By DAN REYNOLDS, senior editor of Risk & Insurance®
As new governors get set to take their seats in January, at least one brings with him the political will to shut down older nuclear plants.
In Vermont, Governor-elect Peter Shumlin, a Democrat, has taken dead aim at Vermont Yankee, the venerable nuclear power plant that generates three-quarters of the electricity produced in that state, according to the U.S. Energy Information Administration.
The plant, owned by Entergy Nuclear, has been plagued by a radioactive water leak. Though fixed, the plant is doomed as of 2012 if Shumlin has his way.
In New Jersey, a state so strapped for power that residents there pay some of the highest electricity rates in the nation, Republican Gov. Chris Christie has taken aim at the Oyster Creek nuclear power plant owned by Exelon.
The plant, which produces 6 percent of the electricity in New Jersey, is damaging the environment around Barnegat Bay by sucking in water from the bay for coolant. The plant's cooling process is killing clam and crab larvae. Without the hundreds of millions of dollars needed to build cooling towers, Exelon will shut the plant down in 2019, a decade before its license expires.
So, are we sure the government doesn't want to help Exelon build those towers? You're talking 10 years of power generation that you're throwing away there.
WORTH THE REPUTATIONAL RISK?
When it comes to reputational damage, nuclear may have it worse than any other source, worse even than the oil and gas industry, which suffered another black eye in the wake of Deepwater Horizon.
Yet consider these numbers brought to us by Dan McGarvey, the Greeneville, N.C.-based chairman of Marsh's U.S. Energy, Mining, and Power Practice, and Shannon Moyer, the Philadelphia-based leader of Marsh's U.S. Nuclear Center of Excellence.
Claims data from the nuclear insurance pool American Nuclear Insurers indicates that there have been 236 claims in the 50 years that the pool has been operational. That amounts to $298.1 million in indemnity plus expenses paid with 17 open claims as of this year.
That's an average of about $6 million a year in claims, and that includes $25 million that was voluntarily set aside to pay for any future claims from the Three Mile Island incident in 1978. The claims payments are split among what is now about 20 domestic insurers, Moyer and McGarvey said.
So, when it gets right down to it, there's not a lot of exposure there.
"Every claim ever paid has been paid by the premiums collected," McGarvey said of the pool. "They take three-quarters of the premiums collected and put them into a surplus fund and pay claims out of that fund," McGarvey said.
Nuclear isn't perfect. No energy source is. But the time has long passed for it to be treated like a political football, which it still is.
December 13, 2010
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