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Benefits of 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 all the costs of nuclear-generated electricity, are borne by the industry, unlike the corresponding costs of some other power sources. Risks from hydropower mishaps (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.

Under the Price-Anderson framework, the public has paid nothing, 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.

Current Coverage Exceeds $10 Billion
Congress passed the Price-Anderson legislation in 1957 as an amendment to the Atomic Energy Act. President Eisenhower signed the measure into law shortly thereafter. It requires nuclear power plants to show evidence of financial protection. Licensees must provide a total of more than $10 billion in insurance coverage to compensate the public in the event of a nuclear accident. No portion is borne by taxpayers or the federal government.

This protection consists of two tiers. The primary level provides $300 million in liability insurance. This first-level coverage consists of the liability insurance provided by two private 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. If this amount is not sufficient to cover claims arising from an accident, secondary financial protection applies.

For this second level, each 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 $95.8 million premium and a 5 percent surcharge that may be applied, if needed, to legal costs. Currently, all 104 operating nuclear reactors are participating in the secondary financial protection program.