The public was promised lower utility bills with the deregulation of the electric industry. The failure of that promise has attracted a lot of attention from the press. But there are other consequences of deregulation that are more disturbing, yet they receive far less media attention. A most serious concern is the negative impact that energy deregulation is having on nuclear safety. Several accidents – classified by the U.S. Nuclear Regulatory Commission (NRC) as “emergencies” – have hit nuclear power plants in New York as they have become exposed to market competition, and more accidents are likely as the plants come under new ownership. Five of New York’s six electric-generating nuclear reactors are in the process of being sold to corporations with a history of cutting corners on safety in order to maximize profit.

Under deregulation, power plant owners will attempt to reduce financing and operating costs as much as possible. There is a very real threat that profits will prevail over safety. At the same time, the NRC seems to be using deregulation as a mandate to relax its regulation of nuclear power plants in ways that will cut costs for the owners.

The widely reported February accident at Con Edison’s Indian Point 2 reactor – a radioactive steam release triggered by a ruptured steam generator tube – offers a startling illustration of the dangers associated with exposing nuclear power to the competitive marketplace. Strong evidence indicates that New York’s move to deregulate electricity markets was, in part, a cause of the accident, the most serious in the 27-year history of the plant. According to their own internal planning documents, Con Edison decided in 1997 not to replace the aging and leak-prone steam generators even though they had already been replaced at every other nuclear plant where they were initially installed. That decision led directly to the February 2000 accident that put in jeopardy the health and safety of millions of people living near the plant, which is located along the Hudson River near Peekskill, just 35 miles north of Manhattan.

Indian Point 3 (IP-3) has also had its share of controversy. In late 1999, during a push by its owner, the New York Power Authority (NYPA), to dramatically reduce the length of a planned shutdown for refueling at IP-3, worker safety was compromised. As a result of NYPA’s decision to relax protective clothing requirements, nearly 200 employees were radioactively contaminated. This came at a time when NYPA was involved in preliminary talks with Entergy Nuclear, Inc. over the sale of its two reactors. In a interview with New York City TV station WABC, a plant whistleblower explained that a great deal of pressure was placed on employees to finish the refueling quickly: “There was a rush to get it done in [a company record of] 40 days and to impress the potential buyer of the plant.”

Governor Pataki and the PSC must be held accountable

In light of these and a number of other accidents, it is troubling that the New York State Public Service Commission (PSC) has suspended its proceeding on nuclear power in competitive markets (Case 98-E-0405) with no date set for its continuation. The proceeding was initiated in January 1999 to analyze whether it was in the public interest to expose nuclear power to market competition. A coalition of environmental groups, including Environmental Advocates, has been requesting Governor Pataki’s direct intervention in requiring the PSC to reactivate the proceeding and complete a full public review of key policy issues associated with the operation of nuclear power plants in competitive markets.

In addition to nuclear safety, there are other issues that need to be addressed:

• The reliability of the purchasers of New York’s nuclear power plants. The companies who have expressed interest in NY’s reactors have a history of cutting corners and getting in trouble with the U.S. NRC and various state public service boards. Furthermore, companies like Entergy are setting up limited liability corporations to manage each reactor, allowing for little or no local or fiscal accountability.

  Two such corporations have already been set up to buy the Indian Point 3 and Fitzpatrick nuclear power plants, currently owned by the New York Power Authority. Each corporation has access to $20 million in working capital from another Entergy affiliate. In addition, the two corporations together share a line of credit for $50 million with still another Entergy company. Thus, the maximum amount of funds available to correct any future problems at either nuclear plant is $70 million.

  A typical nuclear power plant in the United States requires about $10 million per month for routine operations and maintenance. Any repairs or upgrades in equipment require additional funding. These limited liability corporations do not have sufficient funds to withstand the kind of problem that occurred at Indian Point 2.

• Decommissioning plans and costs. There are two main concerns with respect to decommissioning (the stage where the reactor is permanently shutdown, the plant is dismantled and the site is cleaned up and decontaminated): 1) in some cases the decommissioning accounts may not have accrued enough money to adequately fund the cleanup AND 2) in other cases where enough funds may exist, the plant owners may attempt to cut corners, reduce their costs and keep the leftover money which had been collected from ratepayers.

• Nuclear waste storage. After 50 years, the nuclear industry still has no plan for safely storing Low Level and High Level Radioactive Waste.

• The mitigation of stranded costs. Nuclear utilities like Con Edison and Niagara Mohawk are looking to burden their ratepayers with billions of dollars in bad debts.