Entergy 2003 Annual Report Download - page 77

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75
ENTERGY CORPORATION AND SUBSIDIARIES 2003
An additional but temporary contingent liability exists
for all nuclear power reactor owners because of a previous
Nuclear Worker Tort (long-term bodily injury caused by
exposure to nuclear radiation while employed at a nuclear
power plant) insurance program that was in place from
1988 to 1998. The maximum premium assessment expo-
sure to each reactor is $3 million and will only be applied if
such claims exceed the program’s accumulated reserve
funds. This contingent premium assessment feature will
expire with the Nuclear Worker Tort program’s expiration,
which is scheduled for 2008.
Property Insurance
Entergy’s nuclear owner/licensee subsidiaries are members of
certain mutual insurance companies that provide property
damage coverage, including decontamination and premature
decommissioning expense, to the members’ nuclear generating
plants. These programs are underwritten by Nuclear Electric
Insurance Limited (NEIL). As of December 31, 2003, Entergy
was insured against such losses per the following structures:
U.S. UTILITY PLANTS (ANO 1 AND 2, GRAND GULF 1,
RIVER BEND, AND WATERFORD 3)
Primary Layer (per plant) - $500 million per occurrence
Excess Layer (per plant) - $100 million per occurrence
Blanket Layer (shared among all plants) - $1.0 billion
per occurrence
Total limit - $1.6 billion per occurrence
Deductibles:
$1.0 million per occurrence - Equipment
breakdown/failure
$2.5 million per occurrence - Other than equipment
breakdown/failure
Note: ANO 1 and 2 share in the Primary Layer with one
policy in common.
NON-UTILITY NUCLEAR PLANTS (INDIAN POINT 2 AND 3,
FITZPATRICK, PILGRIM, AND VERMONT YANKEE)
Primary Layer (per plant) - $500 million per occurrence
Blanket Layer (shared among all plants) - $615 million
per occurrence
Total limit - $1.115 billion per occurrence
Deductibles:
$1.0 million per occurrence - Equipment
breakdown/failure
$1.0 million per occurrence (all plants except Vermont
Yankee which is $500,000) - Other than equipment
breakdown/failure
Note: Indian Point 2 and 3 share in the Primary Layer with
one policy in common.
In addition, the Non-Utility Nuclear plants are also
covered under NEIL’s Accidental Outage Coverage program.
This coverage provides certain fixed indemnities in the
event of an unplanned outage that results from a covered
NEIL property damage loss, subject to a deductible. The
following summarizes this coverage as of December 31, 2003:
Indian Point 2 and 3, FitzPatrick, and Pilgrim
(each plant has an individual policy with the
noted parameters):
$4.5 million weekly indemnity
$490 million maximum indemnity
Deductible: 12 week waiting period
Vermont Yankee:
$4.0 million weekly indemnity
$435 million maximum indemnity
Deductible: 12 week waiting period
Entergy’s U.S. Utility nuclear plants have significantly
less or no accidental outage coverage. Under the property
damage and accidental outage insurance programs,
Entergy nuclear plants could be subject to assessments
should losses exceed the accumulated funds available from
NEIL. As of December 31, 2003, the maximum amounts of
such possible assessments per occurrence were $77 million
for the Non-Utility Nuclear plants and $79.3 million for the
U.S. Utility plants.
Entergy maintains property insurance for its nuclear
units in excess of the Nuclear Regulatory Commission’s
(NRC) minimum requirement of $1.06 billion per site for
nuclear power plant licensees. NRC regulations provide
that the proceeds of this insurance must be used, first, to
render the reactor safe and stable, and second, to complete
decontamination operations. Only after proceeds are dedi-
cated for such use and regulatory approval is secured
would any remaining proceeds be made available for the
benefit of plant owners or their creditors.
In the event that one or more acts of domestically-
sponsored terrorism causes property damage under one
or more or all nuclear insurance policies issued by NEIL
(including, but not limited to, those described above) within
12 months from the date the first property damage occurs,
the maximum recovery under all such nuclear insurance
policies shall be an aggregate of $3.24 billion plus the addi-
tional amounts recovered for such losses from reinsurance,
indemnity, and any other sources applicable to such losses.
There is no aggregate limit involving one or more acts of
foreign-sponsored terrorism.