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E-M:/ Nuclear power vote in the Senate!

Enviro-Mich message from "Megan Owens" <meo@umich.edu>

To anyone who thought nuclear power was dead:

Call Senator Stabenow and Levin today to stop an expansion of the nuclear
power industry!!!  Urge them to oppose the Bingaman amendment and support
the Reid amendment. (Details below)
		Megan Owens,


Current Status
Bob Bingaman (D-NM) is expected to offer a bad amendment to the Senate
energy bill this afternoon or tomorrow. The Bingaman amendment would
reauthorize the Price-Anderson Act subsidy to nuclear power plant operators.

Harry Reid (D-NV) is expected to offer his own amendment in response to
(“second degree”) Bingaman’s amendment. Reid’s amendment will stop the
Price-Anderson subsidy to any NEW nuclear power plants which are built after
August 1, 2002.

PIRGIM opposes the Bingaman amendment and supports the Reid amendment as an
alternative to this bad amendment. The highlights of the Reid amendment are:

* No subsidy for NEW nuclear plants (which effectively prevents the
construction of new plants because nuclear power cannot compete without

* Financial oversight of nuclear power plant operators to ensure that they
can meet their financial obligations to the public in the event of an
accident (watching for next Enron).

Background to Price-Anderson
Enacted in 1957, the Price-Anderson Act limits the liability of the nuclear
power industry to the public in the event of a nuclear accident.

Originally intended as a short-term measure to spur nuclear plant
development, the Act has been in effect for over four decades and has been
re-authorized several times, with minor modifications.

Though the Act expires on August 1, 2002, existing nuclear plants will
retain the limited liability protection of the Act indefinitely.

Re-authorization of the Act would facilitate the construction of new nuclear
plants by extending the limited liability protection to new power plants
that are built after August 1, 2002. Without re-authorization of the Act,
new nuclear plants would have to purchase full liability insurance on the
open market, as all other types of power generators must.

Limited Level of Protection to the Public in the Event of a Nuclear Accident
The Act provides two levels of nuclear plant liability to the public in the
event of an accident. The primary level of protection requires all plant
operators to carry $200 million in liability insurance, per reactor.

Under the secondary level of liability damages above a reactor’s $200
million primary insurance coverage are assessed equally against all plant
operators, up to a current limit of $83.9 million per reactor. This
assessment is levied at a rate of $10 million per reactor, per year, until
the cap is met.

The Act currently covers 106 reactors. As a result, the Price-Anderson Act
would provide $9.09 billion in compensation in the event of a nuclear
accident. (106 reactors x $83.9 million + $200 million)

The Act does not provide a mechanism for the payment of damages above the
$9.09 billion cap. Nuclear plant operators are expressly exempt from any
additional liability to the public above and beyond the $9.09 billion total.

The Price-Anderson Act would not provide adequate public compensation in the
event of a serious nuclear accident. A government study by the Sandia
National Laboratory, released in 1982, determined that a worst-case accident
at a U.S. nuclear plant could result in damages of more than $500 billion
(2002 dollars).

U.S. Department of Energy Contractors Protected by Government
The Price-Anderson Act requires the federal government to fully indemnify
DOE contractors (certain defense contractors, nuclear labs, waste
transport). Hence, taxpayers bear the full cost in the event of an nuclear
accident involving a DOE contractor. Contractor indemnification includes
coverage for acts of “gross negligence” or “willful misconduct” by the DOE

Price-Anderson Act is a Subsidy to the Nuclear Industry
The Price-Anderson Act constitutes a subsidy to the nuclear industry by
reducing investment risk and by dramatically lowering the cost of retaining
liability insurance. Estimates of the value of the annual subsidy to the
nuclear industry range from $3.5 million to $32 million per reactor. Thus,
the current annual subsidy provided by the Price Anderson Act is between
$366 million and $3.5 billion, given the 106 reactors covered.

Price-Anderson Subsidy Causes Distortion of Unregulated Power Markets
Re-authorization of the Price-Anderson Act also raises the prospect of
wholesale power market distortion due to federal intervention. Many of the
proposed new nuclear plants being contemplated by utilities and independent
power producers would be developed as unregulated merchant plants that are
not subject to state public utility commission oversight.

Extending Price-Anderson protection to these unregulated generators would
enable them to avoid internalizing the risk of an accident into the cost of
generation, thereby extending a competitive advantage to these nuclear
generators compared to other generators competing in wholesale power
markets, such as renewable energy developers.

               Megan Owens
Field Director               734-662-6597
PIRGIM                    MOwens@pirg.org

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