I remember reading Mike's article in 1994. It is even more valid today. (Mike added a paragraph on the LNT fraud.)
"A recent study indicates that between 60 percent and 80 percent of the cost overruns in the United States nuclear industry are attributable to regulations. These are not attributable to management or labor."
----- Original Message -----
From: Gene Cramer
To: ANS MBRExchange
Sent: Wednesday, February 06, 2008 12:45 PM
Subject: [MbrExchange] Nuclear Regulation: The Untold Story
Nuclear Regulation: The Untold Story
By Michael R. Fox, 1/31/2008 6:20:20 AM
Author's note: "This article was written in 1994 and contains important history of the early problems of the U.S. nuclear industry. As a renewed interest in nuclear energy spreads around the world, it is important to understand more clearly some the early problems, if we are to avoid them in the future."
1994 marked a pivotal year for the Washington Public Power Supply System. On May 13th, The Board of Directors voted 9-4 to terminate the mothballed reactors WNP-1 and 3. This means that in the next few years the dismantling of these reactors will begin. Since these reactors are about 70 percent complete, the costs of construction are being paid by the Northwest rate payers, instead of being paid by revenues from the sales of electricity. These bills will continue long after the dismantling of the reactors, estimated to be $350 million per year for the next 24 years .
A second event will occur in December of this year. This is the 10th anniversary of the commercial operation of another nuclear power reactor (WNP-2) located on the Hanford Reservation. It is the only nuclear power reactor in the State of Washington, comparable in electrical output to the Priest Rapids Dam just upstream from WNP-2 on the Columbia River. It is one of 109 operating electric power reactors in the United States, and one of more than 425 operating around the world.
While other nations continue to build nuclear reactors from France to mainland China, and others wanting to start nuclear programs from Indonesia, Thailand to Turkey, the U.S. industry founders. The troubled history of the Washington Public Power Supply System in many ways is a microcosm of the history of the U.S. nuclear program. This historical uniqueness remains unappreciated to much of the American public, as well as the lessons this provides in the areas of energy costs, energy security, economic vitality, and international competitiveness.
While other U.S. reactors have been built and operated more cost-effectively, the problems of the Supply System are the same general problems of the U.S. program and fall into four categories. These include:
Only recently have there been open discussions by utility management discussing their poor relationships with the public. Ken Harrison, president and Chief Executive Officer of Portland General Electric, the owner of the recently terminated Trojan reactor stated thinks historic lack of communication was a big factor in forcing the closure of Trojan. He stated: "People were not prepared. We didn't lay the groundwork to help them, help allay the skepticism, the uncertainty, the uneasiness. ... There was a sort of paternal attitude in the industry. We know we have all the technical expertise. We know how to build these things. We know what's most economic. Just let us do it and stay out of our hair. And I think that was the beginning of the problems we are seeing today." This is an excellent assessment of a utility's communications skills, and applies generally across the U.S. utility industry. It must be a serious and early part of future nuclear programs in the U.S.
It is a sad story, a costly story, and an avoidable story which need not have been written. This is clearly demonstrated by the on-going, cost-effective nuclear programs in many other nations today. Most of these forces at work during the late '70s and early 80s which increased both the costs and political opposition were beyond the controls of the management of the Supply System.
In July 1983 the Washington Public Power Supply System defaulted on 2.5 billion dollars of construction bonds. This remains the largest bond default case in United States history. What this meant was that the Supply System borrowed this amount from the bond holders (the bond purchasers) and then couldn't pay them back. This was a monumental tragedy for a lot of people including the loss of pension funds and the life savings of many investors. For reasons that remain substantially forgotten or undisclosed, the Supply System had little choice.
On Nov. 6, 1984, in a breath-taking decision by a politicized judiciary, the Washington State Supreme Court over-turned a lower state court ruling and found that the Washington State utilities who had signed participant agreements with the Supply System had no authority to sign the agreements. The Washington State utilities represented about 2/3 of the participating utilities in the region. In an appeal to the United States Supreme Court (Feb. 5, 1985) and subsequently denied, it is stated: "To persuade private parties to purchase the bonds, the participants expressly assured repayment and repeatedly told prospective purchasers that they possessed authority to give such assurances.
