ASHINGTON, Aug. 6 — The sale of about two dozen
nuclear power reactors around the country to a small number of
companies has undermined the system Congress devised to ensure
compensation for people hurt by a severe nuclear accident,
according to an analysis commissioned by two antinuclear
groups in New York.
Federal law requires reactor operators to buy $200 million
in conventional insurance. It also provides for about $9.3
billion in additional coverage by requiring that after an
accident, each plant pay $10 million a year, up to $88
million, to compensate victims.
When the law, known as the Price-Anderson act, was approved
by Congress, the idea was to spread the risk among all
reactors. But as a result of recent mergers and purchases,
four companies now own so many reactors that their liabilities
would be more than half a billion dollars each in case of
The study, which was commissioned by Riverkeeper, a Hudson
River environmental group, and the STAR Foundation, a Long
Island antinuclear group, points out that in many cases, the
companies bought the reactors through limited liability
subsidiaries that could declare bankruptcy and permit the
parent corporations to walk away unscathed. It also says that
the limited liability structure jeopardizes the money set
aside for decommissioning the reactors at the end of their
"Price-Anderson only works if those companies are reachable
in the event of an accident," said Alex Matthiessen, executive
director of Riverkeeper. "These limited liability structures
seem specifically designed to put them beyond reach."
The report, prepared by Synapse Energy Economics and
scheduled to be officially released on Wednesday by being
posted on the World
Wide Web at www.noradiation.org, details layer upon layer
of corporate structures used in recent reactor purchases.
Robert Alvarez, program director for the Star Foundation, said
that most of the holding companies had no employees and were
merely "shell corporations." He called them " Enron-style
Representatives for the nuclear industry scoffed at the
idea that the changes in ownership threatened the insurance
system. Having nuclear plants concentrated in the hands of
companies that specialize in running reactors has safety
benefits, they said, and may also create greater financial
"If I'm a nuclear operator, I'm not going to undermine my
core business to save $10 million a year," said Marvin S.
Fertel, senior vice president at the Nuclear Energy Institute,
a trade group. Failure to pay the fee for one reactor could
jeopardize the licenses of the others, he said.
A typical 1,000-megawatt nuclear plant has fuel and
operating expenses of $130 million to $140 million a year, he
said, and a $10 million payment on top of that, in the
unlikely event of a major accident, was a small increment.
In an introduction to the report, Peter A. Bradford, a
former member of the Nuclear Regulatory Commission and a
former head of the public service commissions in both New York
State and Vermont, agreed that the consolidation of nuclear
ownership might make for safer operation. But he said he
thought it also "risks the shifting of accident and
decommissioning costs from the plant owners to the general
public because the relatively secure financial backing of
substantial utilities companies has, in many cases, been
replaced by a limited liability subsidiary whose only asset is
an individual nuclear power plant."
Price-Anderson, established in 1957 by Congress, expired on
Aug. 1. Provisions remain in force for existing reactors but
new ones would not be covered. But that point is moot, since
no new reactors have been ordered since 1978.
The insurance system established by the law could be
crucial for people who live within a few miles of nuclear
plants because commercial property insurance does not cover
In creating the program, Congress set a cap on how much
would be paid to any victims of a nuclear accident. The cap is
periodically adjusted for inflation; it is now about $9.5
billion, with the money coming from the $200 million in
conventional insurance and the $9.3 billion that would be paid
by the nuclear industry after an accident.
Opponents say the cap is a subsidy to the nuclear industry;
the industry asserts that the $9.5 billion is far more than
would be available for a catastrophe at a chemical plant or
some other industrial site. So far, they point out, payments
have totaled only about $200 million.
Whatever the merits of the arguments on both sides, the
emerging structure of the industry has clearly changed the
underlying assumptions behind the building of nuclear power
plants. Critics agree that having a single company operate 15
or 20 reactors is probably good for safety, since plants
within a company share expertise more readily than plants
owned by scattered utilities.
But they also say that the new owners may lack the deep
pockets of the mammoth regulated utilities that built the
reactors, making an insurance scheme more necessary.
The new legal structure is radically different from what
came before. For example, the Indian Point reactors, in a
suburb of New York City along the Hudson River, were sold by
Edison and the New York Power Authority to Entergy,
a utility that built five of its own plants and has bought six
A spokesman for Entergy, Carl Crawford, said the structure
had tax advantages. Asked if it also created a liability
shield, he said, "It has that effect, too."
But, he said, "anyone who thinks that a company that would
spend a billion and a half of its own dollars is going to
shirk a $10 million a year insurance payment, that's just not