Nuclear Regulation: NRC's Liability Insurance Requirements for	 
Nuclear Power Plants Owned by Limited Liability Companies	 
(28-MAY-04, GAO-04-654).					 
                                                                 
An accident at one the nation's commercial nuclear power plants  
could result in human health and environmental damages. To ensure
that funds would be available to settle liability claims in such 
cases, the Price-Anderson Act requires licensees for these plants
to have primary insurance--currently $300 million per site. The  
act also requires secondary coverage in the form of retrospective
premiums to be contributed by all licensees to cover claims that 
exceed primary insurance. If these premiums are needed, each	 
licensee's payments are limited to $10 million per year and $95.8
million in total for each of its plants. In recent years, limited
liability companies have increasingly become licensees of nuclear
power plants, raising concerns about whether these companies--by 
shielding their parent corporations' assets--will have the	 
financial resources to pay their retrospective premiums. GAO was 
asked to determine (1) the extent to which limited liability	 
companies are the licensees for U.S. commercial nuclear power	 
plants, (2) the Nuclear Regulatory Commission's (NRC)		 
requirements and procedures for ensuring that licensees of	 
nuclear power plants comply with the Price-Anderson Act's	 
liability requirements, and (3) whether and how these procedures 
differ for licensees that are limited liability companies.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-654 					        
    ACCNO:   A10247						        
  TITLE:     Nuclear Regulation: NRC's Liability Insurance	      
Requirements for Nuclear Power Plants Owned by Limited Liability 
Companies							 
     DATE:   05/28/2004 
  SUBJECT:   Liability insurance				 
	     Nuclear powerplants				 
	     Insurance premiums 				 

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GAO-04-654

United States General Accounting Office

                     GAO Report to Congressional Requesters

May 2004

NUCLEAR REGULATION

NRC's Liability Insurance Requirements for Nuclear Power Plants Owned by Limited
                              Liability Companies

                                       a

GAO-04-654

Highlights of GAO-04-654, a report to congressional requesters

An accident at one the nation's commercial nuclear power plants could
result in human health and environmental damages. To ensure that funds
would be available to settle liability claims in such cases, the
Price-Anderson Act requires licensees for these plants to have primary
insurance-currently $300 million per site. The act also requires secondary
coverage in the form of retrospective premiums to be contributed by all
licensees to cover claims that exceed primary insurance. If these premiums
are needed, each licensee's payments are limited to $10 million per year
and $95.8 million in total for each of its plants. In recent years,
limited liability companies have increasingly become licensees of nuclear
power plants, raising concerns about whether these companies-by shielding
their parent corporations' assets-will have the financial resources to pay
their retrospective premiums.

GAO was asked to determine (1) the extent to which limited liability
companies are the licensees for U.S. commercial nuclear power plants, (2)
the Nuclear Regulatory Commission's (NRC) requirements and procedures for
ensuring that licensees of nuclear power plants comply with the
Price-Anderson Act's liability requirements, and (3) whether and how these
procedures differ for licensees that are limited liability companies.

www.gao.gov/cgi-bin/getrpt?GAO-04-654.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Jim Wells at 202-512-3841.

May 2004

NUCLEAR REGULATION

NRC's Liability Insurance Requirements for Nuclear Power Plants Owned by Limited
Liability Companies

Of the 103 operating nuclear power plants, 31 are owned by 11 limited
liability companies. Three energy corporations-Exelon, Entergy, and the
Constellation Energy Group-are the parent companies for eight of these
limited liability companies. These 8 subsidiaries are the licensees or
colicensees for 27 of the 31 plants.

NRC requires all licensees for nuclear power plants to show proof that
they have the primary and secondary insurance coverage mandated by the
Price-Anderson Act. Licensees obtain their primary insurance through
American Nuclear Insurers. Licensees also sign an agreement with NRC to
keep the insurance in effect. American Nuclear Insurers also has a
contractual agreement with each of the licensees to collect the
retrospective premiums if these payments become necessary. A certified
copy of this agreement, which is called a bond for payment of
retrospective premiums, is provided to NRC as proof of secondary
insurance. It obligates the licensee to pay the retrospective premiums to
American Nuclear Insurers.

NRC does not treat limited liability companies differently than other
licensees with respect to the Price-Anderson Act's insurance requirements.
Like other licensees, limited liability companies must show proof of both
primary and secondary insurance coverage. American Nuclear Insurers also
requires limited liability companies to provide a letter of guarantee from
their parent or other affiliated companies with sufficient assets to pay
the retrospective premiums. These letters state that the parent or
affiliated companies are responsible for paying the retrospective premiums
if the limited liability company does not. American Nuclear Insurers
informs NRC it has received these letters. In light of the increasing
number of plants owned by limited liability companies, NRC is studying its
existing regulations and expects to report on its findings by the end of
summer 2004.

In commenting on a draft of this report, NRC stated that it accurately
reflects the present insurance system for nuclear power plants.

Source: NRC.
Aerial view of the Three Mile Island Nuclear Station in Pennsylvania,
where the most serious
accident at a U.S. nuclear power plant occurred in March 1979, resulting
in $70 million in liability
claims.

Contents

    Letter                                                                  1 
                                  Results in Brief                          2 
                                     Background                             4 
              Limited Liability Companies Are Licensees for 31 of the 103 

Operating Commercial Nuclear Power Plants in the United States 6

NRC Has Specific Requirements and Procedures to Ensure That All Licensees
Comply with the Price-Anderson Act's Liability Provisions 7

NRC Treats Limited Liability Companies the Same as Other Licensees, but
the Insurance Industry Has Added Important Requirements for These
Companies 9

Agency Comments 10 Scope and Methodology 10

Appendixes                                                              
               Appendix I:          Nuclear Power Plant Ownership          14 
              Appendix II: Comments from the Nuclear Regulatory Commission 21 
                            Table 1: Limited Liability Companies Licensed  
     Table                               to Operate Nuclear                
                               Power Plants and Their Parent Companies     

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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separately.

