear incidents as far as that is based.
http://www.theecologist.org/blogs_and_comments/commentators/2265605/the_true_cost_of_disaster_insurance_makes_nuclear_power_uncompetitive.html
= new reply since forum marked as read
The statement above, to whit:
the amount the nuclear industry is liable for just about covers the cost of one nuclear plant with almost nothing left over to deal with the surrounding communities.
demonstrates that kristopher evidently doesn't understand the concept of *liability* insurance. Kristopher postulates above that the cost of the damaged plant would be paid by the insurance first, and there wouldn't be anything left over for others.
Liability insurance doesn't cover the losses of the insured; liability insurance covers the losses of *others* that the insured may be found liable for. That's how it gets its name.
http://en.wikipedia.org/wiki/Liability_insurance
Liability insurance is a part of the general insurance system of risk financing to protect the purchaser (the "insured"
from the risks of liabilities imposed by lawsuits and similar claims. It protects the insured in the event he or she is sued for claims that come within the coverage of the insurance policy....Liability insurance is designed to offer specific protection against third party insurance claims, i.e., payment is not typically made to the insured, but rather to someone suffering loss who is not a party to the insurance contract.
I would have thought most people would be familiar with the concept from buying their automobile insurance. Many states mandate that the driver have typically $300K in liability insurance. In the event of an accident, that money is used to pay medical bills and suffering of other people injured in the accident. If the driver expects that the cost of his/her vehicle is covered by that $300K liability insurance; then they are sadly misinformed and mistaken. The driver has to buy additional insurance usually called "comprehensive" to cover the cost of the driver's own car.
The insurance in question here is liability insurance, and the entire amount can be used to pay for damages caused by the power plant, and not the loss of the power plant itself. If the reactor owner wants compensation for the loss of the reactor and plant; the owner has to purchase a separate insurance policy to cover that. The liability insurance doesn't cover the loss of the reactor, and the full amount of liability insurance is available to pay injured third parties; contrary to the claim made in the above post.
The Price-Anderson Act demands that the reactor operator get a first tier of coverage from commercial underwriters; and they do, which puts a lie to the claims of the antinuclear movement that there are no insurance companies that will insure nuclear power plants. See:
http://www.nuclearinsurance.com/
American Nuclear Insurers (ANI) is a joint underwriting association created by some of the largest insurance companies in the United States. Our purpose is to pool the financial assets pledged by our member companies to provide the significant amount of property and liability insurance required for nuclear power plants and related facilities throughout the world.
Above this first tier of insurance is a second tier provided in accordance with the Price-Anderson Act:
http://en.wikipedia.org/wiki/Price%E2%80%93Anderson_Nuclear_Industries_Indemnity_Act
The Price-Anderson fund, which is financed by the reactor companies themselves, is then used to make up the difference. As of September, 2013, each reactor company is obliged to contribute up to $121,255,000 per reactor in the event of an accident with claims that exceed the $375 million insurance limit. As of 2013, the maximum amount of the fund is approximately $12.61 billion ($121,255,000 X 104 reactors) if all of the reactor companies were required to pay their full obligation to the fund. This fund is not paid into unless an accident occurs.
The antinuclear movement often promulgates the misinformation that the funds for the second tier protection provided by the Price-Anderson Fund comes from the taxpayers. As stated above, the Price-Anderson fund is financed by the nuclear industry, the reactor operators; it is only administered by the Government.
It is often asked who pays if damages exceed the value in the Price-Anderson Fund; with the antinuclear movement also misinforming the public that this is a hard cap on damages. That is untrue, as the Price-Anderson Act provides that the decision on what to do befalls to Congress:
If claims are likely to exceed the maximum Price-Anderson fund value, then the President is required to submit proposals to Congress. These proposals must detail the costs of the accident, recommend how funds should be raised, and detail plans for full and prompt compensation to those affected. Under the Act, the administrators of the fund have the right to further charge plants if it is needed. If Congress fails to provide for compensation, claims can be made under the Tucker Act (in which the government waives its sovereign immunity) for failure by the federal government to carry out its duty to compensate claimants.
This type of legislation of liability is not unique to the nuclear industry as many in the antinuclear movement erroneously claim. There is similar liability insurance legislation with regard to the aviation industry. Back in the old days when people used to get something called "tickets" from their travel agents in order to board airliners to fly to distant lands; did you ever read the back of the pre-printed "ticket"? The back of the ticket gave the traveler notice of all the insurance limitations that the traveler accepts by using the ticket. I guess the similar notification is available somewhere on the airlines' websites.
Finally, the risks of nuclear power are *not* determined by insurance company actuaries; they only determine what premium the insured pays for a given amount of coverage The risks of what can / can not happen in a nuclear accident is a scientific question. When something goes wrong at a nuclear power plant, it won't be insurance actuaries that are consulted as to what happens next. No - what happens next in the accident is *totally* determined by the Laws of Physics; and hence Physicists, like myself; have a unique perspective on the risks of nuclear power because it is the Laws of Physics that we study that will be the *sole* determinant of those risks. The fact that Physicists support nuclear power to the 99% level should be most indicative.
Altair_IV
ˈlī
ə bəl/Submit
adjective
1.
responsible by law; legally answerable.
"the supplier of goods or services can become liable for breach of contract in a variety of ways"
synonyms: responsible, legally responsible, accountable, answerable, chargeable, blameworthy, at fault, culpable, guilty
"they are liable for negligence"
It's called the Price Anderson Act and they've had it since the beginning. Just like Japan the amount the nuclear industry is liable for just about covers the cost of one nuclear plant with almost nothing left over to deal with the surrounding communities.
A full analysis and report is here:
http://www.ucsusa.org/assets/documents/nuclear_power/nuclear_subsidies_report.pdf
We are in the predicament that we are with carbon fuels precisely because we allowed the industry to externalize, or push onto others, far too much of the costs associated with their use. Our dependency was created long before the full costs began to come due.
That's the pattern the nuclear industry wants to follow. Force us to spend trillions constructing a system that we can't walk away from without massive costs. One important part of that is gaming the tools that tell us the costs - like insurance.
As the article states:
Within Europe, these expected costs are currently partly covered by a compulsory disaster insurance that the nuclear operator pays. However, this disaster insurance is grossly insufficient to include the expected costs of disasters into the price of nuclear energy.
As a result, governments around the world socialize the damages that are not covered by this insurance. This is precisely the reason for which the European Commission is trying to reform the insurance of nuclear disasters.
Paying market rates, according to the analysis, would raise French nuclear industry insurance rates 60% and those of the German nuclear industry by at least 100%. This would result in significant increases in electricity costs to the consumer - a 25% increase in France and 50% (or more) in Germany. Of course the outcome of that would be totally unacceptable for those seeking to maintain control of the global energy supply:
The certain result would be to make nuclear electricity uncompetitive. For this reason operator's maximum liability tends to be capped, as in the UK.
ETA chart "Price-Anderson Insurance Coverage in the Event of an Accident at a Nuclear Reactor" showing the coverage afforded offsite parties under the PAA.
If you read the accompanying analysis you'll see that most of the funding for a disaster would be paid into a fund by the operators of all the other nuclear plants over a period of 7 years after the accident. What could possibly go wrong with that plan? I mean how much harm could be done by making the people suffering damages wait for years to receive their $1183 dollars for rebuilding their new life?
From http://www.ucsusa.org/assets/documents/nuclear_power/nuclear_subsidies_report.pdf Page 80