An empirical analysis of the Nuclear Liability Act (1970) in Canada

The Nuclear Liability Act (1970) limits the liability of nuclear reactor operators in Canada to the first $75 m of any off-site damage done by an accident. In recent litigation, the limitation has been challenged. It has been argued that the implicit subsidy which such a provision confers encourages the use of nuclear over other fuel sources and reduces safety incentives. During the litigation, it was contended that the value of the subsidy could be as high as 12 to 16 cents per kW h. We use numerical curve-fitting techniques to evaluate the subsidy using data implicit in insurance premiums and under a range of expert assessments regarding `worst caseʹ scenarios. In most cases, the subsidy is found to be less than 1 cent per kW h, and in no case is it greater than 4 cents. While the uninternalised costs are not trivial they are smaller than existing estimates of those associated with the use of alternative fuels.