A

United States General Accounting Office Washington, D.C. 20548

May 28, 2004

Congressional Requesters

An accident at one of the nation's 1031 operating commercial nuclear power
plants could result in human health and environmental damages. The
Price-Anderson Act was enacted in 1957 to ensure that funds would be
available for at least a portion of the damages suffered by the public in
the event of an incident at a U.S. nuclear power plant. The act requires
each licensee of a nuclear plant to have primary insurance coverage equal
to the maximum amount of liability insurance available from private
sources-currently $300 million-to settle any such claims against it. In
the event of an accident at any plant where liability claims exceed the
$300 million primary insurance coverage, the act also requires licensees
for all plants to pay retrospective premiums (also referred to as
secondary insurance). Under current U.S. Nuclear Regulatory Commission
(NRC) regulations, these payments could amount to a maximum of $95.8
million for each of a licensee's plants per incident. If claims for an
incident exceed this approximately $10 billion currently available in
primary insurance and retrospective premiums, NRC may request additional
funds from the Congress. To operate a nuclear power plant, the owner must
obtain a license from NRC and meet its regulatory requirements, including
those for liability insurance established under the Price-Anderson Act.

A major aspect of the deregulation or restructuring of the U.S.
electricity industry in the 1990s was the separation of electricity
generation from transmission and distribution. Utilities could create
separate entities or subsidiaries to operate their generation facilities,
including nuclear power plants, or could sell them off to other companies.
Energy holding companies bought some of the generation facilities,
sometimes placing them under subsidiaries. The limited liability company
also emerged in the 1990s as a new type of company structure in the United
States. These companies have characteristics of both a partnership and a
corporation. Like a partnership, the profits are passed through and
taxable to the owners, known as members; like a corporation, it is a
separate and distinct legal entity and its owners are insulated from
personal liability for its debts and liabilities.

1Although 104 commercial nuclear power plants are licensed to operate in
the United States, 1 plant, Browns Ferry Unit 1, was shut down in 1985 and
remains idle.

You asked us to determine (1) the extent to which limited liability
companies are the licensees for U.S. commercial nuclear power plants, (2)
NRC's requirements and procedures for ensuring that licensees of nuclear
power plants comply with the Price-Anderson Act's liability requirements,
and (3) whether and how these procedures differ for licensees that are
limited liability companies. To respond to your request, we reviewed
applicable sections of the Price-Anderson Act and NRC's implementing
regulations and written procedures. We also held discussions with and
obtained information from responsible NRC officials and representatives of
American Nuclear Insurers, which is a joint underwriting association of 50
insurance companies that provides insurance coverage to the nuclear power
plants. These are property/casualty insurance companies licensed to do
business in at least one of the states or territories of the United
States. We performed our work between April 2003 and April 2004 in
accordance with generally accepted government auditing standards.

Results in Brief	Thirty-one of the 103 operating commercial nuclear power
plants nationwide are licensed to limited liability companies. Four of the
31 plants are licensed jointly to two limited liability companies. A total
of 11 limited liability companies are licensed to own nuclear power
plants. One-the Exelon Generation Company, LLC-is the licensee for 12
plants and colicensee for 4 plants. The 10 other limited liability
companies are the licensees or co-licensees for one to five plants. Three
energy corporations-Exelon, Entergy, and the Constellation Energy
Group-are the parent companies for eight of the limited liability
companies. These eight subsidiaries are the licensees or co-licensees for
27 of the 31 plants.

NRC's procedures for ensuring that licensees comply with Price-Anderson
Act liability insurance provisions include requirements that licensees
provide proof of primary and secondary insurance coverage. NRC requires
each licensee to show proof that it has liability insurance that includes
the $300 million of primary insurance coverage per site required by the
Price-Anderson Act. NRC and the licensee also sign an indemnity agreement
that requires the licensee to maintain an insurance policy in this amount.
This agreement is in effect as long as the owner is licensed to operate
the plant. NRC relies on American Nuclear Insurers-the joint underwriting
association that provides insurance for U.S. nuclear power plants-to send
NRC the annual endorsements documenting proof of insurance after the
licensees have paid their annual premiums. In addition to the primary
insurance coverage, licensees must also show proof of secondary insurance
to NRC. This secondary insurance is in the form of retrospective

premiums that, in the event of a nuclear incident causing damages
exceeding $300 million, would be collected from each nuclear power plant
licensee at a rate of up to $10 million per year and up to a maximum of
$95.8 million per incident for each nuclear power plant. Typically, each
licensee signs a bond for payment of retrospective premiums as proof of
the secondary insurance and furnishes NRC with a certified copy. This bond
is a contractual agreement between the licensee and American Nuclear
Insurers that obligates the licensee to pay American Nuclear Insurers the
retrospective premiums. In the event that claims exhaust primary coverage,
American Nuclear Insurers would collect the retrospective premiums. If a
licensee did not pay its share of these retrospective premiums, American
Nuclear Insurers would, under its agreement with the licensees, pay up to
$30 million of the premiums in 1 year and attempt to collect this amount
later from the licensees.

NRC does not treat limited liability companies differently than other
licensees of nuclear power plants with respect to Price-Anderson Act
liability requirements. All licensees follow the same regulations and
procedures regardless of whether they are limited liability companies.
Like other licensees, limited liability companies are required to show
that they are maintaining $300 million in primary insurance coverage, and
they provide NRC a copy of the bond for payment of retrospective premiums.
While NRC does not conduct in-depth financial reviews specifically to
determine licensees' ability to pay retrospective premiums, when a
licensee applies for a license or when the license is transferred, NRC
reviews the licensee's financial ability to safely operate the plant and
to contribute decommissioning funds for the future retirement of the
plant. According to NRC officials, if licensees have the financial
resources to cover these two expenses, they are likely to be capable of
paying their retrospective premiums. American Nuclear Insurers goes
further than NRC and requires limited liability companies to provide a
letter of guarantee from their parent or other affiliated companies with
sufficient assets to cover the retrospective premiums. These letters state
that the parent or an affiliated company is responsible for paying the
retrospective premiums if the limited liability company does not. American
Nuclear Insurers informs NRC that it has received these letters of
guarantee. Recognizing that limited liability companies are becoming more
prevalent as owners of nuclear power plants, NRC is examining whether it
needs to revise any of its regulations and procedures for these companies.
NRC estimates the study will be completed by the end of summer 2004.

