That incident has resulted in $70 million in liability  claims. Limited Liability Companies Are Licensees for 31 of the 103 Operating Commercial Nuclear Power Plants in the United States

Thirty-one commercial nuclear power plants nationwide are licensed to  limited liability companies. In total, 11 limited liability companies are  licensed to own nuclear power plants. Three energy corporations—Exelon,  Entergy, and the Constellation Energy Group—are the parent companies  for 8 of these limited liability companies. These eight subsidiaries are  licensed or co-licensed to operate 27 of the 31 plants. NRC Has Specific Requirements and Procedures to Ensure That All Licensees Comply with the Price- Anderson Act’s Liability Provisions

NRC requires licensees of nuclear power plants to comply with the Price- Anderson Act’s liability insurance provisions by maintaining the necessary  primary and secondary insurance coverage. All the nuclear power plant licensees purchase their primary insurance  from American Nuclear Insurers. The bond for payment of retrospective premiums is a contractual  agreement between the licensee and American Nuclear Insurers that  obligates the licensee to pay American Nuclear Insurers the retrospective  premiums. Each licensee signs this bond and furnishes NRC with a  certified copy. NRC Treats Limited Liability Companies the Same as Other Licensees, but the Insurance Industry Has Added Important Requirements for These Companies

NRC applies the same rules to limited liability companies that it does to  other licensees of nuclear power plants with respect to liability  requirements under the Price-Anderson Act. Limited liability companies, like other  licensees, are required to show that they are maintaining the $300 million in  primary insurance coverage and provide NRC a copy of the bond for  payment of retrospective premiums or other approved evidence of  guarantee of retrospective premium payments. According to NRC officials, if  licensees have the financial resources to cover these two larger expenses,  they are likely to be capable of paying their retrospective premiums. American Nuclear Insurers goes further than NRC and requires licensees  that are limited liability companies to provide a letter of guarantee from  their parent or other affiliated companies with sufficient assets to cover the  retrospective premiums. These letters state that the parent or an affiliated  company is responsible for paying the retrospective premiums if the  limited liability company does not. If the parent company or other affiliated  company of a limited liability company does not provide a letter of  guarantee, American Nuclear Insurers could refuse to issue the bond for  payment of retrospective premiums and the company would have to have  another means to show NRC proof of secondary insurance. American  Nuclear Insurers informs NRC that it has received these letters of  guarantee. NRC estimates that it will complete its study by the end  of summer 2004. II), NRC stated that it believes the report  accurately reflects the present insurance system for nuclear power plants. To determine NRC’s requirements for ensuring that licensees of nuclear  power plants comply with the Price-Anderson Act’s liability requirements,  we reviewed relevant statutes and NRC regulations and interviewed NRC  officials responsible for ensuring that licensees have primary and  secondary insurance coverage. GAO posts this list, known as “Today’s Reports,” on its Web site  daily.
Why GAO Did This Study

An accident at one the nation's commercial nuclear power plants could result in human health and environmental damages. To ensure that funds would be available to settle liability claims in such cases, the Price-Anderson Act requires licensees for these plants to have primary insurance--currently $300 million per site. The act also requires secondary coverage in the form of retrospective premiums to be contributed by all licensees to cover claims that exceed primary insurance. If these premiums are needed, each licensee's payments are limited to $10 million per year and $95.8 million in total for each of its plants. In recent years, limited liability companies have increasingly become licensees of nuclear power plants, raising concerns about whether these companies--by shielding their parent corporations' assets--will have the financial resources to pay their retrospective premiums. GAO was asked to determine (1) the extent to which limited liability companies are the licensees for U.S. commercial nuclear power plants, (2) the Nuclear Regulatory Commission's (NRC) requirements and procedures for ensuring that licensees of nuclear power plants comply with the Price-Anderson Act's liability requirements, and (3) whether and how these procedures differ for licensees that are limited liability companies.

What GAO Found

Of the 103 operating nuclear power plants, 31 are owned by 11 limited liability companies. Three energy corporations--Exelon, Entergy, and the Constellation Energy Group--are the parent companies for eight of these limited liability companies. These 8 subsidiaries are the licensees or colicensees for 27 of the 31 plants. NRC requires all licensees for nuclear power plants to show proof that they have the primary and secondary insurance coverage mandated by the Price-Anderson Act. Licensees obtain their primary insurance through American Nuclear Insurers. Licensees also sign an agreement with NRC to keep the insurance in effect. American Nuclear Insurers also has a contractual agreement with each of the licensees to collect the retrospective premiums if these payments become necessary. A certified copy of this agreement, which is called a bond for payment of retrospective premiums, is provided to NRC as proof of secondary insurance. It obligates the licensee to pay the retrospective premiums to American Nuclear Insurers. NRC does not treat limited liability companies differently than other licensees with respect to the Price-Anderson Act's insurance requirements. Like other licensees, limited liability companies must show proof of both primary and secondary insurance coverage. American Nuclear Insurers also requires limited liability companies to provide a letter of guarantee from their parent or other affiliated companies with sufficient assets to pay the retrospective premiums. These letters state that the parent or affiliated companies are responsible for paying the retrospective premiums if the limited liability company does not. American Nuclear Insurers informs NRC it has received these letters. In light of the increasing number of plants owned by limited liability companies, NRC is studying its existing regulations and expects to report on its findings by the end of summer 2004. In commenting on a draft of this report, NRC stated that it accurately reflects the present insurance system for nuclear power plants.