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back to article Nuke plant owners to pay out up to £1bn per balls-up

Nuclear operators are to be liable for damages amounting up to seven times the current limit in the event of a nuclear incident, the Government has confirmed. A phased increase to a limit of €1.2bn (£999m) will be introduced over five years following the coming into force of an international treaty on nuclear third party …

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Angel

those reserves

Keep in mind: Money going to those reserves is tax-deductible, i.e. the power companies get a 100m tax break for the next few years.

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Anonymous Coward

Re: those reserves

Those 'reserves' don't exist.

The energy companies will pay in to the nuclear insurance pool to obtain their liability coverage which will be a per annum cost to the energy company. The government gets a cut of this (insurance premium tax), as well as a cut of the broker (NRI) commission via corporation tax on their profit.

The insurers will set aside claims reserves based on a best estimate basis (i.e. cost of an accident x probability of occurence) and will also have to put money aside for the regulatory capital they will be required to hold. Even to say these reserves are tax-deductible is misleading, since any profits which emerge from the reserves over time will also be taxed at the corporate tax rate.

It may be that the premiums the energy company pay are tax-deductible, but this is going to be a tiny fraction of the actual coverage.

In short, you're wrong.

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Re: those reserves

> The energy companies will pay in to the nuclear insurance pool to obtain their liability coverage which will be a per annum cost to the energy company.

And this money will reduce profits, doesn´t it?

Granted, the capital in the fund will generate interest which then will be taxed, but in short to mid term interest tax will be less than than the taxes would have been on the profits.

Or is the "reserve" in fact just an insurance contract about the required coverage?

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Re: those reserves

> In short, you're wrong.

In short, you neither come up with facts, care to explain, nor have the balls to sign with your name.

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Double standards

Fine in principle, but we have a government that is willing to underwrite risk for British arms exports by, e.g. BAE, but when it comes to something important (and ethical!) like nuclear power, they're on their own.*

(* queue victims of FoE propaganda saying that Nuclear industry is unfairly subsidized in 3..2..1..)

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Mushroom

not exactly a huge limit

given that Fred Bloggs the plumber probably has £5m PLI cover so it's only 200 plumbers.

Don't forget that your insurance premium will be based on the likelyhood of of each risk.

So not a lot of increase in UK for either tsunami or earthquake.

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Could this be why...

RWE and E.ON dropped plans to build reactors in the UK?

Were they tipped off?

Are there any MP's privy to this information before it was announced that have shares in either E.ON or RWE?

As corruption is rife within the echelons of power I would not be surprised.

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Boffin

"Liability will initially be capped at €700m"

"Currently, operator liability is limited to £140m per incident."

"The Government said that its maximum liability was €500 million more than the minimum"

So are we currently under the minimum?

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Facepalm

That's OK

Fine. I have worked for the UK nuclear generating industry and I do not recall it causing any damages to third parties apart from traffic accidents involving company vehicles. (The Dungeness A flask lorry crushed a parked Jag a couple of years ago while manouevering at a garage where it had gone for its routine service).

Unless they count damage to the nerves of people who whip themselves into a frezy of paranoia over anything nuclear, and who, US style, claim their nerves are worth £1B.

Or claim that they are dying of cancer because they heard there was a fire in a canteen chip pan, seeing this as easy money. Like the guy who tried to sue the railways because of the alleged damage to his nerves caused by hearing about a train accident in which he was not even involved.

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Paris Hilton

Why dont they just be honest and say...

"Nuclear lobby hasn't donated any money or been to supper or won us any votes, so ,sorry chaps, we wont stand in the way of nuclear power of course, we will just stick some concrete blocks across the roadway instead."

"Besides Siemens has donated billions to us, and they don't make nuclear things any more"

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Feed-In-Insurance

It would be interesting to know what level of risk nuclear electricity generation is assessed to present and how much the insurance industry charges for covering it. One might imagine that there are large profits being made here which result in a commensurate increase in the cost of electricity.

It's a shame that there isn't an opportunity for individuals to stake a portion of their savings against the risks in return for a reduction in the cost of electricity. So, for example, I might put £500 into a fund, split as cover of £100 each against the power stations from which I draw most of my electricity, in return for a £50 rebate on my annual bill. The stake could be invested in new-build generating plant, unless there were to be an accident when part of it would be used to pay for remediation.

