ML110870280

Submittal of Guarantee of Payment of Deferred Premiums

ML110870280
Person / Time
Site:	Monticello, Prairie Island
Issue date:	03/27/2011
From:	Molden J Northern States Power Co, Xcel Energy
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
L-XE-11-006
Download: ML110870280 (8)

Text

/@ Xcel Energy.

March 27, 20.1 1 414 Nicollet Mall - MP4 Minneapolis, MN 55401 L-XE-11-006 10 CFR 140.21 U.S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, DC 20555-0001 Prairie Island Nuclear Generating Plant, Monticello Nuclear Generating Plant Units 1 and 2 Docket 50-263 Dockets 50-282, 50-306 Renewed License No. DPR-22 License Nos. DPR-42 and DPR-60 Guarantee of Pavment of Deferred Premiums Please find enclosed a Marsh USA Inc. letter dated December 10, 2010 describing the 201 1 Nuclear Liability Program Secondary Financial Protection (SFP) policy endorsements for the Prairie Island Nuclear Generating Plant and Monticello Nuclear Generating Plant. This letter satisfies 10 CFR 140.21 (a) as a guarantee of payment of deferred premiums.

Summary of Commitments This letter contains no new commitments and no revisions to existing commitments.

mes E. Molden

&ce President, Operations Support Northern States Power Company - Minnesota Enclosure cc:

Administrator, Region Ill, USNRC Project Managers, Prairie lsland and Monticello, USNRC Resident Inspectors, Prairie lsland and Monticello, USNRC Minnesota Department of Commerce Marsh USA Inc. (Shannon Moyer)

AN1 (Gary Uricchio)

ENCLOSURE Marsh Letter Dated December 10,2010 6 Pages Follow

MARSH Tim Farward, ARM Nuclear Client Advisor Marsh USA Ino.

Two Logan Square Philadelphia, PA 19103 215 246 11 59 Fax 215-246-1399 Tirn.Farward@Marsh.com www.marsh.com December 10,201 0 Mr. Michael R. Anderson Director, Hazard Risk Management Xcel Energy Inc.

414 Nicollet Mall, 4th Floor Minneapolis, MN 55401

Subject:

2011 Nuclear Energy Liability Program Renewal Transmittal 0110112011 - 01/01/2012 ear Michael, Enclosed, please find the 201 I advance premium and applicable policy change endorsements for your Nuclear Liability Program policies. All endorsements and associated advance premiums have been reviewed and verified to be both complete and correct.

The following describes the type and purpose of the applicable policy change endorsements enclosed.

Transparencv. Premium lnvoicinn & Financing Endorsement Type 201 1 Advance Premium Gdorsement You will recall that all Nuclear Energy Liability policies are continuous until cancelled.

Therefore, the annual premium that you pay is the premium due in order to maintain the existing coverage. This is significantly different than your conventional casualty or property insurance programs where you receive a new policy each year. Should you desire additional capacity, coverages, or any material changes to your program, please contact us immediately.

Purpose Confirms 201 1 Advance Premium amount to continue policy in place.

Since we have already received your "authorization to bind," we will forward Marsh invoices for the total amount due under separate cover. Please notify us if you would like us to employ special invoicing or allocation methods, or if you would like us to assist in obtaining options for premium financing. All invoices will include mailing instructions.

MARSH Page 2 December 10,2010 Advance Premiums for 201 1 As expected, AN1 has agreed to make no general premium increases for 201 1. The advance premiums, therefore, are affected only by updated Engineering Rating Factors (ERF), updated nuclear inventories or updated nuclear sales.

The attached exhibit illustrates a breakdown of these effects on your Nuclear Liability Program Policies for your review. Listed for your convenience is the applicable endorsement numbers for each policy as well as an analysis of the percentage change from the 2010 advance premium.

Marsh Earns no Commission on this placement.

Shutdown Credit Audit Process We will continue to proactively perform quarterly shutdown credit audits of your program on your behalf through 201 1 and advise you of any shutdowns we believe that may qualify for return premiums. As previously described last year, we have successfully lobbied AN1 on your behalf to modify their shutdown credit criteria at multi-unit sites effective 1/1/2010 following our detailed analysis of industry-wide outage efficiency improvements, thereby broadening the scope of qualifying shutdown events and making our audit process a valuable tool to keep track of each shutdown exceeding 30 days at your facilities.

