$content.slug

On the homepage

Schools

St. Paul schools chief: 'I can't do it alone'

Out There

Petters

Petters jury to resume deliberations Monday

Burning

Anoka County burn clears way for life

Home | Opinion Exchange

If nuclear power is safe, why protect operators from liability?

Star Tribune

Xcel Energy has proposed an expansion of the Prairie Island nuclear power plant in Welch, Minn., on the banks of the Mississippi River.

By Kenneth Zapp

Last update: September 15, 2008 - 1:32 PM

Print this story

Follow Opinion Exchange on Twitter

More from Opinion Exchange

Republicans, from John McCain to congressional candidates, claim that nuclear power is safe and should be expanded in order to solve the energy crisis. But nuclear power would be impossible without the Price Anderson Act, which shields nuclear power plant owners from free market forces.

Specifically, the law caps the amount of insurance a nuclear plant owner must carry and limits the liability the owner would face in case of catastrophic accident or terrorist attack. Since Congress passed the act in 1957, nuclear power executives have acknowledged that their industry is financially dependent on this public protection from the financial consequences of such events.

The law has been renewed every decade. The 2005 Energy Policy Act extended Price Anderson protection with modest increases in the maximum level of insurance coverage required and in the liability a nuclear plant owner faces.

In a market economy, we depend on market forces to measure the risk of an investment. Investors adjust their required returns based on their perception of this risk. Operating firms then manage their risks, through insurance and in other ways.

Without the protections of the Price Anderson Act, owners of nuclear power plants could not afford to purchase enough insurance to cover the full range of risks associated with their operations. If nuclear power were safe, private companies would not need the government to protect them from the risks.

For policy makers, two points are clear. Currently, nuclear power is highly subsidized by this government protection from market forces. Any discussion of expanding nuclear power should cover the possibility of equivalent subsidies to other sources of energy, especially those that pose fewer risks.

Any claim that nuclear power is safe should be subject to two simple tests. Will insurance companies write policies to cover the full range of possible disasters? Will any local government accept the waste from nuclear power plants?

Kenneth Zapp is a professor and department chair in the College of Management at Metropolitan State University.

Recent Opinion Exchange stories

Editorial: A voice of reason enters LRT dispute - September 15, 2008

Editorial: A voice of reason enters LRT dispute - Hausman urges U, Met Council to resolve their differences. More

Comment on this story | Read all 14 comments | Hide reader comments

New ideas for the public sector

THERE'S NEVER BEEN A BETTER TIME to create a more efficient Minnesota. Facing large budget deficits at the state, county and local levels, Minnesotans are seeing with new clarity that the public sector must adapt to new economic realities. Only the smartest, most strategic reinvention will ensure that our tax dollars are spent on the best programs and services. Read more

About Opinion Exchange

Opinion Exchange is produced by the Editorial Department, which is dedicated to hosting the discussion on a range of issues of interest to Star Tribune readers online and in print. In its new format, it's our hope that Opinion Exhange will create a more dynamic dialogue between Star Tribune readers and the Editorial Board. Many individual posts will be written and signed by members of the Editorial Board and will reflect their own opinions. Daily editorials will continue to represent the institutional voice of the newspaper and be researched and written by the Editorial Department, which is independent of the newsroom.

Subscribe to RSS|Learn more about RSS