Something on these lines would be more effective in helping to cut carbon than the Feed-In-Tariff of 43p per kW-hr index-linked for the next 25 years. It would allow similar profit to the FIT to individuals who invest but with the distinction that it would reduce the overall cost of electricity rather than increasing it.

Presumably, however, human psychology is such that people are more likely to pour money week after week into the lottery, which is an odds-on loss, rather than funding and insuring the nuclear industry which is an odds-on winner.

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Anonymous Coward

"I have worked for the UK nuclear generating industry and I do not recall"

As you seem to understand what a flask is, and what the signifcance of Dungeness is, does a level crossing crash between a lorry, and a flask on a train to Dungeness, count (even if the flask was empty)?

Or are you just suffering from short or selective memory?

I mean, really, as a self-appointed representative here on behalf of the industry (probably in contravention of the terms of your employment, so that's another set of rules broken by someone else in the nuclear industry), you'd perhaps have done better for the industry if you'd just kept quiet.

Because readers now know that your reporting (or your memory, or your ability to abide by the rules) is not to be trusted.

http://news.bbc.co.uk/1/hi/england/2037956.stm

"Investigations have started into how a train carrying equipment to a nuclear power station crashed into a lorry on a level crossing near Ashford in Kent. The train was carrying an empty nuclear flask to Dungeness power station. " (11 June 2002)

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Anonymous Coward

Re: "I have worked for the UK nuclear generating industry and I do not recall"

Apologies - although I remembered a ten year old incident, I didn't remember the difference between "I have worked for" and "I work in" in the post to which I was replying. Still, I stand by the general gist. Probably.

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Meh

Re: "I have worked for the UK nuclear generating industry and I do not recall"

Thanks for pointing out that incident. I don't recall it, although it does not sound very memorable.

Your link does not give the cause of this collision, but the vast majority of level crossing accidents are caused by road traffic jumping the lights. I see that this is an ungated crossing, which would be particularly tempting, and which is why the train would have been under a severe speed limit. That line is a long branch just for the power stations at Dungeness.

In any case, the liability here, *if* the stop lights were at fault, would be Railtrack's, not the nuclear industry's.

As you recognised in your second post, I do not work for the industry now so I am more likely to speak my mind on the subject. However, there were no specific "company rules" against doing so when I was employed as long as we did not make it sound like the "official" view if it were not.

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FAIL

Re: "I have worked for the UK nuclear generating industry and I do not recall"

I am assuming of course you also work for the nuclear industry and may I be the first to say you sound like a real douche. I guess your industry has reasons to be ultra paranoid about any whistle blower type activity. Making it obvious in a public forum does little to help your arguments.

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FAIL

Re: "I have worked for the UK nuclear generating industry and I do not recall"

Message was to AC not gentlemen who formerly worked in the industry. Of course he is an anon coward.

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Pint

Re: "I have worked for the UK nuclear generating industry and I do not recall"

Dear asdf,

I live down in New Zealand (where we live a few decades behind the rest of the World), and I do not know what the term "douche" means.

Is it as bad as the American term " Liberal"?

Any information will be much appreciated.

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FAIL

Re: "I have worked for the UK nuclear generating industry and I do not recall"

I guess people in NZ do call most Westerners liberals considering how acceptable racism is in NZ and how badly the natives are still treated.

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Sounds a lot...

Until you realise that the cleanup of Three Mile Island nearly two decades ago cost about that much and Tepco's liabilities for Fukushima are somewhere around the $59 billion mark. Yes nuclear power is pretty damn safe, but the companies are still not bearing the true costs.

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Anonymous Coward

Re: Sounds a lot...

Liabilities are usually stated on a worst case basis - it's one of the fundamental accounting principles, you don't recognise a profit until it's in your grubby paws, but you do recognise any losses as soon as they are foreseen.

that $59 billion (your figures, I haven't checked them) will be utilised in the clean up and re-evaluated every year - chunks of it may be written off if the clean up goes well and it may be increased if it goes badly.

I'd imagine a large chunk is to cover legal fees rather than actual costs of clean up.

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and who eventually pays?

"This is an important step in transferring the cost of nuclear third party liability from taxpayers to operators customers,"

So all that will happen is that if a nuclear plant does go pop, all the people who got their electricity from that supplier will very quick switch, in the expectation that they will end up paying the fine through increased tariffs. All the other providers will, on the knowledge that Unlucky Leccy Inc will shortly be upping it's prices, themselves prepare price rises for all new customers who they will expect abandoning the old ship and joining someone without a billion euro millstone around their necks. Miraculously, those new rates from all the other suppliers will be just a smidge lower than the old supplier will now be charging.

