Transcript The Future of Nuclear Power: Legal and Regulatory Issues

Regulation, Reality and the Rule
of Law: Issues for a Nuclear
Renaissance
Peter A. Bradford
Washington & Lee University
June 23, 2007
Actual v. Perceived Relative Risk
During TMI Accident
8
7
6
5
Actual risk
Perceived risk
4
3
2
1
0
Wed
Thu
Fri
Sat
Sun
“Nuclear Power” + “Revival”:
Rhetoric v. Reality
Per Google
2,500,000
2,000,000
Revival +
Renaissance
1,500,000
Revival
1,000,000
500,000
0
2005 2006 2007
Per Reality
With Few New Units
(Paul Joskow, MIT)
Talk Will Cover
1. Laws and regulatory frameworks for
safety and energy policy matters.
2. Five issues chosen to illustrate the
ongoing struggle of legal processes to
come to terms with nuclear aspirations,
nuclear fears and some semblance of
reality;
3. Ask questions during. Please ask
questions during.
Primary Federal Legal Structure for
Nuclear Regulation (Safety)
• Atomic Energy Act of 1954 as amended
– Fundamental organizational framework and
statutory standards;
– Licensing process
• Energy Reorganization Act of 1974
• Nuclear Nonproliferation Act of 1978
• Nuclear Waste Policy Act of 1982
Role of Congress
•
•
•
•
Laws
Oversight/Confirmation
Budgets
Financial Support, aka incentives or
subsidies
Federal Legal Structure for Electric
Regulation
• Federal Power Act – 1934, often amended
• National Environmental Policy Act – 1969 –
Requiring evaluation of alternatives to major
federal decisions
• Public Utility Regulatory Policies Act – 1978 –
Introduced competition in electric generation;
• Energy Policy Act, 1992 – Increased
competition;
• Energy Policy Act, 2005 – Financial support for
new nuclear plants.
State Legal Structure
• Utility commissions
• Energy planning offices
• Legislatures
Treaties
• Nonproliferation Treaty
• Convention on Civil Liability for Nuclear
Power Accidents
• Megatons to Megawatts
Regulatory Framework
• International Atomic Energy Agency
(IAEA)
• Nuclear Regulatory Commission (NRC)
– Formerly Atomic Energy Commission (AEC)
• State utility regulatory commissions (PUC,
PSC, PSB)
• Environmental Protection Agency (EPA)
Functions of the NRC
5 Commissioners
Licensing
Nuclear Material Safety
Inspection and Enforcement
Research
Appeals Board
Hearing Boards
The Atomic Energy Act of 1954
• Allowed private companies to own and
operate nuclear facilities
• Licensing by AEC
• Standards “adequate protection” or “no
unacceptable risk”
• Duty both to promote and to regulate
1957 Amendments to the AEA
• Price-Anderson liability limits;
• Preemption of states from health and
safety regulation;
• Right of the public to extensive hearings
and information access in reactor licensing
proceedings.
1974 Energy Reorganization Act
• Broke up the Atomic Energy Commission;
• Terminated the Joint Committee on Atomic
Energy
– Revived effective Congressional oversight of
nuclear regulation.
Issue #1: The New Licensing
Process
• The Mythology: The old licensing process
was a major factor in the collapse of
nuclear power in the U.S.
• It has now been repaired by changes in
law and regulatory policy, paving the way
for the renaissance.
The Operating Experience Gap
• By 1970, the U.S. industry had 4.2 GW
operating and 72 GW on order.
– And the AEC was forecasting 1000 plants
(GW) by the year 2000.
• The smallest plant on order was more than
twice the size of the largest plant in
operation.
• Absence of standardization, in contrast to
France and Japan.
Issue #1: The U.S. Licensing
Process, cont’d.
• The Reality:
– The U.S. licensing process led to the building of more nuclear
plants than the next four countries combined as of 1980 (and
issued construction permits for twice as many as were built);
– AEC/NRC never turned down a power plant application;
– U.S. total still almost equals France and Japan combined.
– Plants were built while hearings continued.
– The real villains in the cost escalation story:
• Operating experience (including Three Mile Island)
• Slowing of demand growth leading utilities to slow construction
• Falling fossil fuel prices
NRC “TMI Action Plan” Illustrating the
Regulatory Reaction to Adverse Experience
• Significant modifications of requirements
as to
– Operator training;
– Control room design and instrumentation;
– Emergency preparedness;
– Single administrator in emergencies (so no
transcript).
Issue #1: The Reformed U.S.
Licensing Process, cont’d.
