Student Post: Should Government Underwrite the Risks of Nuclear Energy?

In the case of a nuclear disaster who should be responsible for cleanup and compensation for damage? The Price-Anderson Act caps the liability of private companies and puts the rest of the burden on the Federal Government. It is hard to know what the actual costs of nuclear energy are because of government intervention in reducing liability. If nuclear facilities had to rely on private insurance, be liable for all damage, the game would definitely change. By limiting liability the government encourages risks that otherwise would not be undertaken. The costs of storing waste and protecting waste is also subsidized by the government. These costs are all costs that should be included in the price of energy created by nuclear power plants.

Private insurance companies have come to the conclusion that insuring nuclear power is too risky. The government has capped the liability of the nuclear power plants. The costs have simply been shifted to the taxpayers but these costs must be included in the price we pay for energy. If liability is capped why would the shareholders of the nuclear power plants care about safety? If full liability was placed on the nuclear power plants themselves you can be sure they would be much safer. If nuclear energy is that dangerous that private insurance companies will not provide insurance than is it worth the risk? If the costs of insurance are so high that nuclear power plants cannot be profitable than they should not exist. The costs still exist they are just being shifted to the taxpayer.

The government by limiting liability also encourages nuclear power plants to be built in areas they otherwise would not be built in. In Japan nuclear power plants are built in areas subject to tsunamis. In many European countries nuclear power plants are built next to residential areas. The “not in my backyard” approach in the United States has limited where nuclear power plants are built. While many people complain about NIMBY, with nuclear energy, it is probably a good thing. The costs of a disaster next to a residential area, farming area, fishing area, etc… would be huge. The costs of cleanup and reimbursing those injured would be given to the government. If the nuclear power plant had to cover all the costs you can be sure they would not build in certain areas. Government subsidizing the risks of nuclear power plants gives no incentives for nuclear power to be safe or to be built in areas where the damage would be minimal.

Shareholders of nuclear power plants are not held responsible for the damages caused by the nuclear facilities. In fact, like any public utility, nuclear power plants are given monopolies on energy in certain areas. The government creates these monopolies and then protects them from liability for damages. The true costs of nuclear energy will be realized once we have a disaster and the government steps in to pay for the damages. What happens if the government claims the nuclear power plant did everything right within regulations but still had an accident? Will those that are injured by compensated? Nuclear power plants should exist based on their ability to pay for their own insurance. If nuclear energy cannot be profitable, covering its own liability, than we should look to other ways in providing energy.