Seven-fold increase in liability for nuclear sites announced
Nuclear operators will be expected to take on liability of €1.2 billion for each of their sites, an increase on the current level of £140 million, under proposals outlined by The Rt Hon Chris Huhne MP today.
The Rt Hon Chris Huhne MP, Secretary of State for Energy and Climate Change said:
“The coalition is clear on new nuclear: it has a role to play as part of a diverse energy mix in meeting the UK’s future needs, but it will not receive any public subsidy.
“Nuclear power is low carbon, secure and there is clearly an appetite from the private sector to build.
“The government is determined to provide certainty to low carbon investors, but there will be no public subsidy for nuclear power which is a mature technology. We are taking steps to reduce any risk of the taxpayer having to pick up the tab for new nuclear further down the track. We’ve already set out how operators will be required to put aside money from day one for their eventual clean up and waste storage, and now we’re increasing substantially the liability to be taken on by operators.”
The proposal to require operators to take on liability of €1.2 billion for each of their sites follows the changes to the Paris and Brussels Conventions on nuclear third party liability and is a seven-fold increase on the current level of £140 million. It is also more than the €700m minimum required under the revised Conventions.
There will also be an increase in the categories of damage for which operators are liable to include damage related to the environment. The geographical scope of those eligible to claim compensation will be widened, and any liabilities will be channelled automatically to the nuclear operator.
Notes for editors
The consultation on the Paris and Brussels Conventions will run from 24 January to 28 April 2011. The full document is available on the Paris and Brussels Conventions consultation web page.
The UK is a signatory to the Paris Convention on nuclear third party liability and Brussels Supplementary Convention (“the Conventions”) and has been since their inception in the 1960s. The Conventions establish an international (largely western European) framework for compensating victims of a nuclear incident and are implemented in the UK by the Nuclear Installations Act 1965 as amended (“the 1965 Act”). The Conventions have been revised periodically, the last time in 2004. The most recent amendments upgrade the existing regime and are intended to ensure that, in the unlikely event of a nuclear incident, an increased amount of compensation will be available to a larger number of victims in respect of a broader range of damage than is currently the case.
The UK has committed to ratifying the amended Conventions. The purpose of the consultation is to obtain views on the way that we intend to implement the changes in UK legislation. We intend to do this through an Affirmative Order made under section 76 of the Energy Act 2004.
The consultation sets out:
- Our proposal to set operator liability to €1200m, which is €500m more than the minimum required under the Conventions. This will be phased in over five years starting at €700m, when the revisions come into force, and increased annually by €100m each year;
- Our intention to set lower levels of liability for lower risk sites and for transport (where appropriate). We intend to set operator liability of €70m and €80m respectively.
- Our proposals for implementing the new categories of damage. We intend to “copy out” the wording and definitions used in the Conventions as far as this is possible and sensible, in line with the approach taken by other Convention countries.
- There will also be interest in how operators propose to find financial security or insurance to cover their new liabilities, particularly for those elements which the insurance market is unwilling to provide full cover, e.g. personal injury between 10 and 30 years. It may be necessary for Government to provide reinsurance for any gaps, if there is genuine market failure. We would do so for a charge based on our assessment of the risk we were taking on.
- The Rt Hon Chris Huhne MP made a written parliamentary statement in October defining what is meant by ‘no subsidy for new nuclear power’.