ABZ, Inc.

RISK MANAGEMENT

Experience
ABZ, Incorporated (ABZ) is uniquely qualified to conduct severe accident cost analyses for nuclear power plants. ABZ developed the methodology used to estimate the costs for American Nuclear Insurers (ANI) in 1989. Since then, ABZ has refined the analysis methods, computerized the cost estimating process, and incorporated state-of-the-art risk assessment techniques. Also, ABZ has performed several site-specific studies which utilities have used to determine the level of property insurance required for their specific plants.
The ABZ Study
The cost to cleanup the accident at Three Mile Island, Unit 2 (TMI-2) is about $1 billion. In 1979, only $300 million of property insurance was available to General Public Utilities (GPU). The $300 million compensated GPU for only a fraction of their cleanup and other costs. In 1989, ANI/MAELU (Mutual Atomic Energy Liability Underwriters, also referred to as the Pools) requested ABZ to conduct a study to determine the amount of property insurance needed to protect nuclear utilities from financial hardship if another severe accident were to occur. This study was to provide guidance for considering costs associated with severe nuclear reactor accidents. The results of the ABZ study were published by ANI/MAELU in August 1989 in a report titled, "Identification of On-Site Costs Associated with Severe Nuclear Reactor Accidents."

The ABZ study provided a reasonable and justifiable estimate of the range of potential cleanup costs following a severe nuclear plant accident based on previous studies of cleanup costs, decommissioning studies and, most importantly, actual cost data from TMI-2. The study results do not represent any specific plant or any specific severe accident, such as TMI-2. The study was conducted on the basis of a generic pressurized water reactor (PWR) and boiling water reactor (BWR) of specific size and with specific types of containment.

In addition, the study was benchmarked to the actual TMI-2 costs and, therefore, included labor rates in the vicinity of TMI-2.However, the study provided a methodology that may be extended to more directly apply to a particular plant and results that can be used as a reasonable first step in addressing the level of insurance coverage necessary to reduce a utility's financial exposure in the event of an accident.

Advancements in Methodology
Since 1989, numerous enhancements have been made to the methodology created by ABZ. New studies consider site-specific data, including:

  • Plant Configuration
  • Reactor Core Characteristics
  • Region Labor Rates
  • Plant Operating and Maintenance (O&M) Costs
  • Decommissioning Funding, and Trust Fund Balance
  • Plant Book Value
In addition, the computer model used to perform the actual analysis has been significantly enhanced, and now utilizes a simple user-interface which allows data to be easily revised or updated (for example, to run sensitivity studies on key parameters such as low level waste burial rates, or to perform annual updates and reassessments of insurance needs).
Incorporating Risk Assessment Knowledge
To accurately represent the risk of severe accidents for a specific plant, a detailed and plant-specific definition of the plant's final condition or end state is required. This is done using the plant-specific probabilistic risk assessment (PRA) results. Specifically, the PRA is used to determine the actual plant end states and provides a greater level of detail in the definition of the cleanup costs. In addition, the PRA provides knowledge of the probability of occurrence of each end state. This knowledge, coupled with the cost estimates generated, allows the presentation of a complete picture of the total risk. Such an integrated picture then allows utility management to evaluate the level of insurance coverage necessary to limit risk to what is judged to be acceptable and have a comprehensive basis for supporting the decision. Conclusion Severe accident cost analyses for evaluating the cost of cleanup provides a justifiable, defensible process for assessing the level of nuclear property insurance needed. Additionally, ABZ has extended the methodology to provide greater levels of specificity and detail to allow the preparation of estimates which are much more plant-specific and provide a more comprehensive technical basis for judging the levels of property insurance required.





EMAIL


703-631-7401


   


ABZ, Inc.
Corporate Office:
4451 Brookfield Corporate Drive
Suite 107
Chantilly, VA 20151

Regional Office:
100 Main Street
Suite 110
Dover, NH 03871

Satellite Offices:
Philadelphia, Pennsylvania
Rockaway, New Jersey
Wells, Maine