Marks initial step for sponsors of new nuclear plants to qualify for up to $2 billion in federal risk insurance
WASHINGTON, DC - The U.S. Department of Energy (DOE) Secretary Samuel W. Bodman today released a Conditional Agreement for companies building new nuclear power plants in the United States to qualify for a portion of $2 billion in federal risk insurance. Risk insurance covers costs associated with certain regulatory or litigation-related delays - which are no fault of the company - that stall the start-up of these plants. Authorized by the Energy Policy Act of 2005 (EPAct), risk insurance provides incentive and stability in spurring construction of new nuclear power plants and meeting our energy needs in a clean, safe, economical manner. Secretary Bodman made today's announcement while in Chicago speaking to the World Association of Nuclear Operators and United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry.
"To meet the world's growing demand for electricity and confront climate change, safe and emissions-free nuclear energy must play an integral role in our energy mix," Secretary Bodman said. "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."
Providing risk insurance is part of President Bush's bold energy agenda and allows the first of several sponsors of new nuclear power plants to be backed by the U.S. government should a sponsor undergo lengthy and unnecessary delays preventing operation.
EPAct authorizes DOE to enter into contracts with the first six sponsors that begin construction of new nuclear facilities and meet all other 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 plants for which construction is started and up to $250 million is available for the next four plants. The Conditional Agreement, the first step in the process toward a risk insurance contract, is available to sponsors of advanced nuclear facilities once its application for a Construction and Operating License (COL) is docketed by the Nuclear Regulatory Commission (NRC). Companies can enter into a Conditional Agreement with DOE, however, only the first six that are issued a COL and begin construction are eligible for the risk insurance contract with DOE.
The Conditional Agreement announced today details the rights and responsibilities of potential sponsors to become eligible for risk insurance contracts. Events that would be covered by the risk insurance contract include delays associated with the NRC's reviews of inspections, tests, analyses and acceptance criteria, as well as certain delays associated with a pre-operational hearing or litigation in federal, state or tribal courts. Insurance coverage is not available for normal business risks such as employment strikes and weather delays. In August 2006, DOE issued a final rule that outlines a two-step process to apply for risk insurance coverage, which requires entering into a Conditional Agreement first and, if eligible, then a risk insurance contract.
Today's announcement closely follows previous progress through the Department's Nuclear Power 2010 program, which is a joint government/industry cost-shared effort to identify sites for new nuclear power plants, develop and bring to market advanced nuclear plant technologies, evaluate the business case for building new nuclear power plants, and demonstrate untested regulatory processes. In March of this year the first two Early Site Permits were issued by the NRC. These permits were funded through a 50-50 cost share by DOE and industry. Through the Nuclear Power 2010 program, DOE is partnering with industry to promote the expansion of nuclear power in the United States and work toward the submission of COL applications for new nuclear plants to the NRC.
For more information on today's announcement, visit: the Office of Nuclear Energy.
Megan Barnett, (202) 586-4940