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
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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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