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The Pickering Nuclear Generating Station in Pickering, Ont. is pictured on March 16, 2011.

Darren Calabrese/THE CANADIAN PRESS

The Harper government says Canada's nuclear operators should not have to pay more than a billion dollars in total compensation in the event of a catastrophic incident at one of their reactors.

Natural Resources Minister Joe Oliver said Monday he will introduce legislation in the fall to increase the liability limit from the current $75-million – an amount set four decades ago and one that is widely recognized to be grossly inadequate.

One billion dollars is actually $350-million more than the government proposed in its four previous attempts to lift the cap that didn't make it through Parliament. And it would bring Canada in line with many of the other leading nuclear nations.

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But, as the cleanup continues at the Fukushima Daiichi nuclear power plant in Japan more than two years after an earthquake and tsunami caused equipment failures and meltdowns, critics question why there should be a cap at all. Estimates of the money needed to address the problems at the Japanese facility vary widely but the Tokyo Electric Power Company said last fall it could be $125-billion.

Norm Rubin, the director of nuclear research at the Toronto-based Energy Probe Research Foundation, said it makes sense to limit the amount of insurance a nuclear operator must carry because $1-billion worth of coverage is about as much as the insurance industry is willing to provide.

But it is illogical, said Mr. Rubin, to limit consequences of the nuclear operators' actions. The government, he said, is letting "them off scot-free for all of the damage that we know they can do that is higher than than mandatory insured amount," he said. "There is no reason to limit the rights of victims to get compensation from the company until the company runs out of money."

In addition to increasing the liability limit, Mr. Oliver said the period in which claims can be made after a nuclear incident will be increased to 30 from 10 years. The government also wants the authority to establish a tribunal to settle claims – which could circumvent the need for lengthy court proceedings.

And Canada would join the International Atomic Energy Agency's Convention on Supplementary Compensation for Nuclear Damage, which will address the potential transboundary impacts of a nuclear incident. "Once the convention comes into force – and it requires a few more countries to join – that would add another $450-million so the total would be $1.45-billion" in available compensation, said the minister.

When asked why the liability for a nuclear operator would be capped at $1-billion, Mr. Oliver said it is a question of judgment. "You have to take into account the fact that, if it gets too high, it gets more costly, ultimately, for the consumer. But also, at a certain point, it becomes a disincentive for the operator," he said.

Government documents say it is not in the best interests of Canadians to let a nuclear utility go bankrupt.

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Canada's nuclear operators welcomed the announcement that legislation was on its way. "We have consistently supported an increase in the liability limit," Heather Kleb, the president of the Canadian Nuclear Association, said in a statement. "We look forward to participating in the legislative process when it takes place."

But John Bennett, the executive director of the Sierra Club Canada, said a $1-billion cap is simply not adequate. "Mr. Oliver's action would only have meaning if it was accompanied by a commitment to phase out nuclear power as Sweden and Germany have begun," said Mr. Bennett.

And Shawn-Patrick Stensil, a nuclear analyst for Greenpeace, said the announcement was a clear win for the nuclear industry. "Even if these companies are negligent they can't be held accountable," Mr. Stensil said on his blog. "That's wrong."

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