• Today’s licensing process
– Combines CP & OL
– Drastically limits scope of public involvement
• Areva plant in Finland
– First advanced (EPR) plant built in a liberalized
electricity market;
– License issued in February, 2005;
– By December 2006 project was 18 months behind
and approximately $1 billion over budget
The 15 Wedges (Scientific American, 9/06)
Issue #2: Resource Selection
• A state responsibility, conditioned by PURPA and
the 1982 California Supreme Court decision;
• Cost recovery is through markets, not rate base;
• No new nuclear plants have been bid;
• Deregulation is not what has happened;
• Cost caps and competitive bidding screens;
• Some states prohibit new nuclear plants.
A Market Oddity
• Power from existing units “costs” about 1.5
cents/kwh in markets that pay 5+ cents;
• But power from new plants may cost 8-11
cents/kwh (per recent Keystone Center
report).
U.S. Nuclear Output and Nuclear Capacity, 1973-2005:
Productivity Improvement in the Face of Competition
800000
160
600000
140
120
100
400000
c
200000
Capacity
60
Energy
40
20
05
20
01
20
97
19
93
19
89
19
85
19
81
19
19
77
0
73
0
19
80
Setting Regulated Rates the Old
Fashioned Way
RR = E + r(I - D)
RR = Required Revenue
E = Operating Expenses
r = Return on Investment
I = Amount of investment
D = Depreciation
Lessons of the 1970s, Now Being
Studiously Unlearned
1) Markets adjusted for externalities are
smarter than regulators.
2) Who bears risks of runaway costs?
1970s
customers
1980s
and
1990s
Today
investors
taxpayers
and
customers
(for first
new units)
Energy Policy Act of 2005
• Loan guarantees up to 80% of project costs, shifts risk
and therefore lowers cost of capital (but not of project)
• Production tax credit (1.8 cents/kwh for 6000mw)
• Delay insurance ($500 million for 2 plants, 250 million for
next 4)
• Price-Anderson renewal
• Licensing cost sharing
• EPAct05 shifts costs/risks. It does not lower them.
• Plants built this way are not a “renaissance”.
Retreat from Market Principles in
Some States
• Abrogate competitive bidding
requirements;
• Charging plants to customers before
completion.
Nuclear Has Received Bulk of
Federal R&D Support
(Earth Track05)
Federal Energy R&D, 1950-1993
6%
10%
0%
22%
Fossil
Fission
13%
Fusion
Renewables
Conservation
Other
49%
Federal Energy R&D, 1998-2005
3%
18%
28%
Fossil
Fission
Fusion
Renewables
19%
Conservation
18%
14%
Other
Issue #3: Nonproliferation
• India’s 10-15kt “peace bomb” of May, 1974
• Pakistan declared that it would develop a
nuclear explosive “if we have to eat grass”.
• US efforts to deny use of US heavy water;
– In contrast to Canadian cut-off
• Ford/Carter reassessment of reprocessing and
breeder reactors
• Passage of the U.S. Nonproliferation Act of 1978
The NNPA of 1978
• NRC approval of exports only if
– Assurance against use in explosives
– Adequate physical security
– Approval over retransfer
– Approval over reprocessing
– “Full scope” safeguards
Recent Setbacks
• GNEP reverses U.S. position on
reprocessing while doing nothing to
strengthen the IAEA.
• Arrangement with India required modifying
of NNPA to eliminate full scope safeguards
requirements for a demonstrated
proliferator.
– Implications for Iranian situation
Issue #4: Yucca Mountain
• “Waste confidence” as a basis for reactor
licensing;
• Role of the EPA standard:
– There is no EPA standard
– There is high likelihood of more litigation even
before application is filed
Issue # 5; The Quality of Nuclear
Regulation
•
•
•
"Our great hazard is that this great benefit to
mankind will be killed aborning by unnecessary
regulation." AEC Commissioner Willard Libby,
1955;
TMI Report Conclusion – “Fundamental
changes in the attitudes of the NRC and the
industry are necessary”;
NRC is made up primarily of dedicated and
capable staff, but quality of leadership and
Congressional oversight are again in question.
The Safety Goal
• Individual members of the public should be
provided a level of protection from the
consequences of nuclear power plant operation
such that they bear no significant additional risk
to life and health, and societal risks to life and
health from nuclear power should be
comparable to or less than the risks of
generating electricity by viable competing
technologies and should not be a significant
addition to other societal risks.
Connecting Ten Dots
1) A 2002 survey of NRC employees says that 40% would be scared to raise significant safety
questions. Then Chairman Richard Meserve said this was a big improvement from the 50% of five years
earlier.
