By Dan Reynolds
There may be no energy source with the reputational vulnerabilities of nuclear energy.
Images from educational films of the 1950's show children ducking and covering under their desks under the na´ve assumption that the measure would safely shield them from an atomic blast. Those images are held up by satirists and nuclear opponents, as examples of our past collective na´vetÚ on the topic of the dangers of nuclear fusion and fission.
But the reality is that nuclear power production remains one of the more impressive and fascinating human achievements in power generation. And the nuclear industry is far more sophisticated now then those outdated and much ridiculed images from our past would suggest.
The success of nuclear power plants will vary, and inevitably, the political will to maintain them will waiver. Voters and politicians will periodically take action to deny the relicensing of plants. Indeed, following the events in Japan in March, entire governments, such as Switzerland and Germany, seem bent on taking nuclear down. Those government declarations that they will abandon nuclear energy are clear examples of political risk in the energy sector.
Germany seems intent on taking down eight of its reactors immediately, which will lead to decommissioning, which carries its own risks. Although some experts among those that insure nuclear plants doubt that Germany will follow through and decommission all of its plants.
In the U.S., the first decommissioning of a nuclear power plant occurred at Fort St. Vrain, Colorado, where America's first high temperature gas-cooled reactor design was built. The project was ambitious and perhaps na´ve in terms of what the engineers there were trying to accomplish when they broke ground on the reactor in 1968.
An unstable foundation drove engineers to freeze the soil underneath the structure by pumping freezing brine through a network of tubing. It was an admirable attempt at creating short-term stability that would fail in the long-run.
Fort St. Vrain drove its first electricity to the grid in 1977. But by 1989 it had been undone by a long series of technical malfunctions. With Westinghouse serving as the decommissioning contractor, the plant received permission to store its spent fuel in an Independent Spent Fuel Storage Installation.
But far from being a toxic nightmare of a legacy, today Fort St. Vrain functions as a gas-generated power plant.
Maine Yankee in Wicasset, Maine is another plant that was decommissioned and can be labeled a success story from a risk management standpoint.
Like Fort St. Vrain, Maine Yankee, which got its construction permit in 1968, was undone by nagging technical problems. First there were problems with the plant?s steam generator tubes. Those were followed by the hazard of leaking fuel rods. But decommissioning the plant was highly successful from a loss standpoint, according to one insurance expert.
"They went six million hours without a loss-time accident," said Dan McGarvey, the Greenville, S.C.-based chairman of energy, mining and power for global insurance broker Marsh.
"The safety-conscious environment and culture that pervade in nuclear continue into dormancy and decommissioning," McGarvey said.
And decommissioning can be very tricky work. At Fort St. Vrain, divers had to swim under the reactor core support floor to cut it loose with torches.
At Maine Yankee, explosives were used to safely demolish the containment building and approximately 400 million pounds of waste was safely removed from the site.
Today, 200 acres of plant property have been preserved for conservation and education and an additional 400 acres of plant property have been transferred for economic development.
Marsh's McGarvey said a substantial political risk that adds costs and complications to the use of nuclear fuel is the refusal by the federal government to follow up on promises it made to the industry to be responsible for the disposal of spent fuel. Hence, to this day, decommissioning plants have been advised to establish an Independent Spent Fuel Storage Installation on site.
One of the biggest challenges, which would present a host of risks, in the decommissioning of Maine Yankee and other plants is how to communicate the transition from an operating plant to a dormant plant to personnel who might be understandably anxious about their professional futures.
A report by Naperville, Ill.-based New Horizon Scientific LLC on the decommissioning of Maine Yankee said that a severance and early retirement program went some way in addressing these concerns. It also said that staffing at the plant went from 600, when the plant shut down in 1997, to 85 by the end of 1999 and the work that completes the transfer of nuclear fuel from the plant.
Good communication and a team approach from management went a long way toward lessening personal anxieties and keeping the team's focus on safe operations and decommissioning, according to that report.
In August of 1998, Stone & Webster Engineering Corp. received the contract for decommissioning Maine Yankee at a cost of approximately $250 million out of a total decommissioning cost of $540 million.
But here is where another risk management lesson was learned in the decommissioning of plants. That lesson is, know the financial strength of your decommissioning partner.
In 1999, according to the New Horizon Scientific Report, Stone & Webster subcontractors began complaining to Maine Yankee that they weren't getting paid in a timely manner. The company soon reported that it was having financial troubles and sought reorganization under Chapter 11.
In 2000, the Maine Yankee Atomic Power Company terminated the decommissioning contractor's contract and took over the decommissioning work itself.
DAN REYNOLDS is senior editor at Risk & Insurance«.
December 1, 2011
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