AMERICA (Values in $USD) | CATEGORY (Data as of Aug 27, 2002) | CANADA (Values in $CDN) |
|---|---|---|
| Price Anderson Act (PAA) (enacted 1957) (see section 140.11) | Applicable Law | Nuclear Liability Act (NLANLA) (enacted 1970, into force 1976) |
| Nuclear Regulatory Commission (NRC) | Regulatory Agency | Canadian Nuclear Safety Commission (CNSC) |
| $200 million per NRC licensed nuclear power operator site | Mandatory Primary Insurance | 75 million $Can (approx. 48 million $U-S) per CNSC licensed "nuclear installation" * (* = see 2.0 in Notes below) |
| $8.8 Billion: Operators of each of the 105 currently licensed nuclear power reactors must pay up to $83.9 million per incident at any NRC licensed reactor site | Mandatory Secondary Insurance | None |
| If secondary insurance coverage is exhausted, a 5% surcharge is automatically triggered to cover legal defence and other costs, (brings total secondary coverage to $83.9 X 105%= $88.1 million per reactor, per incident) | Surcharge for legal defence and other costs | None |
| Licensed operators pay a maximum of $10 million annually per reactor per incident until their maximum $88.1 million coverage is satisfied | Method of Payment | N/A |
| At discretion of Congress | Compensation for injury or damage if operator-funded insurance is exhausted | At discretion of Federal Government |
| Yes, with limitations *** see note in 1.3 Notes below | Acts of terrorism covered | Unclear ** - see 2.0 in Notes below |
| Americans are covered under Canada's NLA for injury or damage caused by a Canadian nuclear installation. | Reciprocal agreements between Canada and U.S. | Canadians are covered under America's PAA for injury or damage caused by an American nuclear facility. |
| 104 NRC licensed nuclear power reactors (13 reactors are on the immediate shoreline of 3 the Great Lakes) 29 sites have 1 reactor; 33 sites have 2 reactors; 3 sites have 3 reactors | Relative Concentration of Reactors | 22 CNSC licensed power reactors (20 are on the immediate shoreline of two of the Great Lakes) 2 sites have 1 reactor 1 site has 4 reactors 2 sites have 8 reactors |
Detailed Notes: Price Anderson Act (U.S) vs. Nuclear Liability Act (Canada)
1.0 Price Anderson Act (all amounts in $USD)
- Enacted in 1957 with several subsequent amendments
- Designed to encourage private sector participation
- PAA now responsibility of the NRC for commercial reactors, DOE for DOE contractors
- PAA expired on August 1, 2002, but existing reactors will retain their liability protection under the provisions of the PAA (but DOE contractor coverage is unclear)
- Reauthorization would be required to extend liability protection to new nuclear reactors (not a new reactor, though, since the early 1970’s)
- The PAA as of today (Aug. 28, 2002) has not been reauthorized; intent is to reauthorize, dateline not known for sure but expected before the end of 2002.
1.1 PAA provides two layers of protection in the case of a nuclear accident:
1.1.1 First layer:
- All (and only) nuclear operator licensees of the NRC are required to obtain primary (financial) insurance protection
- Insurance is provided by American Nuclear Insurers (ANI), a joint underwriting association of insurance companies which pool the risk
- Primary insurance amount is that reasonably available at a reasonable cost, as periodically determined by ANI
- Current primary insurance coverage available is $200 million (per accident)
- Primary insurance covers all reactors at a given site (i.e. insurance is not required for each reactor if there is more than one reactor at a given site)
1.1.2 Second layer
- All (and only) nuclear power reactor operators are required to pay a “retrospective premium” (per reactor, per incident) up to $83.9 million (if this limit is reached, a 5% surcharge is automatically triggered to pay legal defence and other costs, bringing the total to just over $88 million)
- This is self-funded insurance by the nuclear industry, and is administered by ANI
- ANI offers default insurance (with limitations and expectation of repayment with interest in the future) in the event that reactor operators are not financially capable of meeting their obligations for retrospective premiums
- Retrospective premiums are not risk-based (e.g. same per reactor over 100 MW regardless of any other differences)
- PAA gives NRC authority to periodically (e.g. every 5 years) adjust amount of retrospective premiums for inflation
- Maximum retrospective premium is $10 million per year, per reactor, per incident
- PAA currently covers 105 reactors (of which 102 are operating), bringing the total coverage to (105 x 83.9) + 200 = $9.0 billion
1.1.3 Old second layer (no longer applicable)
- When the PAA was enacted, only the first primary insurance layer existed; if this primary insurance was exhausted, Congress would provide government indemnification up to an additional $500 million
