DOE Releases Filing Instructions for Federal Risk Insurance for New Nuclear Power Plants

January 7, 2008 // Published as a news service by IHS

Authorized by the Energy Policy Act of 2005 (EPAct 2005), risk insurance is intended to cover costs associated with certain regulatory or litigation-related delays - which are no fault of the company - that stall the start-up of new nuclear power plants.

The Conditional Agreement is the first step in the process toward a risk insurance contract. Sponsors of advanced nuclear facilities, whose application for a combined Construction and Operating License (COL) has been docketed by the Nuclear Regulatory Commission (NRC), can enter into a Conditional Agreement with DOE.

However, the EPAct 2005 authorizes DOE to enter into contracts with only the first six sponsors that are issued a license and begin construction of new nuclear facilities and meet all contractual conditions to provide risk insurance for certain regulatory and litigation delays in the full power operation of their facility.

Up to $500 million in coverage is available for the initial two licensed plants for which construction is started and up to $250 million is available for the next four plants.

Below is a general explanation of the instructions, information requirements and review processes leading to execution of a Conditional Agreement with DOE:

1. Advance Notification of Sponsor Intent. (Optional and preferred, but not required.)
   Advance notification is desirable to provide DOE with valuable information for planning and managing the review of requests for Conditional Agreements, and may facilitate the DOE review and processing of individual requests for a Conditional Agreement.

2. Submission Request for a Conditional Agreement.
   Includes a letter by the qualified sponsor to DOE accompanied by the supporting information and documentation, including a copy of the sponsor's docketed combined Construction and Operating License Application, the date the NRC docketed the application and a summary level schedule identifying key projected dates of construction, testing, and full power operation.

   This schedule should also identify key milestones including major phases of construction, dates for start-up testing period, power escalation schedule and anticipated date of full power operation.

3. DOE Initial Review of Request.
   DOE will conduct an initial review of the request to determine whether the information as provided by the sponsor is adequate. If the provided information in the request is adequate, DOE will notify the sponsor that the information is adequate and begin processing the request.

4. DOE Processing of Request.
   In processing the request, DOE will determine the estimated cost of a standby support contract based on the financial information provided by the sponsor.

   The methodology used to derive the estimated cost of a standby support contract will be consistent with the methodology described in the final rule on Standby Support for Certain Nuclear Plant Delays (71 Federal Register 46306, August 11, 2006).

5. Execution of a Conditional Agreement.
   Once steps three and four have been met and a review and processing of the request is complete, DOE will determine whether the requirements for a Conditional Agreement have been satisfied.

   DOE will notify the sponsor of its determination and, if the requirements for a Conditional Agreement have been met, DOE will send a Conditional Agreement to the sponsor that includes the necessary information to complete the Conditional Agreement.

"These instructions enable sponsors of new nuclear power plants to begin the process of addressing certain barriers to building the nuclear generating capacity necessary to meet [the U.S.'s] growing energy needs," DOE Assistant Secretary for Nuclear Energy Dennis Spurgeon said.

"Federal risk insurance provides an mechanism to spur construction of new nuclear power plants that will help power our economy with advanced technologies and confront global climate change."

This announcement follows previous progress through the DOE Nuclear Power 2010 program, which is a joint government and industry cost-shared effort to promote the expansion of nuclear power in the U.S. and work toward the submission of COL applications for new nuclear plants to the NRC.

In October 2007, Tennessee Valley Authority, the largest public power utility in the U.S. and a member of NuStart Energy, a consortium of nuclear energy companies selected through DOE Nuclear Power 2010 program submitted a COL application to the NRC. In November 2007, Dominion, another DOE Nuclear Power 2010 participant, submitted an application for a COL for North Anna 3.

To review the instructions for requesting a Conditional Agreement and other information on federal risk insurance visit the DOE Office of Nuclear Energy web site.

Source: U.S. Department of Energy (DOE).