Entergy 2008 Annual Report Download - page 89

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ENTERGY CORPORATION AND SUBSIDIARIES 2008
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Notes to Consolidated Financial Statements continued
ENTERGY CORPORATION AND SUBSIDIARIES 2008
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In addition, Waterford 3, Grand Gulf, and 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 and a waiting period.
The following summarizes this coverage as of December 31, 2008:
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 and Indian Point 3 and Palisades
(Indian Point 2 and Indian Point 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$3.5 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, 2008, the maximum amounts of such possible
assessments per occurrence were as follows (in millions):
Utility:
Entergy Arkansas $21.0
Entergy Gulf States Louisiana $17.0
Entergy Louisiana $18.5
Entergy Mississippi $0.07
Entergy New Orleans $0.07
Entergy Texas N/A
System Energy $14.7
Non-Utility Nuclear $87.8
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, first, to render the
reactor safe and stable, and second, to complete decontamination
operations. Only after proceeds are dedicated 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 non-certified 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 additional
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 certified terrorism.
CO N V E N T I O N A L PR O P E R T Y IN S U R A N C E
Entergy’s conventional property insurance program provides
coverage of up to $400 million on an Entergy system-wide basis for all
operational perils (direct physical loss or damage due to machinery
breakdown, electrical failure, fire, lightning, hail, or explosion) on
an “each and every loss” basis, and for natural perils (direct physical
loss or damage due to named windstorm, earthquake or flood) on
an annual aggregate basis. The 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. The primary layer consists of a $125 million layer in
excess of the self-insured retention and is placed through various
insurers. The excess layer consists of two layers: a $175 million layer
in excess of the $125 million primary layer and an additional $100
million layer in excess of $175 million layer; both excess layers are
placed on a quota share basis through several insurers. Combining
the $125 million primary layer, the $175 million excess layer, and
$100 million additional excess layer results in a total of $400 million
in coverage. This 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.
This policy serves to buy-down the $20 million deductible and is
placed on a scheduled location basis. The applicable deductibles
are $100,000 to $250,000, except for properties that are damaged
by flooding and properties whose values are greater than $20
million; these properties have a $500,000 deductible.
Hurricane Katrina and Hurricane Rita Claims
Entergy has received a total of $277 million as of December 31,
2008 on its Hurricane Katrina and Hurricane Rita insurance claims,
including the settlements of its Hurricane Katrina claims with each
of its two excess insurers. Of the $277 million received, $186 million
was allocated to Entergy New Orleans, $16 million to Entergy Gulf
States Louisiana, $24 million to Entergy Texas, and $40 million to
Entergy Louisiana. Entergy currently expects to receive payment
for any remaining insurance recovery related to Hurricane Katrina
and Hurricane Rita in 2009.
To the extent that Entergy New Orleans receives insurance
proceeds for future construction expenditures associated with
rebuilding its gas system, the October 2006 City Council resolution
approving the settlement of Entergy New Orleans’ rate and storm-
cost recovery filings requires Entergy New Orleans to record those
proceeds in a designated sub-account of other deferred credits. This
other deferred credit is shown as “Gas system rebuild insurance
proceeds” on Entergy New Orleans’ balance sheet.