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Compensation after nuclear accidents: Where should the limit be?

January 24, 2016

Panel begins debate on limit of compensation in event of nuclear accident




The Japan Atomic Energy Commission has started full discussions by experts on whether to limit the power plant operator’s liability to pay damage compensation in the event of a nuclear accident.

Currently, nuclear plant operators in Japan bear unlimited liability for compensation, but some experts demand that a ceiling be set for their responsibility.

The discussions are expected to be difficult, as limiting the liability would raise the problem of how to compensate affected people and businesses for the damage in excess of the limit.

For the March 2011 triple meltdown accident at Tokyo Electric Power Co.’s disaster-stricken Fukushima No. 1 plant, Tepco shoulders full liability for compensation under the nuclear compensation law.

But as Tepco alone cannot finance all the costs for compensation payments and decontamination work, the government set aside ¥9 trillion in assistance, which has been provided to the company through Nuclear Damage Compensation and Decommissioning Facilitation Corp., a public-private organization. Tepco repays the aid little by little.

Electric power industry people have been pushing for a cap on nuclear plant operators’ liability for compensation. “If the sky’s the limit for compensation, we cannot project an outlook for our nuclear energy business,” a senior official of a major power utility said.

In line with the government’s policy of continuing to use nuclear energy, an expert panel of the Japan Atomic Energy Commission started debate last year on any problems with the current compensation regime.

Some panel members argued for a limited liability system. “Shouldering risks that go beyond the limit of the private sector will impede fund procurement by electric power companies,” one member said.

On the other hand, a separate member said, “Limited liability is not an option, considering the current situation of Fukushima.”

There are also concerns that a narrower scope of responsibility for power companies could be detrimental to their commitment to safety.

With the panel divided sharply, a government official said no conclusion is expected at an early date.

The expert panel plans to produce a report on their discussions next year, and the government will subsequently start working on any necessary amendments to the nuclear compensation law.

Even if the nuclear compensation system is revised, past nuclear accidents will not be covered by a limited liability system.

Among countries that impose limits on an electric power company’s liability of compensation for a nuclear accident, the United States sets the maximum liability at $12.6 billion and Britain has a ceiling of £140 million ($199.7 million), according to the Japan Atomic Energy Commission. Under the U.S. system, if the scale of nuclear damage exceeds the limit, the president proposes a supplementary compensation program to the Congress.



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