VERNON — It isn't cheap to maintain an insurance policy on a nuclear power plant.
But, as of this month, Entergy Vermont Yankee is getting a big break on premiums: The Nuclear Regulatory Commission says the company can cut its onsite proper-damage insurance coverage from $1.06 billion to $50 million.
Citing the fact that the Vernon plant has been shut down for more than 15 months, the federal agency says a much smaller insurance policy still will be adequate to cover cleanup and decontamination work resulting from any accident.
“The proposed level of insurance coverage is commensurate with the reduced consequences of potential nuclear accidents at VY,” the NRC order says.
Since stopping power production at Vermont Yankee in December 2014, Entergy has sought a number of regulatory changes for the Vernon plant.
One example is an NRC-approved reduction in the Vermont Yankee emergency-planning zone, which took effect April 19. In making a successful case for cutting emergency planning and funding, Entergy argued that the potential for accidents and radiation releases is much lower because the plant is no longer operational.
The company's request to reduce its insurance coverage uses the same logic.
Because the Vernon reactor is no longer licensed to operate, “there are no events that would require the stabilization of reactor conditions after an accident,” federal documents say in summarizing Entergy's request. “Similarly, the risk of an accident that would result in significant onsite contamination at VY is also much lower than the risk of such an event at operating reactors.”
The NRC says its $1.06 billion insurance requirement was established in the wake of the 1979 partial meltdown at the Three Mile Island nuclear plant in Pennsylvania.
The concern was that, without such insurance, nuclear licensees might not have the financial resources necessary to cover cleanup from a major accident. “Although the risk of an accident at an operating reactor is very low, the consequences can be large,” NRC officials write, citing the high pressure, high temperatures, and radionuclide inventories at an operating plant.
However, “with the permanent cessation of reactor operations at VY and the permanent removal of the fuel from the reactor core, such accidents are no longer possible,” the NRC concluded.
The main risks remaining in Vernon, officials say, are associated with radioactive spent nuclear fuel. Currently, that fuel is stored both in a cooling pool in the plant's reactor building and in sealed dry casks on a pad nearby; Entergy has pledged that all fuel will be in casks by the end of 2020.
There is a possibility - though the NRC labels it “highly unlikely” - that, if water is drained from the cooling pool, zirconium cladding on the spent fuel could catch fire. But the probability of such a fire decreases as the fuel cools, and so “the risks from a zirconium fire scenario continue to decrease as a function of the time that VY has been permanently shut down,” the NRC's ruling says.
So the federal agency has determined that any remaining spent-fuel fire risks at Vermont Yankee no longer justify a $1 billion insurance policy.
Likewise, officials say another remaining risk at the plant - the rupture of a large tank holding radiologically contaminated liquid - would be adequately covered by a $50 million insurance policy.
The NRC notes that it has granted similar insurance exemptions to other decommissioning plants including Maine Yankee and the Zion Nuclear Power Station in Illinois. Forcing Vermont Yankee to continue at the higher level of coverage “would result in an undue hardship” and impose costs that are “significantly in excess of those incurred by others similarly situated,” officials wrote.
Also, the commission found that reduced insurance coverage “will not present an undue risk to the health and safety of the public.”
Vermont Yankee spokesman Marty Cohn said the company had been anticipating the insurance change and had factored it into the plant's decommissioning cost estimate.
Nevertheless, the NRC's exemption announcement has immediate financial consequences for Vermont Yankee: When factoring in reductions in both onsite and offsite insurance policies, the company's annual premiums will decrease from about $1.9 million to less than $500,000, Cohn said.
“This helps to preserve the decommissioning trust fund by allowing us to have the proper level of insurance,” Cohn said.
He added that, from a radiological standpoint, “the (NRC's) exemptions recognize the decreased risks associated with decommissioning.”