Dominion Power 2002 Annual Report Download - page 76

Notes to Consolidated Financial Statements, Continued
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 expired August 1, 2002, but operating nuclear reac-
tors continue to be covered by the law. Congress is currently
holding hearings to reauthorize the legislation. The expiration
of the Price-Anderson Act has no impact on existing nuclear
license holders.
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 decommis-
sioning 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 insur-
ance is provided by Nuclear Electric Insurance Limited (NEIL),
a mutual insurance company, and is subject to retrospective pre-
mium assessments in any policy year in which losses exceed the
funds available to the insurance company. The maximum assess-
ment 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 max-
imum 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 also 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
available 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
Service Corporation, part owners of Millstone’s Unit 3, are
responsible for their share of the nuclear decommissioning
obligations and insurance premiums on applicable units,
including any retrospective premium assessments and any
losses not covered by insurance.
17 Property, Plant and Equipment
Major classes of property, plant and equipment and their
respective balances are:
At December 31, 2002 2001
(millions)
Utility
Generation $ 8,497 $ 8,415
Transmission 3,283 3,165
Distribution 7,347 7,024
Storage 781 755
Plant under construction 972 585
Nuclear fuel 740 757
Gas gathering and processing 341 285
General 830 876
Total utility $22,791 $21,862
Nonutility
Exploration and production properties:
Proved $ 6,265 $ 4,707
Unproved 1,440 1,508
Merchant generation properties—nuclear 921 968
Nuclear fuel 146 107
Merchant generation properties—other 629 361
Other—including plant under construction 439 284
Total nonutility 9,840 7,935
Total property, plant and equipment $32,631 $29,797
Costs of unproved properties capitalized under the full cost
method of accounting that are excluded from amortization at
December 31, 2002, and the years in which such excluded costs
were incurred, follow:
Years
Total 2002 2001 Prior
(millions)
Property acquisition costs $ 903 $103 $740 $60
Exploration costs 138 59 42 37
Capitalized interest 82 63 17 2
Total $1,123 $225 $799 $99
Amortization rates for capitalized costs under the full
cost method of accounting for Dominion’s United States and
Canadian cost centers were as follows:
Year Ended December 31, 2002 2001 2000
(Per mcf equivalent)
United States cost center $1.13 $1.13 $1.13
Canadian cost center 0.85 0.78 0.92
74 Dominion ’02 Annual Report