In commenting on a draft of this report, NRC stated that it accurately
reflects the present insurance system for nuclear power plants.

Background	The Atomic Energy Act of 1954 authorized a comprehensive
regulatory program to permit private industry to develop and apply atomic
energy for peaceful uses, such as generating electricity from privately
owned nuclear power plants. Soon thereafter, government and industry
experts identified a major impediment to accomplishing the act's
objective: the potential for payment of damages resulting from a nuclear
accident and the lack of adequate available insurance. Unwilling to risk
huge financial liability, private companies viewed even the remote specter
of a serious accident as a roadblock to their participating in the
development and use of nuclear power.2 In addition, congressional concern
developed over ensuring adequate financial protection to the public
because the public had no assurance that it would receive compensation for
personal injury or property damages from the liable party in event of a
serious accident. Faced with these concerns, the Congress enacted the
Price-Anderson Act in September 1957. The Price-Anderson Act has two
underlying objectives: (1) to establish a mechanism for compensating the
public for personal injury or property damage in the event of a nuclear
accident and (2) to encourage the development of nuclear power.

To provide financial protection, the Price-Anderson Act requires
commercial nuclear reactors to be insured to the maximum level of primary
insurance available from private insurers. To implement this provision,
NRC periodically revises its regulations to require licensees of nuclear
reactors to increase their coverage level as the private insurance market
increases the maximum level of primary insurance that it is willing to
offer. For example, in January 2003, NRC increased the required coverage
from $200 million to the current $300 million, when American Nuclear
Insurers informed NRC that $300 million per site in coverage was now
available in its insurance pool.

In 1975, the Price-Anderson Act was amended to require licensees to pay a
pro-rated share of the damages in excess of the primary insurance amount.

2NRC's regulations define a nuclear incident as any occurrence that causes
bodily injury, sickness, disease, or death or loss of or damage to
property or for loss of the use of property arising out of or resulting
from the radioactive, toxic, explosive, or other hazardous properties of
the source, special nuclear or byproduct material.

Under this amendment, each licensee would pay up to $5 million in
retrospective premiums per facility it owned per incident if a nuclear
accident resulted in damages exceeding the amount of primary insurance
coverage. In 1988, the act was further amended to increase the maximum
retrospective premium to $63 million per reactor per incident to be
adjusted by NRC for inflation. The amendment also limited the maximum
annual retrospective premium per reactor to $10 million. Under the act,
NRC is to adjust the maximum amount of retrospective premiums every 5
years using the aggregate change in the Consumer Price Index for urban
consumers. In August 2003, NRC set the current maximum retrospective
payment at $95.8 million per reactor per incident. With 103 operating
nuclear power plants, this secondary insurance pool would total about $10
billion.3

The Price-Anderson Act also provides a process to deal with incidents in
which the damages exceed the primary and secondary insurance coverage.
Under the act, NRC shall survey the causes and extent of the damage and
submit a report on the results to, among others, the Congress and the
courts. The courts must determine whether public liability exceeds the
liability limits available in the primary insurance and secondary
retrospective premiums. Then the President would submit to the Congress an
estimate of the financial extent of damages, recommendations for
additional sources of funds, and one or more compensation plans for full
and prompt compensation for all valid claims. In addition, NRC can request
the Congress to appropriate funds. The most serious incident at a U.S.
nuclear power plant took place in 1979 at the Three Mile Island Nuclear
Station in Pennsylvania. That incident has resulted in $70 million in
liability claims.

NRC's regulatory activities include licensing nuclear reactors and
overseeing their safe operation. Licensees must meet NRC regulations to
obtain and retain their license to operate a nuclear facility. NRC carries
out reviews of financial qualifications of reactor licensees when they
apply for a license or if the license is transferred, including requiring
applicants to demonstrate that they possess or have reasonable assurance
of obtaining funds necessary to cover estimated operating costs for the
period of the license. NRC does not systematically review its licensees'
financial qualifications once it has issued the license unless it has
reason to believe

3NRC regulations also require licensees to maintain $1 billion in on-site
property damage insurance to provide funds to deal with cleanup of the
reactor site after an accident.

this is necessary. In addition, NRC performs inspections to verify that a
licensee's activities are properly conducted to ensure safe operations in
accordance with NRC's regulations. NRC can issue sanctions to licensees
who violate its regulations. These sanctions include notices of violation;
civil penalties of up to $100,000 per violation per day; and orders that
may modify, suspend, or revoke a license.

  Limited Liability Companies Are Licensees for 31 of the 103 Operating
  Commercial Nuclear Power Plants in the United States

Thirty-one commercial nuclear power plants nationwide are licensed to
limited liability companies. In total, 11 limited liability companies are
licensed to own nuclear power plants. Three energy corporations-Exelon,
Entergy, and the Constellation Energy Group-are the parent companies for 8
of these limited liability companies. These eight subsidiaries are
licensed or co-licensed to operate 27 of the 31 plants. The two
subsidiaries of the Exelon Corporation are the licensees for 15 plants and
the colicensees for 4 others. Constellation Energy Group, Inc., and
Entergy Corporation are the parent companies of limited liability
companies that are licensees for four nuclear power plants each. (See
table 1.)

