Fact Sheets

September 2012

Key Facts

• Through the Price-Anderson Act, the U.S. nuclear power industry has more than $12 billion in liability insurance protection to be used in the event of a reactor incident.

• This insurance protection consists of two tiers. The first tier provides $375 million in liability insurance coverage per incident. If this is exhausted, a second tier can provide additional insurance coverage up to $12.6 billion per incident.

• The first tier limit of $375 million is based on the maximum private insurance available. The second-tier $12.6 billion limit will be adjusted for inflation on an ongoing basis.

• Additionally, Congress can modify or increase these coverage limits at any time through legislation.

• If the entire insurance pool is exhausted, state and local governments can petition Congress for additional disaster relief.

• Utilities—not the public or the federal government—pay for this insurance. Price-Anderson is not a subsidy. Utilities pay an annual premium to cover each reactor.

• The Price-Anderson framework has worked well in the past. Insurance pools set up under the act disbursed approximately $71 million in claims and litigation costs related to the 1979 accident at Three Mile Island.

• The act has proven so successful that Congress has used it as a model for legislation to protect the public against potential losses or harm from other hazards.

• Congress has extended the act several times, making significant alterations, most recently in the Energy Policy Act of 2005.

Benefits of the Act
The Price-Anderson Act provides no-fault insurance to benefit the public in the event of a nuclear power plant accident the Nuclear Regulatory Commission deems to be an “extraordinary nuclear occurrence.”

The costs of this insurance, like many costs of nuclear generated electricity, are borne by the industry, unlike the corresponding costs of some other power sources. Costs from hydropower mishaps, such as dam failure and resultant flooding, for example, are borne directly by the public. The 1977 failure of the Teton Dam in Idaho caused $500 million in property damage, but the only compensation provided to those affected was about $200 million in low-cost government loans.

The public has paid nothing under the Price-Anderson framework, while insurance pools have paid roughly $200 million in claims, and the nuclear power industry has paid $21 million to the federal government in indemnity fees.

The act has proven so successful that Congress has used it as a model for legislation to protect the public against potential losses or harm from other hazards, including faulty vaccinations, medical malpractice and toxic waste.

Liability Coverage Up to $12.6 Billion
Congress passed the Price-Anderson legislation in 1957 as an amendment to the Atomic Energy Act.

The act requires nuclear power plants to show evidence of financial protection. Through this program, the nuclear energy industry provides a total of up to $12.6 billion in insurance coverage to compensate the public in the event of a nuclear accident.

The insurance protection consists of two tiers. The primary tier provides $375 million in liability insurance coverage per incident. This first-tier coverage consists of the liability insurance provided by insurance pools. The pools are groups of insurance companies pledging assets that enable them to provide substantially higher coverage than an individual company could offer.

The primary tier amount is not sufficient to cover claims arising from an accident, a second tier of financial protection applies.

The second tier offers additional liability insurance coverage up to $12.6 billion per incident.

Each operating nuclear plant must pay a retrospective premium equal to its proportionate share of the excess loss, up to a maximum of $100.6 million per reactor per accident. This includes a $111.8 million premium that can increase to $117.5 million if a 5 percent surcharge to cover legal costs is included.

In addition, Congress can modify or increase the insurance liability coverage limits at any time through legislation.

All 104 operating nuclear reactors in the United States participate in the second-tier financial protection program.

Additional Disaster Relief Funds Available
If the entire insurance pool, including the initial $375 million and the additional $12.6 billion are exhausted, responding organizations like state and local governments can petition Congress for additional disaster relief under provisions of the Price-Anderson Act.

Taxpayers or the federal government do not pay for the insurance offered by Price-Anderson. Instead, utilities pay an annual premium for each reactor site. As of 2008, the average annual premium for a single-unit reactor site was $400,000.

Past Success: The Three Mile Island Accident
The Three Mile Island accident in 1979 demonstrated the ability of the Price-Anderson Act to effectively provide care for the public. Immediately following the accident, Pennsylvania’s governor recommended the evacuation of pregnant women and families with young children living in the area nearest the plant site. At the time of the accident, the private insurance pools had $140 million in first-tier coverage in force. The pools immediately assembled insurance adjusters from across the country at a central claims office in Harrisburg, Pa.

These adjusters advanced money to evacuated families for living expenses incurred while away from their homes, with the request that any unused funds be returned. Recipients responded by sending back several thousand dollars. In addition, the insurance pools reimbursed 636 individuals and families for lost wages as a result of the accident.

In addition to the cash advances and reimbursements, the insurance pools later settled a class-action suit for economic loss filed on behalf of residents in a 25-mile radius around Three Mile Island. The last of the litigation was resolved in 2003.

Insurance pools have paid approximately $71 million to date in claims and litigation costs connected with the Three Mile Island accident.

Program Updated and Expanded in 2005
Congress has extended the act several times, making significant alterations, most recently in the Energy Policy Act of 2005.

The Energy Policy Act of 2005 reinstated and extended the Price-Anderson Act for another 20 years—the longest extension Congress has granted.

This latest revision requires that nuclear plant operators purchase all private insurance available to them—currently $375 million—to serve as first-tier coverage. Companies also are obligated to contribute to the second-tier fund, in case the $375 million limit is not sufficient to cover claims.