Reports Assert Davis-Besse Reactor Deteriorated Swiftly: FirstEnergy Calls '02 Incident a Fluke, Seeks to Collect $200M From Insurer

Reports Assert Davis-Besse Reactor Deteriorated Swiftly: FirstEnergy Calls '02 Incident a Fluke, Seeks to Collect $200M From Insurer

May 17 - The Blade

The future of FirstEnergy Corp.'s nuclear operating company could depend on how firmly the utility continues to stand behind a pair of reports that suggests the near-rupture of Davis-Besse's old reactor head in 2002 was a fluke.

FirstEnergy submitted the two reports -- one 661 pages and the other 96 -- weeks ago to its insurance company, Nuclear Electrical Insurance Limited, in hopes of collecting $200 million from an insurance claim. Both were completed in December.

The Nuclear Regulatory Commission did not receive a copy of the longest one, written by Exponent Failure Analysis Association of Menlo, Calif., and Altran Solutions Corp. of Boston, for more than three months.

It concluded most of Davis-Besse's old head deteriorated from leaky reactor acid in the final three weeks before the plant's historic two-year outage began on Feb. 16, 2002, in contrast to government research -- which FirstEnergy had never disputed -- that the problem took years to unfold.

"We need to hear directly from FirstEnergy how they're going to address that disparity," Scott Burnell, NRC spokesman, said.

On Monday, agency officials said FirstEnergy needs to explain why it waited until March 20 to forward the government a copy of that report. Though the NRC stands behind its inspection program and has seen no widespread implications for the nuclear industry, it has acknowledged there could have been.

The NRC's discovery of the second report was a bit of a fluke itself: Its existence did not come up until days ago, in correspondence that involved the insurance company. The agency made it public yesterday.

The latest report highlights the fact that FirstEnergy has not admitted to anything. It asserts that the utility, the NRC, and the nuclear industry could not have predicted what happened at Davis-Besse, near Oak Harbor, Ohio, even if the old reactor head had been cleaned during its previous outage in 2000.

That report was written by Roger Mattson, a mechanical engineer with more than 40 years of experience in nuclear power and nuclear weapons. His resume includes the NRC and its predecessor, the Atomic Energy Commission, from 1967 to 1984, plus a stint with the U.S. Environmental Protection Agency. He has been an independent consultant since he retired in 2002.

His report said the NRC often operates in hindsight and that fines the agency levied are "nearly always paid without contest because the licensee typically wants to put the event behind it."

FirstEnergy paid no ordinary fines. Its $5.45 million civil fine in 2005 and its $28 million criminal fine in 2006 were records, totaling nearly $33.5 million.

The utility, while not admitting to anything, has not contested any of the findings made by federal investigators, including last year's statement from a government prosecutor who claimed FirstEnergy showed "brazen arrogance" for withholding information about the plant's condition in the fall of 2001.

David M. Uhlmann, chief of the U.S. Department of Justice's environmental crimes section, said at the time that the $28 million fine was imposed to let other nuclear operators know the government will be harsh if any are caught lying.

It's unclear if FirstEnergy wanted the NRC to see the two reports that were submitted to its insurance company.

Danny Pace, FirstEnergy's senior vice president of fleet engineering for nuclear operations, said in a May 4 letter to the NRC that the utility "does not plan to routinely docket correspondence related to this insurance arbitration."

Mr. Burnell said it's "not an understatement at all" to say the two reports have become a serious matter among the agency's highest-ranking officials in suburban Washington. He said the agency's five commissioners will deal directly with Tony Alexander, FirstEnergy's chief executive officer and the utility's top official. "We're addressing [FirstEnergy] at that level," he said.

The NRC on Monday issued a "Demand for Information," which compels Mr. Alexander to answer key questions under oath.

The utility faces more legal action, even criminal prosecution, if it is caught misleading the government or providing incomplete information, said the agency's enforcement chief, Cynthia Carpenter.

The NRC has said such edicts can lead to "revising, suspending, or revoking existing operating licenses."

Both that letter and the document that outlines the agency's demand were made public Tuesday. In the latter, the NRC lists FirstEnergy's other nuclear assets, including the Perry plant east of Cleveland and the twin-reactor Beaver Valley complex in western Pennsylvania.

Mr. Burnell would not comment on the degree those might be affected by any forthcoming NRC sanctions. But he reiterated that a lot rides on FirstEnergy's response.

Todd Schneider, a FirstEnergy spokesman, said utility lawyers have advised him not to comment because the firm is formulating a response.

Mr. Schneider said, however, that FirstEnergy maintains responsibility for what happened.

"The Davis-Besse event was our responsibility. We're not trying to shirk that in any way, shape, or form," he said.

Contact Tom Henry at: thenry@theblade.com or 419-724-6079.

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