Specifically, for each of the 14 issues of these bonds over more than four years, participants approved the necessary Supply System bond resolutions, and took no exception to the language in the Official Statements accompanying the bond offerings advising prospective purchasers that the participants were obligated to make repayment 'whether or not the Projects are completed, operable or operating and notwithstanding the suspension, reduction or curtailment of the Projects' output.' Without those assurances, no bonds would have been sold." It is reasonable to assume that the 88 participating utilities were acting upon the advice of at least 88 attorneys.
All bond purchasers are subject to some financial risks. But as stated in the appeal: "... the bondholders did not take the risk that the participants might simply refuse to make the payments securing the bonds and that unforeseeable interpretations of state law would convert their loan into a gift." Furthermore, the agreement which the participants had signed, had earlier been found valid by the Oregon State Supreme Court, and contains many of the same legal features which exist in current, valid contracts between the Supply System and the Bonneville Power Administration (BPA).
Since that decision was made, it has been reviewed by several law schools, including those at Cornell, the University of Puget Sound, University of Washington and found to have been a very poor decision. As anti-nuclear advocates gained more and more strength in placing sympathizers on Public Utility Districts, Commissions and other Legislative positions, the less responsibly they behaved, and the more influential they became in Washington State politics. This was not lost upon the Washington State Supreme Court judges. Whether the fact that the members of the Supreme Court are elected in the State of Washington, instead of being appointed, had influenced the Court, may only become known in the more candid days of the retired judges.
However, without the financial participation of these utilities to pay their share of the construction costs, the ability of the Supply System to pay the bond holders evaporated. While the Supply System did have both management and labor problems they were not exceptional. When analyzing the problems fairly, one will find that the management and labor problems were small in terms of costs, relatively to those inflicted upon the Supply System by both judicial and regulatory agencies. Regrettably, the story didn't end with the Washington State Supreme Court.
The public has been told that the default was a management problem. This has been repeated so frequently, that it has become an article of faith in Supply System folklore. In fact, there were management problems, and one of the past managing director Bob Ferguson has said so. The public has also been told there were labor problems, and, yes, there were labor problems. Labor leaders concede that too. What the public has not been told (in addition to the dubious role of the Washington State Supreme Court) is the tremendous impact which the regulatory agencies had and still have upon the United States nuclear industry. A recent study indicates that between 60 percent and 80 percent of the cost overruns in the United States nuclear industry are attributable to regulations. These are not attributable to management or labor.
The words "regulation" and "regulatory changes" have little meaning to those who don't have to deal with them professionally. Historically, the public has been frightened of the industry, and thus to this public a few more regulations, good or bad, promoted under the concept of greater safety, would seem reasonable. The direct relationship between the resulting regulatory flood and increased energy costs still eludes the public. The use of regulatory excesses as a weapon to cripple the generation of bulk supplies of electricity in the United States eludes the public, too.
Regulatory excesses have been recognized for years as such for implementing increased costs. The Wall Street Journal quotes Barry Commoner: "They (the antinukes), would succeed (in stopping nuclear power) through harassment tactics that would delay nuclear plants, escalate their costs and make them uneconomical to build."
The element of intent to make energy more costly in the United States is clearly stated throughout the anti-nuclear literature. In Shutdown Strategies, an anti-nuclear handbook by those working to bring financial harm to the Seabrook reactor owner (NH), and to the Shoreham reactor owner (NY) their efforts are described as "successes" in anti-nuclear activism. With the concurrence of Governor Cuomo, the Long Island Lighting Company (LILCO) was able to write Shoreham off as a loss. This shift of the payment for the Shoreham reactor from Long Island rate payers to the American taxpayers, was implemented without so much as a thank-you to the American public.
The past governor of New Hampshire and Reagan chief of staff, John Sununu, asked rhetorically a meeting of scientists in 1985 (referring to the Seabrook reactor in New Hampshire), "What is more anti-consumerist than those consumer groups who go about making electricity intentionally more costly to the consumer?" There is little that is more anti-consumerist.
Congressmen discovered that such anti-consumerist activities improved their popularity too. Ed Markey of Massachusetts stated in a campaign brochure : "If I am reelected I will obtain another Subcommittee Chairmanship which will enable me to finish my efforts to abolish nuclear power in this country." Some of the social equations are:
The Salzburg (Austria) Conference for a Non-Nuclear Future (1977) also discussed these tactics . F. C. Olds, editor of Power Engineering magazine and an observer at the meeting reported : "Economics was a crucial topic. Principal discussions have dealt with strategies for driving nuclear power costs to unbearable heights." Olds, quoting Walter Patterson, Friends of the Earth in Great Britain: "The real leverage in the safety implications of nuclear power lies in their use to drive costs upward. If we try to make systems safe, they become more expensive. Eventually, we get to the point where we can convince ourselves that they are adequately safe, but we no longer want to pay for them."
