The U.S. Nuclear Regulatory Commission (NRC) is mandated to ensure “adequate protection” to the public health and safety, regardless of cost. It also has steadfastly declined to specify precisely what constitutes “adequate protection,” except that it does not mean “zero risk.” Rather it judges on a case-by-case basis whether the “adequate protection” standard has been met. NRC also seems to reserve the right to require an even higher level of protection, when that can be achieved in a manner that it judges to meet similarly imprecisely specified criteria such as “practicality” and “reasonableness.” In Regulatory Guide 1.174 NRC comes close to a concrete specification of “adequate protection,” albeit one that depends upon the historical licensing basis for a specific plant. And the technical portion of this paper begins with a description of how the approach of Regulatory Guide 1.174 can be viewed from the perspective of Risk-Informed Safety Margin Characterization. Meanwhile, in this research, in order to better understand the role of regulation, a microeconomic model of a price-taking nuclear power plant is constructed, particularly of the cost (C) of achieving any specified level of core damage frequency (CDF). Solution of this model reveals an economic optimum, at a point that balances plant value against risk of losing the plant via an accident involving core damage. For CDFs slightly smaller than this economic optimum there is scope for a regulatory mandate of even smaller CDF, should that be deemed either necessary to attain “adequate protection,” or reasonably attainable in order to achieve greater than adequate protection of the public health and safety. It is argued that regulatory bodies must have scope for discretionary decisions, because the information necessary to formulate a reasonable approximation to the cost curve C (fortunately) does not exist.

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