2) January 2003 - A NY Times story reported that the NRC had ruled that terrorism was too speculative to be
considered in NRC licensing proceedings, even as the Bush administration and Congress considered terrorism
likely enough to suspend habeas corpus. This position has since been rejected by the 9th Circuit Court of
Appeals, but the NRC continues to apply it elsewhere.
Incidentally, the original staff testimony taking this position was submitted on September 12, 2001, while the
Trade Center and the Pentagon were still smoldering. The licensing board wanted to admit the contention
over the staff objection but was overruled by the commission.
3) From an NYT editorial of January 7, 2003 Unfortunately, the regulatory agency that was supposed to ride herd on unsafe plants was equally negligent. A
report just released by the N.R.C.'s inspector general concludes that the regulatory staff was slow to order
Davis-Besse to shut down for inspection, in large part because it did not want to impose unnecessary costs on
the owner and did not want to give the industry a black eye. Although the N.R.C. insists that safety remains its
top priority, its timidity in this case cries out for a searching Congressional inquiry into whether the regulators
can still be counted on to protect the public from cavalier reactor operators.
Connecting 10 Dots
4) In 2003 the NRC submitted the name of Sam Collins, the official who had overseen the Davis
Besse lapses, to the Office of Personnel for the highest civilian financial award, a 35% bonus - or
about $40,000.
During the time covered by the award, the NRC inspector general also concluded that Collins had
knowingly inserted a false statement into a letter sent by the NRC chair to David Lochbaum at the
Union of Concerned Scientists.
As Lochbaum observed at the time "The NRC has a safety culture problem. The survey released
last December showed that only 51% of the workers felt comfortable raising safety concerns. The
Commission can only reinforce the fears by rewarding a person who has falsified documents,
chided those who did their jobs, and taken repeated steps to undermine safety".
5) Immediately after the September 11 attacks, the NRC rushed out a claim that nuclear power
plants were designed to withstand such crashes. This claim, which had not correct, was later
withdrawn.
6) Two unprecedented speeches by a Commissioner attacking groups with a history of
responsible participation in NRC proceedings.
Connecting 10 Dots
7) The claim by Senator Pete Domenici that he had successfully persuaded the NRC to reverse
its "adversarial attitude" toward the nuclear industry by threatening to cut its budget by one-third
during a 1998 meeting with the chair (from Senator Pete V. Domenici, A Brighter Tomorrow;
Fulfilling the Promise of Nuclear Energy (Rowman and Littlefield, 1998, pp. 74-75)
8) The fact that the current NRC chair (Dale Klein) appeared in paid industry ads attesting to the
safety of Yucca Mountain. When Commissioner Jaczko was appointed from the staff of Nevada
Senator Harry Reid, he was required to take no part in Yucca Mountain matters for a year or
two. No such requirement was placed on Klein.
9) The NRC has dramatically curtailed the opportunities for public participation. To give but one
of many examples, lawyers can no longer cross examine in most cases. They must submit their
questions to the licensing board chair, who decides whether or not to ask them.
10) "The top U.S. nuclear regulator vouched for the safety of a new Westinghouse nuclear
reactor - yet to be built anywhere in the world - in a sales pitch to supply China's growing power
industry.....U.S. Nuclear Regulatory Commission Chairman Nils Diaz said the U.S. $1.5 billion
AP1000 reactor made by Westinghouse Electric Co. is likely to receive regulatory approval in the
next few months." Associated Press, October 19, 2004
An Unfortunate Reality
• The nuclear power programs that actually
unfold are never the idealized programs
that nuclear proponents envision.
– Just look at the Energy Policy Act of 2005,
NRC biases, the Global Nuclear Energy
Partnership, the recent deal with India
Sensible Energy Policy that Might Improve Nuclear Power
Prospects and Command Broad Political Support
•
Implement climate change policy that creates (or recognizes) value of all carbon
reducing technologies, including carbon sequestration, energy efficiency and
renewable energy
–
–
–
–
•
Carbon caps and markets
Carbon taxes
Carbon reducing set asides (portfolio standards) and/or production tax credits
Remove Price-Anderson liability limitations for future projects
Use neutral market mechanisms to choose least costly approaches among
these
– Avoid “pin-the-tail-on-the-donkey” energy policy making
•
•
•
Take the time to deal sensibly with waste, proliferation and safeguards;
Rigorous prioritization of options for research purposes – effective, efficient,
expeditious;
Recreate the Nuclear Regulatory Commission as an impartial and widely
respected regulatory body.