Before leaving the topic of intent to abolish nuclear energy, one must ask "why". The answer lies not in the realm of public health and safety. This is simple to demonstrate by examining the blizzard of available risk analyses of energy production, many by agencies outside the nuclear industry. These all show that there is no safer way to make a kw-hr than from a nuclear plant. The answer is one of ideology. One finds the strong whiff of contempt for the United States, of people in general and Americans in particular. Some have expressed the notion that it was a mistake to discover the polio vaccine or even attempt to discover the causes of AIDS. For example, John Davis of Earth First Journal stated " I suspect that eradication of smallpox was wrong. It (smallpox) played an important part in balancing ecosystems." Or "... as radical environmentalists we can see AIDS not as a problem, but as a necessary solution." Such ideology has very little to do with health, safety, nor a better environment.
Simple body and injury counts (the bases of risk analyses) repeatedly demonstrate that relative to coal, oil, wood, conservatism, etc. nuclear energy is one of the safest forms of energy available. The hypocrisy of the anti-nuclear movement is never clearer than in a discussion of coal (10,000-20,000 deaths per year world-wide), oil, wood, conservation, etc. There are, of course, risks to nuclear energy. They are, invariably, smaller than the risks of these other forms of energy. As a matter of fact, the nuclear safety record, which, if we are to believe the professed concerns for public safety, should be the centerpiece of these groups’ safety agenda.
It is in fact a major irritant and impediment to their agenda. Patricia Ross reported the statement from a conference leader "Let's face it, we don't want safe plants-we want the ones being planned to be blocked, and the ones operating to be shut down."
Safety, then is not the issue. Ideology is. Crippling electrical production is. These political and ideological forces then have forced the NRC and other agencies to act as the authors and enforcers of a prohibitive flood of regulations and regulatory changes. And what enforcers.
P. J. O'Rourke used the phrase "safety Nazis" and whether he intended it or not, it’s most appropriate here. The result has been needlessly high costs of electrical energy, weakened United States competitiveness for the world markets of steel, aluminum, and other manufactured goods, the export of these industries and the related export of highly skilled manufacturing jobs.
Using the nuclear industry itself as an example, more and more, the United States must look to Japan, France, Korea, and other nations to find the nuclear technologies that were once largely the domain of the United States. These include reactor technology, waste technology, (France and England sell their waste services commercially around the world), breeder technology, and geologic repository technology. Our nation has walked away from a multi-billion dollar market for lack of leadership and an abundance of fear.
The terms "regulation" and "regulatory change" are admittedly abstract terms, and thus are difficult to visualize, but let's try. First, one must appreciate the sheer magnitude of the regulatory flood.
A recent study shows that the explosion of nuclear costs was not only a continuous process, but also superimposed, were four periods after which the costs increased abruptly. These correspond to the Calvert Cliffs decision (1971), the formation of the NRC (1974), the Brown's Ferry fire (1975), and Three Mile Island (1979). The relationship between regulations and costs tracks remarkably close to the costly experiences in “the field," known to be stunning.
Costs did increase sharply at these times. For example, Olds pointed out that during the few years prior to 1979 the Federal Register was publishing 7000 pages of new regulations annually. During 1979, the year of Three Mile Island accident, the Federal Register published 77,000 pages of new regulations. This was 290 pages of new regulations per working day. Just how many of these impacted the nuclear industry was not established. Too many did. However, the mere number of pages of regulations is not crucial to the understanding of the regulatory blizzard. Fortunately, a few of the regulations and their costs can be analyzed. What the regulations actually require are much more important in appreciating the impact than a mere page count. Let's take an example.
The need to be specific is important, regrettably. In criterion 4 of Title 10, Part 50, Appendix A of the Code of Federal Regulations (10 CFR 50 App. A) was the following statement: "These (reactor) structures, systems, and components shall be appropriately protected against dynamic effects, including the effects of missiles, pipe whipping, and discharging fluids, that may result from equipment failures and from events and conditions outside the nuclear power unit."
