Power plants face insurance hike

Monday, April 28, 2008

Nuclear power plant operators in the Czech Republic are facing a huge and unexpected increase in insurance costs, following a government decision to raise the amount of liability for damage compensation from 6 billion Kč ($384.9 million) to 8 billion Kč.

In March, the government issued a statement instructing the Industry and Trade Ministry to work with the Environment Ministry to implement the increase by preparing a ratification of the protocol to the Vienna Convention on Civil Liability for Nuclear Damage.

“We will cancel the limited liability of the operators of nuclear reactors for damage so that they pay market insurance, as other industrial sectors are required to do,” said Tomáš Bartovský, spokesman for the Industry and Trade Ministry, which conducted the analysis on which the government statement was based.

The politically charged development, which has made strange bedfellows of the generally pro-nuclear Industry and Trade Ministry and anti-nuclear Environment Ministry, is believed by many to be the initiative of Environment Minister and Green Party Chairman Martin Bursík, an outspoken opponent of nuclear energy.

Dana Drábová, chairwoman of the State Office for Nuclear Safety (SÚJB), an independent regulator, said Bursík’s actions are consistent with previous anti-nuclear moves. “It was one of the conditions of the Green Party to enter the coalition,” she pointed out, referring to the party’s insistence that there be no more nuclear power plants built and no expansion in the use of nuclear energy before it would accept the Coalition Agreement in 2007. Both conditions were at odds with the original policies of the Greens’ fellow coalition party, the Civic Democrats.
The current law regarding liability, as established by the Vienna Convention, which the Czech Republic signed in 1994, states that the amount is limited to 6 billion Kč. However, since 2007, the Green Party has sought to establish unlimited liability. “The government’s decision to increase it to 8 billion Kč was a compromise,” Drábová said.

Free profit
The change will necessitate not only ratification of the protocol to the Vienna Convention, but also an amendment to the Atomic Act of 1997, which established the rules and regulations for the country’s nuclear industry.

According to Bartovský, “The Industry and Trade Ministry will be responsible for amending the Atomic Act and the Environment Ministry will cooperate.”

For her part, Drábová insisted that the purely political development has absolutely nothing to do with the current safety levels of the country’s two nuclear power plants at Temelín and Dukovany. She furthermore said that insurance companies will make huge profits out of nothing.
She is also concerned that the development could mean that the SÚJB — which she said is currently responsible for 95 percent of the enforcement of the Atomic Act — forfeits some of its responsibilities. However, she strongly refutes rumors that the SÚJB could be folded into the Environment Ministry. “It is not possible to change the status of the SÚJB by a simple government resolution,” she said. “So, if somebody — I don’t feel it necessary to speak of Mr. Bursík personally — but if somebody, anybody, would like to change the status of our office, the government would have to propose to Parliament to change the law.” Asked if there’s been such a proposal, Drábová said, “Up until now, no.”

Bartovský, however, was quick to assure the future of the agency. “The independence of the SÚJB will not be endangered in any way,” he said. “The Industry and Trade Ministry is responsible for the Atomic Act, not the SÚJB.”

Asked about other concerns, such as a rise in the price of other fuels resulting from the liability increase, Drábová said she wasn’t aware of any, but added, “I only have it from open sources that there may be some very negligible increase in the price of electricity.”

Bartovský had a more definitive take. “There will be no hike in fuel prices due to the insurance cost increase,” he said.

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