 Table 1: Limited Liability Companies Licensed to Operate Nuclear Power Plants
                           and Their Parent Companies

                                                             Number of plants 
    Limited liability company          Parent company                owned or 
                                                                     co-owned 
    Exelon Generation Company,       Exelon Corporation      
               LLC                                           
AmerGen Energy Company, LLC       Exelon Corporation      
    Exelon Generation Company,   Exelon Corporation; Public  
      LLC; PSEG Nuclear, LLC         Service Enterprise      
                                    Group, Incorporated      
        PSEG Nuclear, LLC       Public Service Enterprise    
                                Group, Incorporated          
Calvert Cliffs Nuclear Power Constellation Energy Group,  
            Plant, LLC                      Inc.             
     Nine Mile Point Nuclear    Constellation Energy Group,  
           Station, LLC                     Inc.             
Entergy Nuclear Indian Point     Entergy Corporation      
              2, LLC                                         
Entergy Nuclear Indian Point     Entergy Corporation                     1 
              3, LLC                                         
Entergy Nuclear FitzPatrick,     Entergy Corporation                     1 
               LLC                                           
     Entergy Nuclear Vermont        Entergy Corporation                     1 
           Yankee, LLC                                       
     FPL Energy Seabrook, LLC         FPL Group, Inc.                       1 
       PPL Susquehanna, LLC     Pennsylvania Power and Light                2 
                                          Company            
    Source: GAO survey of NRC                                
        project managers.                                    

Of all the limited liability companies, Exelon Generation Company, LLC,
has the largest number of plants. It is the licensee for 12 plants and
colicensee with PSEG Nuclear, LLC, for 4 other plants. For these 4 plants,
Exelon Generation owns 43 percent of Salem Nuclear Generating Stations 1
and 2 and 50 percent of Peach Bottom Atomic Power Stations 2 and 3. (App.
I lists all the licensees and their nuclear power plants.)

  NRC Has Specific Requirements and Procedures to Ensure That All Licensees
  Comply with the Price-Anderson Act's Liability Provisions

NRC requires licensees of nuclear power plants to comply with the
Price-Anderson Act's liability insurance provisions by maintaining the
necessary primary and secondary insurance coverage. First, NRC ensures
that licensees comply with the primary insurance coverage requirement by
requiring them to submit proof of coverage in the amount of $300 million.
Second, NRC ensures compliance with the requirement for secondary coverage
by accepting the certified copy of the licensee's bond for payment of
retrospective premiums.

All the nuclear power plant licensees purchase their primary insurance
from American Nuclear Insurers. American Nuclear Insurers sends NRC annual
endorsements documenting proof of primary insurance after the licensees
have paid their annual premiums. NRC and each licensee also sign an
indemnity agreement, stating that the licensee will maintain an insurance
policy in the required amount. This agreement, which is in effect as long
as the owner is licensed to operate the plant, guarantees reimbursement of
liability claims against the licensee in the event of a nuclear incident
through the liability insurance. The agency can suspend or revoke the
license if a licensee does not maintain the insurance, but according to an
NRC official, no licensee has ever failed to pay its annual primary
insurance premium and American Nuclear Insurers would notify NRC if a
licensee failed to pay.4

As proof of their secondary insurance coverage, licensees must provide
evidence that they are maintaining a guarantee of payment of retrospective
premiums. Under NRC regulations, the licensee must provide NRC with
evidence that it maintains one of the following six types of guarantees:
(1) surety bond, (2) letter of credit, (3) revolving credit/term loan
arrangement, (4) maintenance of escrow deposits of government securities,
(5) annual

4The average annual premium for a single nuclear power plant at a site is
about $400,000. The premium for a second or third plant at the same site
is discounted because the maximum amount of primary insurance for a
multi-plant site is $300 million.

certified financial statement showing either that a cash flow can be
generated and would be available for payment of retrospective premiums
within 3 months after submission of the statement or a cash reserve or
combination of these, or (6) such other type of guarantee as may be
approved by the Commission.

Before the late 1990s, the licensees provided financial statements to NRC
as evidence of their ability to pay retrospective premiums.5 According to
NRC officials, in the late 1990s, Entergy asked NRC to accept the bond for
payment of retrospective premiums that it had with American Nuclear
Insurers as complying with the sixth option under NRC's regulations: such
other type of guarantee as may be approved by the Commission. After
reviewing and agreeing to Entergy's request, NRC decided to accept the
bond from all the licensees as meeting NRC's requirements. NRC officials
told us that they did not document this decision with Commission papers or
incorporate it into the regulations because they did not view this as
necessary under the regulations.

The bond for payment of retrospective premiums is a contractual agreement
between the licensee and American Nuclear Insurers that obligates the
licensee to pay American Nuclear Insurers the retrospective premiums. Each
licensee signs this bond and furnishes NRC with a certified copy. In the
event that claims exhaust primary coverage, American Nuclear Insurers
would collect the retrospective premiums. If a licensee were not to pay
its share of these retrospective premiums, American Nuclear Insurers
would, under its agreement with the licensees, pay for up to three
defaults or up to $30 million in 1 year of the premiums and attempt to
collect this amount later from the defaulting licensees. According to an
American Nuclear Insurers official, any additional defaults would reduce
the amount available for retrospective payments. An American Nuclear
Insurers official told us that his organization believes that the bond for
payment of retrospective premiums is legally binding and obligates the
licensee to pay the premium. Under NRC regulations, if a licensee fails to
pay the assessed deferred premium, NRC reserves the right to pay those
premiums on behalf of the licensee and recover the amount of such premiums
from the licensee.

5Fifteen licensees continue to provide financial statements to NRC.

  NRC Treats Limited Liability Companies the Same as Other Licensees, but the
  Insurance Industry Has Added Important Requirements for These Companies

NRC applies the same rules to limited liability companies that it does to
other licensees of nuclear power plants with respect to liability
requirements under the Price-Anderson Act.

All licensees must meet the same requirements regardless of whether they
are limited liability companies. American Nuclear Insurers applies an
additional requirement for limited liability companies with respect to
secondary insurance coverage in order to ensure that they have sufficient
assets to pay retrospective premiums. Given the growing number of nuclear
power plants licensed to limited liability companies, NRC is examining the
need to revise its procedures and regulations for such companies.

NRC requires all licensees of nuclear power plants to follow the same
regulations and procedures. Limited liability companies, like other
licensees, are required to show that they are maintaining the $300 million
in primary insurance coverage and provide NRC a copy of the bond for
payment of retrospective premiums or other approved evidence of guarantee
of retrospective premium payments. According to NRC officials, all its
licensees, including those that are limited liability companies, have
sufficient assets to cover the retrospective premiums. While NRC does not
conduct in-depth financial reviews specifically to determine licensees'
ability to pay retrospective premiums, it reviews the licensees' financial
ability to safely operate their plants and to contribute decommissioning
funds for the future retirement of the plants. According to NRC officials,
if licensees have the financial resources to cover these two larger
expenses, they are likely to be capable of paying their retrospective
premiums.

