TVA insurance on nuclear plants unchanged

SEPTEMBER 3, 2002

TVA insurance on nuclear plants unchanged

KNOXVILLE (AP) - The Tennessee Valley Authority has not increased insurance coverage for its three nuclear power plants since the Sept. 11 terrorist attacks.

TVA's current property casualty insurance allows up to $1.06 billion in coverage per site plus an extra $1 billion limit spread among all three plants.

Last year the federal utility estimated the value of two of its nuclear plants at well above their insured limit: Watts Bar near Spring City, Tenn., at $6 billion and Browns Ferry in north Alabama at $2.8 billion.

TVA Director Bill Baxter said the agency is reviewing risks and insurance options based on terrorism activity. Nearly all of Tennessee and parts of six adjoining states receive electricity from TVA plants.

"It's a new world that we're living in today," Baxter told The Knoxville News-Sentinel. "I think everybody is re-examining what are insurable risks. There is a lot of discussion within the industry. How do you measure that risk? What part is insurable? What part would the federal government need to step up on? What part do you self insure on? Legitimately all of those things are being re-examined in the light of Sept. 11."

TVA should try to insure its nuclear plants at full value so it could afford to replace the power should nuclear plants be heavily damaged by natural or man-made attacks, said Stephen Smith, executive director of the Southern Alliance for Clean Energy in Knoxville. The organization spends much time studying TVA's power systems and their effect on the environment.

"Post-Sept. 11 you should have greater investment in security and greater investment in things like insurance," Smith said. "With the ongoing sophistication and threats from terrorism ... the likelihood of a nuclear plant attack has dramatically increased. They couldn't build another nuclear plant for $2.06 billion (insurance coverage), but they could replace it with another form of power like natural gas."

TVA manager Vicki Harkleroad, who handles the agency's insurance, said TVA long has self-insured its non-nuclear power plants but is studying whether to buy private insurance in light of world events.

Nuclear plant coverage was not increased after Sept. 11 because TVA has tight security and assumes low probability of a terrorist attack at one of its sites. Also, the insurance is meant primarily to meet federal mandates for handling damage to a reactor, any decontamination or permanent shutdown and is not intended to cover full value to replace lost power, she said.

"There's not $6 billion of nuclear property insurance available in the marketplace" for a plant like Watts Bar, Harkleroad said. She said terrorism is a concern and an attack on a U.S. nuclear plant is not impossible.

"I certainly hope it's improbable that they would attack any place else in the United States," Harkleroad said.