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Re: and who eventually pays?

No, all customers of all suppliers will immediately pay higher bills to cover higher insurance premiums. If anything goes bang, the insurance pays. I would guess that when such large sums are involved for extremely improbably events, suppliers would band together in something like a reinsurance scheme, so even if one supplier's plant goes bang, they all share the increased insurance premiums. Otherwise they're exposing themselves to being wiped out in the event of an accident

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UK Dumping Ground

Ok so I read this bit....

"A lower liability level of €70 million, up from the current £10 million, will apply to incidents occurring at certain 'low risk' sites, with a level of €80 million for incidents occurring during low risk transport of nuclear substances. These are the minimum limits that can be set under the revised Conventions, the Government said."

...as we have increased the generation liability to over double the 500 million minium but kept the transport and storage libability to the bare minium required.

So it's more exepensive to generate here than it would be elsewhere in europe but cheap to move and store waste here. I'm not keen on this and would rather see new generation technologies advanced and encouraged. Long term benefit rather than short term benfit in charging for storing other people's waste !

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Re: UK Dumping Ground

"short term benfit in charging for storing other people's waste"

I was under the impression that the waste would need to be stored for quite a while? And will likely continue to be generated for the forseeable future as well? What kind of time frame are you thinking about?

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Re: UK Dumping Ground

You are absolutely correct but the decison makers rarely think beyond say 4 years so I'm talking about short term political and financial benefit. If these people invested the money into development we could (in theory if not already) be using other countries "waste" to power our reactors.

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Gold badge

Level playing field?

If we are to believe the consensus, fossil power stations are causing damage to the environment on a daily basis. Any chance of them being asked to put some cash aside for the "repair bill" Thought not.

I've no objections to an industry having to demonstrate that it can bear the costs of credible future claims against it. Quite the contrary. I just wish that the rest of the energy industry had to meet the same high standards of the nuclear biz.

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Re: Level playing field?

I think you'll find the rest of the energy industry *does*, but it tends to happen further back in the supply chain because that's where the risk is - with the fuel suppliers rather than the power station operators. Fossil fuel power stations don't melt down, but rigs catch fire, oil storage facilities explode, supertankers hit the rocks, old coal mines collapse (something the Coal Authority is still paying compensation for on behalf of Britain's vanished coal industry). How big do you think BP's insurance premium is?

If you mean the other industries don't pay for the daily pollution they cause, you might be closer to the mark. But then let's not forget that the only way a previous government managed to privatise this allegedly viable industry was by selling off the assets and keeping all the long (long, long) term liabilites of waste disposal. Strange, that.

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Flame

Re: Level playing field?

You level the playing field in respect of fossil fuel stations to some extent by introducing carbon taxes. This is also, like limited liability nuclear operator insurance, is still a blunt instrument. For example while a carbon tax would reflect that gas is cheaper than coal in terms of C02/GWh, it doesn't account for a coal industry which rips the tops off mountains dumping these elsewhere and puts many tonnes of mercury vapour into the air every year.

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Anonymous Coward

This is why people are against nuclear power stations in their back yard. Because if the thing does go a bit Chernobyl/Three Mile Island/Fukushima:

a) their home insurance policy has explicitely excluded nuclear risk so they're SOL there

b) £1 billion divided by the 50,000+ dwellings and hundreds of thousands of people affected (and with the government likely getting first dibs with claims) means they'll be lucky to get a few hundred pounds in settlement for their £250,000 house being rendered uninhabitable.

Given that risk, and the fact they're not going to be compensated up front for running that risk, the response of any rational person should be to oppose a new station near them.

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Mushroom

I see your point

RE: "This is why people are against nuclear power stations in their back yard. Because if the thing does go a bit Chernobyl/Three Mile Island/Fukushima:" - I see your point, but to make things fair, anyone who raises objections to having a nuclear power plant built near their house has to have their electricity disconnected.

It's the only way to make things fair - people should have the advantages with the disadvantages.

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I'd be fine with a a nuclear power station in my metaphorical (not literal) back yard. I imagine that due to half of society's irrational fears about nuclear power, and the other half's awareness of the impact of those irrational fears on house prices, I could get a far nicer place near a nuclear power station than I could elswhere.

