New Projects, Nuclear

U.S. federal risk insurance available for nuclear power plants

4 August 2006 — After touring Georgia Power and speaking to its employees, U.S. Department of Energy (DOE) Secretary Samuel W. Bodman today announced completion of the final rule that establishes the process for utility companies building the next six new nuclear power plants in the United States to qualify for a portion of $2 billion in federal risk insurance.

“Providing federal risk insurance is an important step in speeding the nuclear renaissance in this country,” Secretary Bodman said. “Companies that take risks and enter the market first after a 30-year hiatus should not be penalized by hold-ups that are not their fault. This risk insurance protects them against bureaucratic and legal issues that delay their start-up.”

This risk insurance, which was authorized by the Energy Policy Act of 2005 (EPAct), will provide an important incentive to begin the licensing and construction of the new nuclear power plants. The risk insurance covers costs associated with certain regulatory or litigation related delays—that are no fault of the company—that stall the start-up of these plants. Up to $500 million in coverage is available for the initial two plants for which construction is started and up to $250 million is available for the next four plants.

Events that would be covered by the risk insurance include delays associated with the Nuclear Regulatory Commission’s reviews of inspections, tests, analyses and acceptance criteria or other licensing schedule delays as well as certain delays associated with litigation in federal, state or tribal courts. Insurance coverage is not available for normal business risks such as employment strikes and weather delays. Covered losses would include principal and interest on debt and losses resulting from the purchase of replacement power to satisfy contractual obligations. In formulating the final rule, DOE evaluated and took into account comments received from industry and public interest groups, including comments on the need for greater clarity on how premiums for the risk insurance will be calculated.