- When the second layer (of retrospective premiums) was added, the government indemnification became redundant
- Today, if both the first and second layers of protection (primary insurance + retrospective premiums) are exhausted, any government indemnification over and above the first and second layers would be at the discretion of Congress
1.2 DOE contractors (primarily for nuclear weapons production)
- Contractors not required to obtain primary insurance
- DOE would be required to indemnify contractors to a limit of $9.43 billion; intended to be same liability as for commercial nuclear power industry, but when set there were 110 reactors covered under PAA (taxpayers would bear these costs)
- DOE can, though, impose civil penalties against for-profit contractors (subject to limitations) for safety violations
- Liabilities associated with the Nuclear Waste Fund (e.g. building a central repository, transportation accidents to the repository) would be paid from the Nuclear Waste Fund (utility ratepayers would bear these costs)
1.3 Other notes
- Licensees of the NRC (other than for nuclear power reactors) are not required to obtain the primary insurance coverage of $200 million under the PAA
- PAA coverage also applies for used fuel in dry storage but must be on the reactor site (i.e. considered as interim storage) and the reactor licensee must have primary insurance coverage
- According to the NRC, there is only one independent site for used fuel storage (Morris near Chicago); it is not required to obtain the primary insurance under PAA, but has done so voluntarily; however secondary coverage as provided for under the PAA does not apply for this site (only to nuclear reactor sites)
- PAA covers terrorist attacks (according to NRC officials) with limitations: primary insurance coverage has a (lifetime) industry loss limit of U-S $200 million, which if exhausted, could be reinstated in the future at ANI’s discretion (secondary coverage or retrospective premiums would not, though, be reduced, and would be invoked when lower limited primary insurance coverage is exhausted)
- Manufacturers/suppliers are covered under the reactor licensee umbrella insurance and retroactive premium under PAA
- NRC also requires operators of nuclear reactors to maintain minimum site property insurance coverage of $1.06 billion (this is not mandated under PAA)
- Ontario Power Generation (which owns 20 of Canada’s 22 power reactors) does not carry property insurance coverage for on-site damage
2.0 Nuclear Liability Act (all amounts in $CDN)
- Each “nuclear installation” must obtain $75 million of insurance coverage (liability cap)
* Each of the following are designated as a “nuclear installation” under the NLA:
- Bruce “A” (four reactors plus used fuel at the reactor buildings)
- Bruce “B” (four reactors plus used fuel at the reactor buildings)
- Pickering “A” & “B” (eight reactors, plus used fuel at the reactor buildings and in dry storage)
- Darlington (four reactors plus used fuel at the reactor buildings)
- Insurance is provided by the Nuclear Insurance Association of Canada (over 50 insurance companies participate to pool the risk)
- In the event of a major nuclear accident, any compensation above $75 million would be provided by the federal government at their discretion
** An operator under the NLA is not liable for injury or damage if the nuclear accident/incident “occurred as a direct result of an act or armed conflict in the course of war, invasion or insurrection” (i.e. operator may not be liable for terrorist attacks.)
- Manufacturers/suppliers are exempt under the NLA
3.0 Notes of comparison: PAA vs. NLA
- Canada and the U.S. have reciprocal agreements: Canadians are covered by the PAA for damages caused by an accident at a U.S. facility; Americans are covered by the NLA for damages caused by an accident at a Canadian facility
- The maximum level of industry funded compensation under the NLA (adjusting for currency differences) is about ½ of 1% compared to that under the PAA
4.0 Questions which Arise
- Discretionary compensation on the part of the federal Canadian Government could be constrained by Canada’s relatively low population and revenue generating capability. Would the U.S. government have to effectively bail out the Canadian government in the event of a major accident where U.S. citizens suffer widespread harm? Could U.S. taxpayers be effectively subsidizing the Canadian nuclear industry? Or is it simply that Americans could be more exposed to uncompensated harm from a Canadian nuclear facility than vice-versa?
- The Canadian nuclear sites (in particular the Bruce site) appear to represent a much greater concentration of nuclear related risks on average vis-à-vis their U.S. counterparts (due to the number of reactors, waste storage and ancillary operations, such as the heavy water plant, incinerator). This may make the severity of a major accident or terrorist attack potentially much greater than at a U.S. nuclear site.