US government agrees new build insurance
Companies building new nuclear power plants in the USA can now qualify for a share of $2 billion in federal risk insurance, under a Conditional Agreement released by the Department of Energy (DoE).
The insurance covers costs associated with certain regulatory or litigation-related delays that, through no fault of the company, can delay plant start-up. According to the DoE, the risk insurance, authorized under the Energy Policy Act of 2005, "provides incentive and stability in spurring construction of new nuclear power plants and meeting our energy needs in a clean, safe, economical manner."
Energy Secretary Samuel W Bodman, announcing the agreement, noted: "Conditional Agreements pave the way for risk insurance contracts that will provide the first project sponsors constructing new nuclear power plants with assistance if they face delays in expanding the use of nuclear energy across the nation."
The coverage of the government-backed risk insurance would include delays associated with regulatory reviews of inspections, tests, analyses and acceptance criteria, as well as certain delays associated with pre-operational hearings or litigation in federal, state or tribal courts. Normal business risks, such as employment strikes and weather delays, would not be covered.
Under the Energy Policy Act, the DoE is authorized to enter contracts to provide risk insurance with the first six sponsors to begin construction of new nuclear facilities and that meet all other contractual conditions. Coverage of up to $500 million will be available to the first two plants which begin construction, with up to $250 million for the next four. Application for coverage is a two-step process, with sponsors required to enter a Conditional Agreement first and then, if eligible, a risk insurance contract. The Conditional Agreement is available to any sponsor of an advanced nuclear facility once its application for a Construction and Operating Licence (COL) is docketed by the Nuclear Regulatory Commission (NRC). However, only the first six that are issued a COL and begin construction will be eligible for the risk insurance contract with DoE.
The DoE is working with industry to promote the expansion of nuclear power in the country and work towards the submission of COL applications for new nuclear plants though its Nuclear Power 2010 program. The first two Early Site Permits for new plants - Entergy's Grand Gulf and Exelon's Clinton - were issued by the NRC earlier this year. NRG Energy has recently filed a COL application for two new units at its South Texas Project site, while UniStar has filed the first part of a COL application for a third unit at Calvert Cliffs earlier in the year.
Further information
The text of the Conditional Agreement
DoE's Nuclear Power 2010 program
WNA's US Nuclear Power Industry information paper
WNN: COL application filed for new South Texas plant
WNN: Second US site gains new build permit