(N.b. "Elsewhere" does not include wind farms. Even fewer people want to live near those than want to live near nuclear power stations.)

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Re: I see your point

I have already said the price of building a nuke plant in my back yard was to connect my radiators to the cooling circuit for free.

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Megaphone

@Nathan Hobbs

" but to make things fair, anyone who raises objections to having a nuclear power plant built near their house has to have their electricity disconnected."

Much as I might personally enjoy doing the same to some yokels who live near a very windy ridge close to Evesham with their flashy 4X4 vehicles and stupid anti windfarm protest signs outside their houses, you can't really make private views on a public policy capable of legitimate democratic protest and expression and then discriminate on this basis in terms of who benefits.

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Boffin

@h4rm0ny - show us the evidence

'(N.b. "Elsewhere" does not include wind farms. Even fewer people want to live near those than want to live near nuclear power stations.)'

This assertion would be capable of being proved one way or the other by unbiassed research. Anecdotal evidence and some of my own observations suggest the opposite: No noticeable impact on housing prices near windfarms in mid Wales but houses near Dungeness very cheap compared to other relatively isolated coastal hamlets in rest of same region.

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Re: @h4rm0ny - show us the evidence

Okay - fair enough. You got me in that I can't provide serious statistical evidence to say that wind farms are even less popular than nuclear power plants to live near. It's just my impression. There are plenty of protests against wind farms going up in the UK. They never get the level of coverage you'd see with anti-nuclear campaigners, sadly. Denmark invested hugely in windfarms and now they're very unpopular there with people who have to live near the things. So the best I can say is that many people object to both wind farms and nuclear power stations. The difference to me is that the wind farms seem to provide valid reasons for objection, whereas nuclear powerstations (imo) do not.

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Re: I see your point

No. They should have wind generators built there instead.

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Fair enough

I support nuclear power as being the only realistic baseload to reduce fossil-fuel dependancy, and I appreciate that while the possibilities of meltdown are tiny, the consequences of such events could be catastrophic. So I fully support that power companies have this giant liability. The real result of this will be that these companies will spend whatever is required to damn well make sure that a severe accident never happens.

So energy prices might go up a bit as a result, I have no problem with that if the result is a predictable, secure and safe supply for the the next 50-100 years.

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Alert

Fine, but what about .....

So does this mean that coal-fired power stations will analogously be required to insure themselves against mining disasters?

More coal miners' lives have been lost in the course of digging up coal to be used for generating electricity, than would have been lost in nuclear incidents had the two technologies been in use for the same amount of time.

Anything else is unfairly discriminating against nuclear power; which probably is the only viable option to fill the gap until renewables become self-hosting (i.e. when the amount of energy generated each year by renewables exceeds the amount of energy consumed each year in building new renewables-based generation capacity).

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Re: Fine, but what about .....

A good part of the coal mined would have been for steel production... jftr

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Boffin

renewables already self hosting

"until renewables become self-hosting (i.e. when the amount of energy generated each year by renewables exceeds the amount of energy consumed each year in building new renewables-based generation capacity)."

For total renewables, including hydro, solar, wind and geothermal and biomass, there almost certainly has never been a time when manufacture of new capacity in all these areas has absorbed more energy than being produced by all of them. The world's first electricity power station at Cragside in Northumbria was hydro powered. Historically steam engines originally required water wheel (hydro) power to manufacture the parts before steam energy became self-hosting, in the sense of steam power being used to manufacture steam engines.

The wind industry are also claiming their own industry to be self hosting as well, in more recent and narrow terms, in relation to energy needed to manufacture and payback time:

http://www.bwea.com/ref/faq.html#payback states:

"The average wind farm in the UK will pay back the energy used in its manufacture within six to eight months, this compares favourably with coal or nuclear power stations, which take about six months."

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Re: Fine, but what about .....

Assuming that accidents are evenly distributed among coal mined for various purposes, the death toll just from the coal mined for electricity production still greatly exceeds that from nuclear power production.

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Anonymous Coward

And what about...

The fact that burning coal puts more uranium and thorium into the atmosphere than nuclear power has ever done. And that's normal operation!

If you believe some of the hype around anthropogenic climate change shouldn't fossil fuel power stations be paying the costs for coastal defences, and other mitigations necessary from higher temperatures?

To be honest though, given the risks of an issue in the UK are so low, I don't think this will really change things that much in the UK. The proof of that though will largely be in whether we have a new round of nuclear power stations being built. We sorely need them!

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