How Safe is too Safe

My mother grew up in Arco, Idaho. You’ve never heard of it. Very few people have. It is a small, mostly agricultural, town in the high desert of south-central Idaho. A drive through Arco today will be the picture of a sleepy small town that time seems to have forgotten. It wasn’t always that way. Arco had its moment in the sun. A moment the whole world was watching. They’re still proud of it. The letter board over city hall has proclaimed the same message for almost 70 years; “First city in the world to be lit by atomic power”.

In 1955 little Arco, was chosen as the optimal site to test a bold new method of generating electricity. Nuclear energy did not come without its detractors. There were many quick to warn of the potential dangers that could be cause by malfunctions. Naysayers aside, the Borax-II reactor fired up without a hitch, and the electricity was instantly coursing through the wires on its way to the homes of Arco, where is has continued to run, problem free, since 1955.

It wasn’t until 1979, in another sleepy town, this time in Pennsylvania, that the country first became familiar with the term “meltdown”. The Three-Mile Island Nuclear Facility sits on a small island in the Susquehanna River south of Harrisburg. In the early 1970’s it was chosen as the site for a major nuclear project aimed at bringing cheap electricity to Central Pennsylvania. It did just that for five years, until March 28, 1979.

At 4 AM while performing routine maintenance, technicians used compressed air and water to remove a blockage in a water filter. Generally, that job was done with just compressed air, but that night, the air was not doing enough, so the decision was made to add pressurized water to help blast away the debris. There is a reason that the procedure is done with air. If water is used, there is a chance it can in its way into the air actuated controls of the cooling unit. And that is exactly what happened. The water cause malfunctions in the valves and turbines powering the cooling system which in turn shut down the cooling unit. You can probably assume this much, but when the cooling unit shuts down, the reactor gets hot. Extremely hot.

That rising heat creates a tremendous amount of pressure in the reactor. Engineers had accounted for this when they designed the system, so they added a safety mechanism. The reactor was equipped with a pressure relief valve. Two of them in fact. The first was opened automatically when the pressure rose too high. When it opened, a light illuminated on the control panel telling operators they needed to also go open the other valve, which was done manually. The idea was, if the automatic one failed, the operators could always go and open the other valve by hand, then return and close the valve when the pressure dropped, and the light turned off. 

On March 28th the pressure rose, the automatic valve opened, and the light turned on. Correspondingly operators also opened the manual valve. The pressure was relieved, and the light again turned off. So, as you would imagine operators returned and closed the manual valve.  Crisis averted. Thank goodness for safety measures. Only as you already know, the crisis was not averted. Something went terribly wrong.

As it turns out, the automatic valve had malfunctioned. It was stuck opened. Now, instead of letting out pressure, it was letting out water.  The water that was meant to cool the frighteningly hot metals inside. That little red light, the one that turns off when the valve closes, doesn’t turn off when the valve closes. It turns off when the actuator that powers the valve receives power. The actuator did receive power, so the light turned off, but that actuator did not close the valve.

It took operators over four hours to realize that the valve they thought was closed, was in fact open, and was dumping the precious cooling water uselessly out of the reactor. By the time it was discovered the plant had entered a partial meltdown.  

All early nuclear reactors were equipped with manual safety valves. Engineers of subsequent reactors were constantly looking for ways to make them safer. What’s safer than one valve? Two valves! What’s safer than a manual valve? Automatic valves! It wasn’t stupidity, or even negligence that led to the disaster. It was the opposite. The system quite frankly was… too safe.

Humans have a habit of doing things like this. In 16th century Italy, it was common to see large marble columns stored on their sides near construction sites. Traditionally this was done by placing two supports under the column splitting it into thirds. If two supports are good, surely three would be better right? Crews then started putting a third support right under the center of the columns and one under each end. Much to their surprise, it didn’t take long for all the columns to crack in half, directly above that center support.

I’ll turn to Galileo to explain what was happening. “One of the end supports had after a long while become decayed and sunken, but the middle one remained hard and strong, thus causing one half of the column to project in the air without any support.” It didn’t take long for that heavy column to crack under its own weight, with no support. More, is not always better.

I have many times advocated that everyone needs an emergency fund. I still believe that is true, and I always will. But I also would caution anyone that when it comes to an emergency fund, just like any other safety mechanism, more is not always better.

A fully funded emergency fund is the bedrock of your financial house. It needs to be three to six months’ worth of expenses. But and this is crucial, it should NOT be any more than that. Especially in an inflationary environment like today, that excess emergency fund is currently costing you 10% per year as prices rise, but that money earns no interest. I understand that investing can be nerve wracking. Nobody likes to see their money go down in value. Just remember, that leaving too much in an emergency fund, being “too safe”, can be best way to guarantee that you lose money.

In short, times are getting dicey. It has never been a better time to have a fully funded emergency fund. Be safe. Just not too safe.