A Permanent Subsidy? Nuclear Power’s Price Anderson Act (5 Extensions, 89 years)

“The infant industry argument is a smoke screen,” wrote Milton and Rose Friedman in their 1979 classic, Free to Choose. “The so-called infants never grow up.” And several years later, the two wrote: “Nothing is so permanent as a temporary government program.” [1]

Previous posts have documented the “permanent subsidies” of industrial wind power (14 extensions) and of solar power (15 extensions). [2] Add nuclear liability protection to this list, although the technology has long been declared safe by the industry and its proponents.

The Nuclear Industries Indemnity Act of 1957 became law as Section 170 of the Atomic Energy Act of 1954. It was supposed to be a ten-year window to allow commercial nuclear power to prove its economy and safety. But the so-called Price-Anderson Act–capping damage claims “to protect the public and to encourage the development of the atomic energy industry”–is still with us, some two-thirds of a century later.

The 1957 law’s limit of $60 million per plant (about 10x in today’s dollars) was joined by an up-to-$500 million indemnification guarantee per accident. These provisions, vetted among the beneficiaries, was just enough to remove a major barrier to the commercialization of nuclear power for electric utilities sponsors and for builders Westinghouse, GE, and others. Rate base incentives for utilities was also crucial for the new energy industry to compete against coal and hydro for electrical generation.

No payouts resulted in the ten-year period, but the private sector was not ready to stand on its own. The involved parties lobbied for $100 million per accident, which became $74 million in a 10-year extension in 1966, a small increase in real terms. This first extension would not be the last….

Subsidy enough? Nope, the second extension came in 1975 (for 12 years); the third in 1988 (20 years, with the cap increased from $500 million to $9.43 billion); the fourth in 2005 (20 years); and fifth in 2024 (40 years, to 2066). [3]

Surely, nearly 70 years after the initial “temporary” law, the nuclear industry could have repealed Price-Anderson and let the private insurance market sort things out. Commercial nuclear power is safe, right? Claims under Price-Anderson have been small or none. The collected $13 billion would ensure a smooth transition to the private market. Safer units should not subsidize the less safe, right?

Wrong! The nuclear industry needed to remove 2025, and last year the talk was for a decade, maybe 20 years. And the industry got more under favorable political circumstances. The result: 40 years–to 2065.

“Congress’s 40-year extension of a law limiting how much money nuclear power companies are on the hook for prompted sighs of relief from the industry and supporters of the measure,” The Hill reported, “who say the liability limit provides certainty for insurers and investors in the carbon-free power source.” To critics, the sweetheart subsidy was done in darkness.

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[1] Milton and Rose Friedman, Free to Choose, p. 49; Tyranny of the Status Quo, p. 115.

[2] The tax credit for wind temporarily expired (without retroactive true-up) for a brief period in 1992.

[3] The extensions of the Nuclear Industries Indemnity Act of 1957 (Public Law 85-256, 71 Stat. 576) have been:

Price-Anderson Amendments Act of 1966 (Public Law 89-645, 80 Stat. 891)

Price-Anderson Amendments Act of 1975 (Public Law 94-197, 89 Stat 1111)

Price-Anderson Amendments Act of 1988 (Public Law 100-408, 102 Stat. 1066)

Price-Anderson Amendments Act of 2005, Public Law 109-58, 119 Stat. 594)

Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy Act of 2024, S.870.

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