Part 2 of 2 Parts (Please read Part 1 first)
This era of nuclear safety corresponded to the time when nuclear power plants were operational and generating electricity. Once a plant is permanently shuttered, there are no operating profits. Now the only way to maximize profits is to minimize costs. Companies specializing in decommissioning such as Holtec will work hard to figure out how to carry out decommissioning as cheaply as profitable.
Reputational incentives also change. When a plant is operating, the owners are concerned about any problem at any plant that could impact their reputation and their whole business including non-nuclear assets. However, when a nuclear power plant is sold to a small decommissioning firm, there is a lot less at stake if problems are encountered.
And, finally, there is the question of bankruptcy. A company the size of Entergy with a nineteen-billion dollar market capitalization could only be put out of business by a very large incident. That is not the case for a smaller company. Economists have argued that bankruptcy protection raises a “moral hazard” problem. Judgement proof companies have a lot less incentive to act safely.
There is a similar “moral hazard” with respect to oil and gas wells. Analysts say that small oil and gas producers face adverse incentives with regard to safety and environmental risk. If a small gas and oil producer declares bankruptcy, they are not held responsible for accident cleanup costs. This can lead them to be less concerned about safe operating practices. The American West has thousands of “abandoned” wells that have not been properly remediated. Many of these wells are “owned” by companies that have filed for bankruptcy. The same sorts of problems have shown up with respect to coal mines and off-shore oil drilling platforms. The stakes for the nuclear industry are even higher than the stakes in fossil fuel cleanup. It is anticipated that the cleanup of closed nuclear power plants will run into the billions of dollars.
There are valid concerns that economic incentives are not enough to ensure safe and complete decommissioning. Companies which purchase shuttered nuclear power plants to decommissions are inheriting significant decommissioning funds that have been extracted from owners and operators. The Nuclear Regulatory Commission (NRC) has claimed that it will closely monitor financial viability closely during the decommissioning process. Some analysts have raised the question of what would happen if a decommissioning company ran out of money before the process was complete. Who will pay the addition costs if the decommissioning funds are not sufficient to pay all the costs?
The NRC is obviously the organization that must deal with this question. As more and more U.S. nuclear power reactors are retired, the focus of the NRC should shift from regulating construction and operation to regulating decommissioning and spent fuel storage. The NRC must move quickly to prepare for emerging risks in the commercialization of decommissioning.
The companies decommissioning recently closed nuclear power plants want to accelerate the timeline for decommissioning. This could be either good or bad for public safety depending on how closely decommissioning is monitored. The companies buying nuclear power plants for decommissioning require special expertise and equipment to carry out decommissioning tasks quickly and competently. This could be beneficial to the public if done right. However, some analysts say that the incentives to properly carry out decommissioning are not very compelling, and it is an open question whether or not the NRC will be able to competently regulate decommissioning.