SUBSIDY TO NUCLEAR POWER THROUGH PRICE‐ANDERSON LIABILITY LIMIT

Jeffrey A. Dubin and Geoffrey Rothwell

Contemporary Economic Policy, 1990, vol. 8, issue 3, 73-79

Abstract: Between 1959 and 1982, the Price‐Anderson Act placed a limit of $560 million on the liability of nuclear power plant operators for accidental damages. This limit grew to $7 billion due to the 1988 amendments to the act. This paper using insurance premiums charged for the first $160 million of coverage and the Nuclear Regulatory Commission's estimate of the probability of a worst‐case loss, models the distribution of damages with a log‐logistic density function. The study finds that the value of the Price‐Anderson subsidy was $60 million per reactor year before 1982 but then dropped to $22 million per reactor year following the 1988 amendments.

Date: 1990
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