PG&E 2014 Annual Report Download - page 133

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Nuclear Insurance
The Utility is a member of NEIL, which is a mutual insurer owned by utilities with nuclear facilities. NEIL provides
insurance coverage for property damages and business interruption losses incurred by the Utility if a nuclear event were to occur at
the Utility’s two nuclear generating units at Diablo Canyon and the retired Humboldt Bay Unit 3. NEIL provides property damage
and business interruption coverage of up to $3.2 billion per nuclear incident and $2.6 billion per non-nuclear incident for Diablo
Canyon. Humboldt Bay Unit 3 has up to $131 million of coverage for nuclear and non-nuclear property damages. If NEIL losses in
any policy year exceed accumulated funds, the Utility could be subject to a retrospective assessment. If NEIL were to exercise this
assessment, as of December 31, 2014, the current maximum aggregate annual retrospective premium obligation for the Utility is
approximately $51 million.
NEIL also provides coverage for damages caused by acts of terrorism at nuclear power plants. Certain acts of terrorism
may be “certified” by the Secretary of the Treasury. If damages are caused by certified acts of terrorism, NEIL can obtain
compensation from the federal government and will provide up to its full policy limit of $3.2 billion for each insured loss. In
contrast, NEIL would treat all non-certified terrorist acts occurring within a 12-month period against one or more commercial
nuclear power plants insured by NEIL as one event and the owners of the affected plants would share the $3.2 billion policy limit
amount.
Under the Price-Anderson Act, public liability claims that arise from nuclear incidents that occur at Diablo Canyon, and
that occur during the transportation of material to and from Diablo Canyon are limited to $13.6 billion. The Utility purchased the
maximum available public liability insurance of $375 million for Diablo Canyon. The balance of the $13.6 billion of liability
protection is provided under a loss-sharing program among utilities owning nuclear reactors. The Utility may be assessed up to
$255 million per nuclear incident under this program, with payments in each year limited to a maximum of $38 million per
incident. Both the maximum assessment and the maximum yearly assessment are adjusted for inflation at least every five years.
The next scheduled adjustment is due on or before September 10, 2018.
The Price-Anderson Act does not apply to claims that arise from nuclear incidents that occur during shipping of nuclear
material from the nuclear fuel enricher to a fuel fabricator or that occur at the fuel fabricator’s facility. The Utility has a separate
policy that provides coverage for claims arising from some of these incidents up to a maximum of $375 million per incident. In
addition, the Utility has $53 million of liability insurance for Humboldt Bay Unit 3 and has a $500 million indemnification from
the NRC for public liability arising from nuclear incidents, covering liabilities in excess of the liability insurance.