American Nuclear Insurers goes further than NRC and requires licensees
that are limited liability companies to provide a letter of guarantee from
their parent or other affiliated companies with sufficient assets to cover
the retrospective premiums. An American Nuclear Insurers official stated
that American Nuclear Insurers obtains these letters as a matter of good
business practice. These letters state that the parent or an affiliated
company is responsible for paying the retrospective premiums if the
limited liability company does not. If the parent company or other
affiliated company of a limited liability company does not provide a
letter of guarantee, American Nuclear Insurers could refuse to issue the
bond for payment of retrospective premiums and the company would have to
have another means to show NRC proof of secondary insurance. American
Nuclear Insurers informs NRC that it has received these letters of

guarantee. The official also told us that American Nuclear Insurers
believes that the letters from the parent companies or other affiliated
companies of the limited liability company licensed by NRC are valid and
legally enforceable contracts.

NRC officials told us that they were not aware of any problems caused by
limited liability companies owning nuclear power plants and that NRC
currently does not regard limited liability companies' ownership of
nuclear power plants as a concern. However, because these companies are
becoming more prevalent as owners of nuclear power plants, NRC is
examining whether it needs to revise any of its regulations or procedures
for these licensees. NRC estimates that it will complete its study by the
end of summer 2004.

Agency Comments	We provided a draft of this report to NRC for review and
comment. In its written comments (see app. II), NRC stated that it
believes the report accurately reflects the present insurance system for
nuclear power plants. NRC said that we correctly conclude that the agency
does not treat limited liability companies differently than other
licensees with respect to Price-Anderson's insurance requirements. NRC
also stated that we are correct in noting that it is not aware of any
problems caused by limited liability companies owning nuclear power plants
and that NRC currently does not regard limited liability companies'
ownership of nuclear power plants as a concern. In addition, NRC commented
that we agree with the agency's conclusion that all its reactor licensees
have sufficient assets that they are likely to be able to pay the
retrospective premiums. With respect to this last comment, the report does
not take a position on the licensees' ability to pay the retrospective
premiums. We did not evaluate the sufficiency of the individual licensees'
assets to make these payments. Instead, we reviewed NRC's and the American
Nuclear Insurers' requirements and procedures for retrospective premiums.

Scope and	We performed our review at NRC headquarters in Washington, D.C.
We reviewed statutes, regulations, and appropriate guidance as well as

Methodology	interviewed agency officials to determine the relevant
statutory framework of the Price-Anderson Act. To determine the number of
nuclear power plant licensees that are limited liability companies, we
surveyed, through electronic mail, all the NRC project managers
responsible for maintaining nuclear power plant licenses. We asked them to
provide data on the

licensees, including the licensee's name and whether it was a limited
liability company. If it was a limited liability company, we asked when
the license was transferred to the limited liability company and who is
the parent company of the limited liability company. We received responses
for all 103 nuclear power plants currently licensed to operate. We
analyzed the results of the survey responses. We verified the reliability
of the data from a random sample of project managers by requesting copies
of the power plant licenses and then comparing the power plant licenses to
the data provided by the project managers. The data agreed in all cases.
We concluded that the data were reliable enough for the purposes of this
report.

To determine NRC's requirements for ensuring that licensees of nuclear
power plants comply with the Price-Anderson Act's liability requirements,
we reviewed relevant statutes and NRC regulations and interviewed NRC
officials responsible for ensuring that licensees have primary and
secondary insurance coverage. We also spoke with American Nuclear Insurers
officials responsible for issuing the insurance coverage to nuclear power
plant licensees, and we reviewed relevant documents associated with the
insurance. To determine whether and how these procedures differ for
licensees that are limited liability companies, we reviewed relevant
documents, including NRC regulations, and interviewed NRC officials
responsible for ensuring licensee compliance with Price-Anderson Act
requirements.

As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 7 days from
the date of this letter. We will then send copies to interested
congressional committees; the Commissioners, Nuclear Regulatory
Commission; the Director, Office of Management and Budget; and other
interested parties. We will make copies available to others on request. In
addition, the report will be available at no charge on GAO's Web site at
http://www.gao.gov.

If you or your staff have any questions about this report, I can be
reached at (202) 512-3841. Major contributors to this report include Ray
Smith, Ilene Pollack, and Amy Webbink. John Delicath and Judy Pagano also
contributed to this report.

Jim Wells Director, Natural Resources and Environment

List of Congressional Requesters

The Honorable Hillary Rodham Clinton The Honorable James M. Jeffords The
Honorable Harry Reid United States Senate

