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SUBSIDY TO NUCLEAR POWER THROUGH PRICE‐ANDERSON LIABILITY LIMIT
Author(s) -
DUBIN JEFFREY A.,
ROTHWELL GEOFFREY S.
Publication year - 1990
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.1990.tb00645.x
Subject(s) - damages , subsidy , liability , limit (mathematics) , economics , nuclear power , nuclear power plant , logistic distribution , business , actuarial science , agricultural economics , law , statistics , finance , logistic regression , mathematics , physics , nuclear physics , market economy , mathematical analysis , political science
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.