Dominion Power 2001 Annual Report Download - page 70

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
68
Dominion filed a request with the NRC in 2001 for a 20-year
life extension for the Surry and North Anna units and expects to
file a similar request for the Millstone units in 2004. Dominion
expects to decommission the Surry and North Anna units dur-
ing the period 2032 to 2045 and the Millstone units during the
period 2050 to 2055.
Surry North Anna Millstone
(millions) Unit 1 Unit 2 Unit 1 Unit 2 Unit 1 Unit 2 Unit 3 Total
NRC license expiration year 2012 2013 2018 2020 (1) 2015 2025
Current cost estimate (1998 dollars) $411 $413 $401 $387
———
$1,612
Current cost estimate (1999 dollars)
————
$631 $ 500 $ 618 1,749
Funds in external trusts at December 31, 2001 239 234 198 187 288 278 273 1,697
2001 contributions to external trusts 11 11 7 7
———
36
(1) Unit 1 is being decommissioned and was not in service.
The NRC requires nuclear power plant owners to annually
update minimum financial assurance amounts for the future
decommissioning of the nuclear facilities. Dominion’s 2001
NRC minimum financial assurance amount, aggregated for the
nuclear units, was $1.9 billion and will be satisfied by a combi-
nation of surety bonds and the funds being collected in the
external trusts.
Insurance
The Price-Anderson Act limits the public liability of an owner of
a nuclear power plant to $9.5 billion for a single nuclear inci-
dent. The Price-Anderson Act Amendment of 1988 allows for an
inflationary provision adjustment every five years. Dominion has
purchased $200 million of coverage from commercial insurance
pools with the remainder provided through a mandatory indus-
try risk-sharing program. In the event of a nuclear incident at
any licensed nuclear reactor in the United States, Dominion
could be assessed up to $88 million for each of its seven licensed
reactors not to exceed $10 million per year per reactor. There is
no limit to the number of incidents for which this retrospective
premium can be assessed.
The Price-Anderson Act was first enacted in 1957 and has
been renewed three times—in 1967, 1975 and 1988. Price-
Anderson expires August 1, 2002, but operating nuclear reactors
would continue to be covered by the law. Congress is currently
holding hearings to reauthorize the legislation.
Dominion’s current level of property insurance coverage
($2.55 billion for North Anna, $2.55 billion for Surry and $2.75
billion for Millstone) exceeds the NRC’s minimum requirement
for nuclear power plant licensees of $1.06 billion per reactor site
and includes coverage for premature decommissioning and
functional total loss. The NRC requires that the proceeds from
this insurance be used first to return the reactor to and maintain
it in a safe and stable condition and second to decontaminate
the reactor and station site in accordance with a plan approved
by the NRC. Dominion’s nuclear property insurance is provided
by Nuclear Electric Insurance Limited (NEIL), a mutual insur-
ance company, and is subject to retrospective premium assess-
ments in any policy year in which losses exceed the funds
available to the insurance company. The maximum assessment
for the current policy period is $70 million. Based on the severity
of the incident, the board of directors of Dominion’s nuclear
insurer has the discretion to lower or eliminate the maximum
retrospective premium assessment. Dominion has the financial
responsibility for any losses that exceed the limits or for which
insurance proceeds are not available because they must first be
used for stabilization and decontamination.
Dominion purchases insurance from NEIL to cover the
cost of replacement power during the prolonged outage of a
nuclear unit due to direct physical damage of the unit. Under
this program, Dominion is subject to a retrospective premium
assessment for any policy year in which losses exceed funds avail-
able to NEIL. The current policy period’s maximum assessment
is $29 million.
Old Dominion Electric Cooperative, a part owner of the
North Anna Power Station, and Massachusetts Municipal
Wholesale Electric Company and Central Vermont Public Ser-
vice Corporation, part owners of Millstone’s Unit 3, are responsi-
ble for their share of the nuclear decommissioning obligations
and insurance premiums on applicable units, including any ret-
rospective premium assessments and any losses not covered by
insurance.