                                   Appendix I

                         Nuclear Power Plant Ownership

                     Page 14 GAO-04-654 Nuclear Regulation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Calvert                                            
                                            LLC    Arkansas  Entergy        Arkansas  Entergy                                                Central           Corn Belt                                            Ohio          FirstEnergy                                           Ohio          Cleveland           Toledo         FirstEnergy                   Exelon                                          Exelon                                                       Power                                 Power                                  Power         Brunswick                            North                         Brunswick                            North                          Byron    Exelon                                 Byron    Exelon                                          Union           Calvert Cliffs                                        
    License   Plant Licensed LLC transfer parent   Nuclear  Arkansas, No    Nuclear  Arkansas, No                       No    Center       Iowa Power  No        Power    No    Beaver               No    1       Edison  No     Nuclear     No    Beaver               No    2       Edison  No     Electric     No     Edison  No     Nuclear     No    Braidwood Generation Yes 1/12/2001   Exelon     Braidwood Generation Yes 1/12/2001   Exelon                       No    Station     9                   No    Station     10                   No    Station     11 Steam     Carolina No    Plant       Carolina  No     Agency    12 Steam     Carolina No    Plant       Carolina  No     Agency    13 Station Generation Yes 1/12/2001   Exelon    14 Station Generation Yes 1/12/2001   Exelon    15 Callaway Electric No   16 Cliffs  Nuclear Yes                                   
                     to own      date     company   One 1     Inc.           One 2     Inc.          Arnold  Interstate                    Cooperative        Cooperative       Valley  Pennsylvania               Company        Operating         Valley  Pennsylvania               Company        Illuminating        Company        Operating         Station 1  Company,                Corporation  Station 2  Company,                Corporation  Browns  Tennessee          1          Browns  Tennessee          2           Browns  Tennessee          3           Electric  Power &          1         Eastern                       Electric  Power &          2         Eastern                          1     Company,                Corporation       2     Company,                Corporation     Plant   Company          Nuclear  Power                                        
                                                                                                     (Duane) Power and                                                          Power      Power                                  Company           Power      Power                                  Company                            Company                        LLC                                             LLC                                 Ferry   Valley                        Ferry   Valley                         Ferry   Valley                                   Light                     Municipal                                Light                     Municipal                                LLC                                             LLC                                                            Power   Plant,                Constellation  Plant    
                                                                                                     Energy    Light                                                            Station   Company                                                   Station   Company                                                                                                                                                                                      Nuclear Authority                     Nuclear Authority                      Nuclear Authority                                  Co.                      Power                                     Co.                      Power                                                                                                                                                             LLC       6/19/2001 Energy Group,    1      Inc.

Appendix I
Nuclear Power Plant Ownership

                         (Continued From Previous Page)

                     Page 15 GAO-04-654 Nuclear Regulation
                                                             Calvert                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                            LLC      Calvert Cliffs                                                Catawba                              Saluda River                            Catawba North                     Piedmont          Clinton AmerGen                                                                          Comanche                  Electric        Comanche                  Electric                               Power                               Power        Cooper  Nebraska                                                                                                                              City of                                       Orlando                          Seminole           Davis-Besse                                  Toledo                                          
    License   Plant Licensed LLC transfer parent  17 Cliffs  Nuclear Yes                          Plant    Inc. 18 Nuclear   North    No     Corp.        Electric   No     Duke Energy No   19 Nuclear Carolina  No     No.      Municipal No   20  Power   Energy  Yes 11/24/1999   Exelon    21  Columbia            No    Station     22   Peak              No    Station      23   Peak              No    Station      24 Cook    Indiana  No    Plant     25 Cook    Indiana  No    Plant     26 Nuclear  Public  No   27 Crystal             No    3       City of No     City of  No       City of   No      City of  No     City of  No     New       No     Commission            No     Utilities  No     Orlando        Electric   No   28 Nuclear     Cleveland    No    Station       Edison  No   29         Pacific  No             
                     to own      date     company    Nuclear Power                                  2              Station  Carolina                    Cooperative,        Corporation         Station Municipal         1         Power           Station Company,                Corporation    Generation                                 Steam      TXU              1             Steam      TXU              2            (Donald Michigan         1          (Donald Michigan         2          Station  Power           River     Florida                 Alachua        Bushnell        Gainesville        Kissimmee        Leesburg        Smyrna                           City         Commission                     Cooperative,         Power       Electric                         Company         Diablo  Gas and        Power    
                                                     Power   Plant,                Constellation                   1        Electric                        Inc.                                2       Power                      Agency                     LLC                                              Energy                                 Generation                                Generation                       C.)      Power                      C.)      Power                              District         Nuclear    Power                                                                                                     Beach and                         of          and City                           Inc.                         Illumination                                     Canyon  Electric       Plant    
                                                             LLC         6/19/2001 Energy Group,                           Membership                                                                   Agency                                                                                                Northwest                               Company LP                                Company LP                       Nuclear Company                     Nuclear Company                                              Plant   Corporation                                                                                                  Utilities                        Ocala        of                                                              Company                                          Nuclear Company          1      

Appendix I
Nuclear Power Plant Ownership

                         (Continued From Previous Page)

                     Page 16 GAO-04-654 Nuclear Regulation
                                                                                                                                                                                                                                                                                                                                                                                                        Omaha                                                    Grand     System          South                                                    North                                                           Municipal                                                                             Municipal                                                                                                                                   Entergy                                    Entergy                                                                                  
                    Licensed     transfer LLC                Pacific        Power        Dresden   Exelon                             Station        Dresden   Exelon                             Station        Farley                Plant        Farley                Plant                               Power                      Entergy                                Nuclear         Fort    Public          Ginna   Rochester                        Gulf      Energy          Mississippi                   Carolina       Power       Carolina                       Hatch                Plant       Electric         Oglethorpe         City of          Hatch                Plant       Electric         Oglethorpe         City of         Hope                                                                Group,       Indian Nuclear                Entergy      Indian Nuclear                  Entergy      Kewaunee Wisconsin                   Wisconsin     
    License   Plant  to own  LLC date     parent  30 Diablo  Gas and  No    Plant     31 Nuclear Generation Yes                          2        32 Nuclear Generation Yes                          3        33 (Joseph Alabama No      1       34 (Joseph Alabama No      2       35  Fermi   Detroit No    Plant     36               Nuclear    Yes                          Power      37 Calhoun  Power   No   38 (Robert Gas and     No    Station     39 Nuclear Resources, No     Electric    No   40 Harris    Power &  No    Plant       Eastern   No     Agency    41 (Edwin  Georgia No      1         Authority No        Power    No     Dalton, No   42 (Edwin  Georgia No      2         Authority No        Power    No     Dalton, No   43 Creek     PSEG   Yes                Public  Station   10/18/2001 Incorporated 44 Point  Indian  Yes 9/6/2001 Corporation 45 Point  Indian  Yes 11/21/2000 Corporation 46 Nuclear   Public   No    Plant        Power &  No  
                                          company    Canyon  Electric         2           Power   Company,                 Exelon                     Power   Company,                 Exelon                    M.)      Power                     M.)      Power                     (Enrico) Edison          2          FitzPatrick FitzPatrick,                  Entergy     Plant         Station District         E.)     Electric                         Station    Inc.           Power               (Shearon)  Light                     Municipal                       I.)    Power                       of            Corporation        Georgia           I.)    Power                       of            Corporation        Georgia         Nuclear Nuclear,                   Service                                         2     Point                                3     Point                                Power     Service                      Light       
                                                     Nuclear Company                                LLC         8/3/2000 Corporation                            LLC         8/3/2000 Corporation                 Nuclear Company                    Nuclear Company                     Atomic  Company                    (James A.)      LLC          11/21/2000 Corporation                                          Nuclear Corporation                                                Assoc.              Nuclear     Co.                      Power                         Nuclear Company                    Georgia                                            Nuclear Company                    Georgia                                            Power     LLC        8/21/2000; Enterprise                                              2, LLC                                     3, LLC                                           Corp.                      Company      

