Entergy 2007 Annual Report Download - page 86

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Entergy Corporation and Subsidiaries 2007
Notes to Consolidated Financial Statements continued
In addition, Waterford 3, Grand Gulf, and the Non-Utility Nuclear
plants are also covered under NEIL’s Accidental Outage Coverage
program. is coverage provides certain xed indemnities in the event
of an unplanned outage that results from a covered NEIL property
damage loss, subject to a deductible. e following summarizes this
coverage as of December 31, 2007:
Waterford 3
n฀ $2.95 million weekly indemnity
n฀ $413 million maximum indemnity
n฀ Deductible: 26 week waiting period
Grand Gulf
n฀ $100,000 weekly indemnity
n฀ $14 million maximum indemnity
n฀ Deductible: 26 week waiting period
Indian Point 2 & 3 and Palisades
(Indian Point 2 & 3 share the limits)
n฀ $4.5 million weekly indemnity
n฀ $490 million maximum indemnity
n฀ Deductible: 12 week waiting period
FitzPatrick and Pilgrim (each plant has an
individual policy with the noted parameters)
n฀ $4.0 million weekly indemnity
n฀ $490 million maximum indemnity
n฀ Deductible: 12 week waiting period
Vermont Yankee
n฀ $4.0 million weekly indemnity
n฀ $435 million maximum indemnity
n฀ Deductible: 12 week waiting period
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, 2007, the maximum amounts of such possible
assessments per occurrence were as follows (in millions):
Utility:
Entergy Arkansas $20.7
Entergy Gulf States Louisiana $15.5
Entergy Louisiana $17.1
Entergy Mississippi $0.06
Entergy New Orleans $0.06
System Energy $13.6
Non-Utility Nuclear $86.8
Entergy maintains property insurance for its nuclear units in
excess of the NRC’s 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, rst, to render the reactor
safe and stable, and second, to complete decontamination operations.
Only aer proceeds are dedicated for such use and regulatory approval
is secured would any remaining proceeds be made available for the
benet of plant owners or their creditors.
In the event that one or more acts of non-certied 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 rst property damage occurs, the
maximum recovery under all such nuclear insurance policies shall be
an aggregate of $3.24 billion plus the additional amounts recovered
for such losses from reinsurance, indemnity, and any other sources
applicable to such losses. ere is no aggregate limit involving one or
more acts of certied terrorism.
CO N V E N T I O N A L PR O P E R TY IN S U R A N C E
Entergy’s conventional property insurance program provides coverage
up to $400 million on an Entergy system-wide basis for all operational
perils including direct physical loss or damage due to machinery
breakdown, electrical failure, re, lightning, hail, and explosion on an
“each and every loss” basis. In addition to this coverage, the program
provides coverage up to $350 million on an Entergy system-wide basis
for all natural perils including named windstorm, earthquake and
ood on an annual aggregate basis. e coverage is subject to a $20
million self-insured retention per occurrence for operational perils or
a 2% of the insured loss retention per occurrence for natural perils (up
to a $35 million maximum self-insured retention). Covered property
generally includes power plants, substations, facilities, inventories,
and gas distribution-related properties. Excluded property generally
includes above-ground transmission and distribution lines, poles, and
towers. e primary property program consists of a $150 million layer
in excess of the self-insured retention and is placed through various
insurers. e excess program consists of a $250 million layer in excess
of the $150 million primary program for operational perils and a $150
million layer in excess of the $150 million primary program for natural
perils and is placed on a quota share basis through several insurers.
e natural perils additional layer program consists of a $50 million
layer in excess the $150 million excess program and is also placed on
a quota share basis through several insurers. Coverage is in place for
Entergy Corporation, the Registrant Subsidiaries, and certain other
Entergy subsidiaries, including the owners of the Non-Utility Nuclear
power plants.
In addition to the conventional property insurance program, Entergy
has purchased additional coverage ($20 million per occurrence) for
some of its non-regulated, non-generation assets. is policy serves
to buy-down the $20 million deductible and is placed on a scheduled
location basis. e applicable deductibles are $100,000 to $250,000.
Hurricane Katrina and Hurricane Rita Claims
Entergy has received a total of $134.5 million as of December 31,
2007 on its Hurricane Katrina and Hurricane Rita insurance claims,
including $69.5 million that Entergy received in the second quarter
2007 in settlement of its Hurricane Katrina claim with one of its two
excess insurers. Of the $134.5 million received, $70.7 million was
allocated to Entergy New Orleans, $33.2 million to Entergy Gulf States,
Inc. (including $20.7 million to Entergy Texas), and $24.8 million to
Entergy Louisiana. In the third quarter 2007, Entergy led a lawsuit in
the U.S. District Court for the Eastern District of Louisiana against its
other excess insurer on the Hurricane Katrina claim. At issue in the
lawsuit is whether any policy exclusions limit the extent of coverage
provided by that insurer.
ere was an aggregation limit of $1 billion for all parties insured by
the primary insurer for any one occurrence at the time of the Hurricane
Katrina and Rita losses, and the primary insurer notied Entergy that
it expects claims for both Hurricanes Katrina and Rita to materially
exceed this limit. Entergy currently estimates that its remaining