Pipe-whipping is a phenomenon that has never been adequately demonstrated to occur, and thus there is little or no engineering basis for the requirement of pipe restraints. Steel pipe is alleged to whip about after a hypothetical pipe break, much like a fire hose. To implement this requirement required very costly restraints to be manufactured, inspected, tested, accepted, approved and installed. Some of these weighed several tons. A conservative estimate is that it cost the United States utilities about 500 million dollars to comply with this one regulatory guide. This, of course, is being paid by the rate-payers. The industry and therefore the rate payers have paid an estimated 500 million dollars to protect themselves against events that don't occur. The failure to do so would have placed the utility in violation of the regulation.
But this sad story of regulatory abuse doesn't end here. On July 18, 1986 the NRC issued a proposed rule which modified the General Design Criterion 4 (above). It essentially rescinded the requirement. The new ruling would even permit the removal of installed pipe whipping restraints. The NRC rescinded its requirement after it had earlier cost the utilities and the rate payers hundreds of millions of dollars to implement. It is important to appreciate that had the industry not complied with the NRC requirement, it would have been in violation of law.
This is what a mere seven lines of regulation cost the industry. The price the United States has paid for thousands of pages of such regulation is staggering. In discussing this with a former NRC regulator, the prevailing attitude at the NRC was that compliance to regulations such as this was a management problem, not one imposed by the NRC! Imposing regulations, however capricious, was considered laudable behavior at the NRC. The threat of even more regulation kept the industry silent. A past NRC commissioner's statement, "I don't give a damn about nuclear energy, I just want to make it safe", gives a glimpse of the mob mentality among the regulators.
Kent Hansen et al, of Massachusetts Institute of Technology (MIT) recently issued a report which states "What is unique to the United States is a highly antagonistic relationship between regulators and utilities." Insiders have known this for nearly 20 years.
The WNP-2 nuclear power plant was completed in 1984 for a total cost of 3.2 billion dollars. A cost comparison with the Trojan nuclear plant, located on the Columbia River in Oregon, is illustrative. Trojan was completed in 1976 for a cost of 460 million dollars, a factor 7 less for two plants of near identical size in the same region. Why? A look at the amount of required materials gives a hint that something was very wrong.
WNP-2 contains more than double the amount of concrete (2.4 times), more than double the cable trays (2.4 times), and a spectacular 6 times the amount of electrical conduit. WNP-2 weighs 2-1/2 times as much as Trojan! To suggest that this was caused by management ordering 2-1/2 times too much concrete, piping, conduit, and other material, is to misrepresent what management is all about. Similarly the labor force cannot be faulted for this horrendous difference. Inflation had some effect upon cost differences but obviously not upon differences in quantities of materials.
These differences were a manifestation of a huge explosion in regulations, and even worse changes in the regulations. Experts have estimated that even with the huge regulatory burden which exists today, nuclear power plants could be built more cheaply and in less time, if the regulations were simply held stable during construction. The mind boggles if regulatory reforms could reduce the number of regulations to say, pre-NRC days. The United States reactors completed in the '60s and early '70s were cheaper to build and were routinely completed in less than 5 years. France, Japan, and Korea and other nations are demonstrating that this is achievable today.
Obviously, a few of the new regulations did bring improvements. For example, great strides have been made in the past 10 years in what is known as "human factors engineering." This involves the interface between man and machine and has evolved into a technology all its own. It has application in computer "friendliness", cockpit design in airliners; design of automobiles, as well as in control room design for reactors. Reactor control rooms are much more "user friendly," than those completed earlier.
A second example relates to emergency preparedness and evacuation exercises which have brought organization and coordination of many local, state, and federal agencies which would be involved in such emergencies. Many times these emergency plans have been activated during real situations. Interestingly, by far most of the emergencies have not involved the nuclear plant itself. They have involved nearby chemical spills, railroad derailments and other accidents. The cost of the emergency facilities, communication centers, emergency practices, and training have largely been borne by the nuclear utility, and not by those responsible for the neighboring emergencies.
Other improvements include a 24-hour presence of a "shift technical advisor" in the control room. He or she adds to the ability of the reactor operators to respond to off-normal conditions. These and other changes are good improvements which have been implemented at relatively low cost. There is precious little engineering justification for the vast majority of the regulations. Fear, not wisdom, was driving this process.