Appendix I
Nuclear Power Plant Ownership

                         (Continued From Previous Page)

                     Page 17 GAO-04-654 Nuclear Regulation
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Nine                                                         Nine                                                                 North Virginia                              North Virginia                                                                                                                                                                                                                                                                                             
                                          LLC        LaSalle   Exelon                                LaSalle   Exelon                                                                                                                                                                               Nuclear                                   Nuclear        Millstone                                   Millstone                                  Central                                                                                                          Nine     Mile                                                Nine     Mile                                                Long              Anna Electric            Old                Anna Electric            Old             Oconee                      Oconee                      Oconee                                                                              Palisades Consumers          Palo                                                      Improvement                   
    License   Plant Licensed LLC transfer parent  47 County  Generation Yes 1/12/2001   Exelon    48 County  Generation Yes 1/12/2001   Exelon    49              Exelon   Yes                        1     50              Exelon   Yes                        2     51                      No    Station     52                      No    Station     53  Nuclear    Dominion   No    Station     54  Nuclear    Dominion   No    Station       Vermont No     Corporation                    No     Electric    55 Monticello Northern No    Generating     56  Mile    Point   Yes                          Station     57  Mile    Point   Yes                          Station        Island  No   58   Power   and    No      Dominion   No   59   Power   and    No      Dominion   No   60 Nuclear Duke Energy No   61 Nuclear Duke Energy No   62 Nuclear Duke Energy No   63         AmerGen  Yes                       Power     64  Nuclear   Energy   No   65  Verde  Arizona No    Generating                    No      and Power                No  
                     to own      date     company    Station  Company,                Corporation    Station  Company,                Corporation    Limerick   Generation                                     Limerick   Generation                                     McGuire                       1           McGuire                       2             Power     Nuclear             2             Power     Nuclear             3          Public                          Massachusetts          Co.           Nuclear    States          Plant            Point  Nuclear                                  1            Point  Nuclear                                  2          Lighting         Station  Power           Electric           Station  Power           Electric           Station Corporation         Station Corporation         Station Corporation         Oyster   Energy                            Plant          Plant    Company          Nuclear Public        Station 1         Salt River          District        El Paso      
                                                        1       LLC                                     2       LLC                                  Generating  Company,                  Exelon              Generating  Company,                  Exelon              (William Duke Energy                      (William Duke Energy                                Connecticut,                                Connecticut,                     Service                           Municipal                                     Power                           Nuclear Station,               Constellation                 Nuclear Station,               Constellation                Company                1 Company         Cooperative               2 Company         Cooperative         1                           2                           3                            Creek  Company,                Exelon                                                      Service                          Project                            Electric     
                                                                                                                                                     Station       LLC         1/12/2001 Corporation           Station       LLC         1/12/2001 Corporation             B.)    Corporation                        B.)    Corporation                                    Inc.                                        Inc.                                                           Wholesale                                    Company                                    LLC        11/7/2001  Energy Group                           LLC        11/7/2001  Energy Group                                                                                                                                                                                                             Nuclear   LLC        8/8/2000 Corporation                                                   Company                        Agricultural                         Company      

Appendix I
Nuclear Power Plant Ownership

                         (Continued From Previous Page)

                     Page 18 GAO-04-654 Nuclear Regulation
                                                                                       Los                                                                                                                                                                           Los                                                                                                                                                                           Los                                                                                                                                                                                                                                                                                                                                                                                                 
                                                     Southern         Public         Angeles         Southern                                                                                                                      Southern         Public         Angeles         Southern                                                                                                                      Southern         Public         Angeles         Southern                                                                                                                                                                                                                                           Perry                                                            Entergy             Point Wisconsin           Point               
                    Licensed     transfer LLC       California        Service         Dept.         California                         Palo                 Generating                           Improvement      El Paso         California        Service         Dept.         California                         Palo                 Generating                           Improvement      El Paso         California        Service         Dept.         California                        Peach                                         Power                                         Group,       Peach                                         Power                                         Group,       Nuclear  Ohio          Cleveland        Toledo          Pilgrim  Nuclear             Beach Electric            Beach               
    License   Plant  to own  LLC date     parent      Edison   No     Company No       of    No       Public   No     Authority    66  Verde  Arizona No    Station 2                     No      and Power       Electric No       Edison   No     Company No       of    No       Public   No     Authority    67  Verde  Arizona No    Station 3                     No      and Power       Electric No       Edison   No     Company No       of    No       Public   No     Authority    68 Bottom   Exelon   Yes                        Station                Yes                  Incorporated 69 Bottom   Exelon   Yes                        Station                Yes                  Incorporated 70 Power   Edison  No     Electric  No     Edison  No   71 Station Generation No   72 Nuclear   Power   No   73 Nuclear Wisconsin No  
                                          company    Company          of New          Water           Power                           Nuclear Public                          Salt River          District        Company          Company          of New          Water           Power                           Nuclear Public                          Salt River          District        Company          Company          of New          Water           Power                           Atomic Generation                               2            PSEG            Public                      Atomic Generation                               3            PSEG            Public                      Plant   Company         Company         Company                    Co.             Plant 1  Company          Plant 2 Electric      
                                                                      Mexico           and                                                    Service                          Project                                                              Mexico           and                                                    Service                          Project                                                              Mexico           and                                                    Company,                  Exelon                   Nuclear,         Service                              Company,                  Exelon                   Nuclear,         Service                                                                                                                                             Power       
                                                                                      Power                                                   Company                        Agricultural                                                                           Power                                                   Company                        Agricultural                                                                           Power                                                     LLC         1/12/2001 Corporation                  LLC         Enterprise                                LLC         1/12/2001 Corporation                  LLC         Enterprise                                                                                                                                            Company      

