Broken Incentives in US Nuclear Power Regulation

A nuclear powerplant at San Onofre was shut down a year ago after a slight radiation leakage.  Now it turns out that there are allegations that they were aware of potential concerns with the steam generators that broke but neglected to fix them because the fixes would have led to a more rigorous safety review.

Boxer's letter adds new weight to a longstanding — and unresolved — question at San Onofre. Did Edison modify the generators so extensively before they were installed that the company should have sought an amendment to its operating license, a process that can take months or even years?

Essentially the story is that the utility faced a cost benefit analysis that compared the cost of the following.

P = Reduced probability of steam generators breaking from potential modifications
C = Cost of steam generator breaking
S = Cost of additional safety modifications
L = Cost of Licensing from the NRC

And they decided that S + L > P*C so they shouldn't change anything about the design to reduce regulatory oversight. It turns out it was the wrong decision. 

Barbara Boxer's office is now alleging that they have proof that executives thought P was significant but believed that L was too high.  Senator Barbara Boxer's office broke this story and they seem to want to make L more mandatory so that the utility company would not have had to enter that variable into their cost benefit analysis. There is also a believe that L would lead to a further reduction in the probability of new machine parts breaking.

However, I haven't seen many people covering the story mention just how perverse these incentives are that safety modifications would have cost too much in licensing requirements to be implemented. In this regard maybe the US should look more to Japan and France's streamlined licensing and certification procedures rather than use any excuse of problems to hike costs for nuclear energy even further.  

It's too bad Japan's tsunami put people off nuclear power. Clean energy isn't perfectly safe. Take hydroelectric power, where a broken dam also has the potential to kill many people. But nuclear is scary and dams and floods are common so the opposition to dams is based more on environmental grounds and people living downriver while the opposition to nuclear power comes from across the country and is based largely on ignorance. When the costs of making any changes are high, the benefits of plants running newer technology are minimized. In Japan, the newer power plant that was closer to tsunami fared much better than Fukushima Daiichi plant.  We can see from San Onofre hints that under a system where any change is penalized with years of costly licensing review the chances of a disaster might actually go up, not down.