(Added January 08.) The basis for regulating radiation exposures has for decades been the so-called Linear No-threshold Theory (LNT). This theory is represented by a straight line from zero radiation doses to greater harm at much higher doses. It is well known that high doses of nearly everything, including water, are deleterious. This does not hold at low doses. See for example (http://tinyurl.com/2c2hwa).
There has been a huge and growing body of research at the low doses range which clearly shows that low dose radiation is harmless, and in some cases appears to be beneficial. The assumption that the LNT predicts harm at low doses of radiation is not valid. Requiring the nuclear industry to spend billions in compliance costs to keep radiation doses needlessly low has been a flawed pursuit of zero risk. It has been a costly and immense tragedy. Dr. Lauriston Taylor, Past President of the Health Physics Society and member of the National Academy of Sciences has stated that the use of the LNT for these purposes was "deeply immoral uses of our scientific heritage"). Dr. Gunnar Walinder of Sweden stated that this was "the greatest scientific scandal of the 20thCentury.”)
Too late for many rate payers, regulatory excesses are now being recognized by the Nuclear Regulatory Commission and by Congress. For example, Congressman James Broyhill entered into the Congressional record the following statement: "It is now widely recognized that many of the problems plaguing our nation's nuclear power program are due in large measure to the manner in which the Federal Government regulates this industry."
In his report to Congress (March 11, 1985) James Tourtellotte, Chairman of the Regulatory Reform Task Force (NRC), stated this about the backfitting rule (10CFR50.109): "The primary purpose of the (backfitting) rule when it was passed on March 31, 1970, was to improve the stability of the licensing by minimizing the alterations of structures, systems or components of a nuclear power plant after the construction permit had been issued.
The rule has been selectively ignored by the (NRC) staff for nearly 15 years. There is a substantial amount of evidence suggesting that the (NRC) staff's backfitting practices which have cost consumers billions of dollars have made nuclear plants more difficult to operate and maintain, have injected uncertainty and paralyzing delay into the administrative process and in some instances may have reduced rather than enhanced public health and safety." It has also left the wrong impression on the American public that nuclear energy is inherently costly and inherently lengthy in construction. It is neither, as other nations are demonstrating.
There are several indications that many of these issues are being revisited at the Nuclear Regulatory Commission with an increased emphasis on reasonableness. That is good. However, for the terminated reactors of the Washington Public Power Supply System and others around the nation, it is too late. The Supply System was not equipped to build five plants simultaneously during such a period of unreasoned regulations and an unruly group of powerful critics.
Today the American public pays more than $150 billion per year today to comply with the current body of environmental regulations, much of which is unjustified. This does not include the billions in additional costs of state environmental regulations. These regulations (and the associated compliance costs) continue to increase dramatically each year.
Collectively, the compliance costs will contribute little to improved health, safety, or a better environment for the American people. These increased costs will decrease the availability of many services and commodities, including low-cost electricity. Its been said that a people get the government they deserve. The American people deserve a better government, better judiciaries, and better health, science and energy policy.
Backfitting is the word used to described the results of changing the regulations after construction began. In many instances it meant tearing out concrete, rebar, piping, conduit, wiring, etc., and rebuilding per the next new regulation.
Report on Backfitting and Licensing Practices at the U.S. Nuclear Regulatory Commission, Regulatory Reform Task Force, James Tourtellotte, Chairman, March 11, 1985.
"Achieving Effective Regulation Through the Application of Universal Principles", speech (S-05-94) presented by Commissioner Kenneth C. Rogers, U.S. Nuclear Regulatory Commission, 27th Japan Atomic Industrial Forum Annual Conference Hiroshima Japan, April 13-15, 1994.
Michael R. Fox, Ph.D., a science and energy reporter for Hawaii Reporter and a science analyist for the Grassroot Institute of Hawaii, is retired and now lives in Eastern Washington. He has nearly 40 years experience in the energy field. He has also taught chemistry and energy at the University level. His interest in the communications of science has led to several communications awards, hundreds of speeches, and many appearances on television and talk shows. He can be reached via email at mailto:firstname.lastname@example.org
HawaiiReporter.com reports the real news, and prints all editorials submitted, even if they do not represent the viewpoint of the editors, as long as they are written clearly. Send editorials to mailto:Malia@HawaiiReporter.com
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