Appendix I
Nuclear Power Plant Ownership

                         (Continued From Previous Page)

                                                     License   
           Plant           Licensed to own      LLC transfer   LLC parent     
                                                    date       company        
74 Praire Island     Northern States Power   No             
      Nuclear Plant            Company                         
             1                                                 
75 Praire Island     Northern States Power   No             
      Nuclear Plant            Company                         
             2                                                 
76   Quad Cities       Exelon Generation     Yes  8/3/2000      Exelon     
         Station 1           Company, LLC                       Corporation   
                          MidAmerican Energy    No             
                               Company                         
77   Quad Cities       Exelon Generation     Yes  8/3/2000      Exelon     
         Station 2           Company, LLC                       Corporation   
                          MidAmerican Energy    No             
                               Company                         
78    River Bend      Entergy Gulf States,   No             
          Station                Inc.                          
79 Robinson (H. B.)  Carolina Power & Light  No             
          Plant 2                Co.                           
80 Salem Nuclear       PSEG Nuclear, LLC     Yes            Public Service 
      Generating                                    8/21/2000      Enterprise 
         Station 1                                                 Group,     
                                                                Incorporated  
                          Exelon Generation     Yes 1/12/2001      Exelon     
                             Company, LLC                       Corporation   
81 Salem Nuclear       PSEG Nuclear, LLC     Yes            Public Service 
      Generating                                    8/21/2000      Enterprise 
         Station 2                                                 Group,     
                                                                Incorporated  
                          Exelon Generation     Yes                Exelon     
                             Company, LLC           1/12/2001   Corporation   

                     Page 19 GAO-04-654 Nuclear Regulation
           Southern                                                                                                                                                                Tauton           Hudson                                                                 South                 City                        Central                        South                 City                        Central                        St.   Florida     
San     California       Generating        San     Southern         Generating        Seabrook FPL                                                                Electric      Municipal        Light &            Sequoya Tennessee         Sequoya Tennessee         Texas   Texas         Public                      Power &        City of         Texas   Texas         Public                      Power &        City of         Lucie Power       
82 Onofre  Edison     No    Station 2      83 Onofre  California No    Station 3      84 Nuclear  Energy    Yes              FPL  Station       Massachusetts No     Co.           Lighting  No     Power      No   85 Nuclear Valley    No   86 Nuclear Valley    No   87 Project Genco, No     Service No     Antonio      Light   No     Austin, No   88 Project Genco, No     Service No     Antonio      Light   No     Austin, No   89 Plant and     No  
Nuclear Company                            Nuclear Edison                             Power    Seabrook,               Group,                Municipal                          Plant            Department         Plant 1 Authority         Plant 2 Authority         1       LP            Board                       Company        Texas           2       LP            Board                       Company        Texas           1     Light       
                                                      Company                                     LLC           11/1/2002   Inc.                Wholesale                                                                                                                                        of San                                                                           of San                                                           Company     

Appendix I
Nuclear Power Plant Ownership

                         (Continued From Previous Page)

                     Page 20 GAO-04-654 Nuclear Regulation
                                                 90   Florida                                                                          South            92    Virginia        93    Virginia                                                                                                                                                      96                                                      97    Florida        98    Florida                                                                                                             Municipal                                                                      Municipal                                                                                103                                                        Kansas        Kansas             Source:     
                                          LLC    St.   Power         Florida         Orlando          91    South                      Carolina        Surry  Electric       Surry  Electric                                                         Electric                                                               Electric             Three                                                  Turkey   Power       Turkey   Power         99    Entergy                                         Entergy          100                           Electric        Oglethorpe        City of        101                           Electric        Oglethorpe        City of                                               Watts  Tennessee                                             City         Electric             GAO       
License  Plant Licensed LLC transfer parent  Lucie   and   No    Municipal No    Utilities  No   Summer  Carolina No   Station      Public    No    Power    and    No    Power    and    No                            Yes                       Station     Company                          Yes                       Station     Company  Mile   AmerGen  Yes                        Station      Point    and   No    Point    and   No   Vermont Nuclear Yes                       Power         Nuclear   No   Vogtle          No   Plant      Authority No       Power    No    Dalton, No   Vogtle          No   Plant      Authority No       Power    No    Dalton, No                          No   Station       Bar    Valley   No               Kansas  No   Station      Power & No    Power        No   survey of    
                   to own      date     company Plant  Light          Power         Commission      (Virgil Electric                   Service        Station  Power        Station  Power            94          PPL                   Pennsylvania    1                    95          PPL                   Pennsylvania    2                Island   Energy                                1        Station  Light       Station  Light       Yankee  Vermont                          Station      Operations,      (Alvin  Georgia        1           of           Corporation       Georgia      (Alvin  Georgia        2           of           Corporation       Georgia         102       Entergy           3        Nuclear Authority       104 Wolf   Gas &                      Light        Cooperative,         NRC       
                                                  2   Company        Agency                           C.)   & Gas                      Authority         1    Company          2    Company       Susquehanna Susquehanna,                 Power and                     Susquehanna Susquehanna,                 Power and                     Nuclear Company,                  Exelon                   3    Company         4    Company      Nuclear Yankee,                Entergy                   Inc.            W.)    Power                   Georgia                                         W.)    Power                   Georgia                                       Waterford  Operations,                  Plant 1                  Creek    Electric                   Company       Inc.               Project     
                                                                                                    Nuclear Company                                                                                  Steam        LLC          6/1/2000        Light                        Steam        LLC          6/1/2000        Light                               LLC        12/20/1999 Corporation                                                                 LLC       7/1/2002 Corporation                               Nuclear Company                                                                Nuclear Company                                                                Generating    Inc.                                             Generating Company                                                    Managers.    

Appendix II

Comments from the Nuclear Regulatory Commission

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