Nuclear Liabilitv Market Update - Effective 11112011 Capacity As of January I, 201 1, AN1 is continuing to offer a maximum liability limit of $375 million via their Facility Form and Master Worker policies. AN1 is maintaining the maximum available Foreign Supplier's and Transporter's policy limit at $50 million.

Market Security We expect AN1 to issue your "Changes in Subscribing Companies and Proportionate Liability Endorsement" during the middle of the first quarter of 201 1. You will recall that this endorsement, issued annually, provides detail as to the actual insurance companies that are providing capacity through their respective proportionate participation percentage for the given policy for the period beginning January 1, through December 31. Please note that AN1 requires that all companies meet their stringent eligibility requirements and that all companies have historically met Marsh's minimum financial requirements. That being said, ANl's membership criteria are as follows:

MARSH Page 3 December 10,2010

1. A License to write Property/Casualty business in at least one jurisdiction in the United States;

2. A.M. ~est's rating of "A-" or better;

3. A policyholder's surplus (PHs) of at least $1 00 million;

4. Unqualified, audited financial statements for the latest financial reporting period; and

5. No more than 10% PHs committed to ANlls Domestic Syndicate.

Should you have any concerns regarding who may or may not be participating in 201 1, or the several (and specifically'not joint) nature of the subscribing companies vs. the joint and several nature of the member companies in the U.S. nuclear pooling program, please do not hesitate to contact us.

Resiulatorv. Reportinn and Contractual Compliance Services 10CFR140.15(e):

In accordance with Marsh U.S. Nuclear Energy Center of Excellence standard practice, please note for your records that we have fowarded certified copies of all applicable endorsements to your Facility Form policies, Master Worker certificates and Secondary Financial Protection certificates to Mr. Ira Dinitz at the NRC in accordance with ?O CFR 140.15te).

Financial Disclosures Information:

There are currently 104 licensed reactors operating in the United States. As a result, the current maximum retrospective assessment per accident under the Secondary Financial Protection Program (SFP) as mandated by the Price Anderson Amendment to the Atomic Energy Act is $17.5 Million per reactor, per year for a total of $1 17.495 Million per reactor.

The total protection afforded each unit is therefore $12.595 Billion ($12.22 Billion by SFP).

This assessment is subject to inflationary adjustment every five years with the most recent adjustment having taken effect on October 2gth, 2008.

Upon request, we are able to provide our "Nuclear Insurance Note - Auditor Documentation Package Tool" to assist you in demonstrating nuclear insurance and financial protection requirements for auditor purposes as needed. We hope you will find this service tool beneficial and we look forward to any feedback you may have. Additionally, should you desire us to review any of your financial disclosure statements throughout the year, we are happy to do so upon request and can provide "best practice" wording and benchmarking.

MARSH Page 4 December 10,2010 Miscellaneous:

Nuclear Liability certificates of insurance, detailed summaries of coverage, contractual reviews or broker letters are available upon request. Additionally, Marsh's unique position as a leader in the nuclear risk management arena enables us to provide benchmarking and premium projection services of the highest quality. Please do not hesitate to contact us should you desire additional services.

This letter represents a synopsis of coverage and is provided as a reference only. The actual policy, including endorsements, determines coverage. It contains exclusions, limitations and other provisions not referenced (or only briefly summarized) here and the policy should be consulted for full coverage terms, conditions and requirements. It is important that you review the policy and advise us at your earliest opportunity of anything which you believe is not in accordance with the negotiated coverage and terms.

Marsh has been hiring nuclear trained professionals since the 1960's. We are fluent in technical issues surrounding nuclear power plant construction, operation and decommissioning as well as enrichment facilities, fuel fabricators, waste disposal sites and the vendors who serve them. Our hands on experience running naval nuclear power plants gives us a depth of understanding in radiation, chemistry, metallurgy and physics that you will not find anywhere else.

Should you have any questions or concerns, please do not hesitate to contact me at (215) 246-1 159, Mr. Shannon Moyer at (215) 246-1463 or any other member of the Marsh U.S.

Nuclear Energy Center of Excellence.

On behalf of everyone at Marsh, I thank you for the opportunity to provide assistance with your nuclear placement needs, and we look forward to continuing our relationship in 201 1.

Sincerelv.

Tim Farward, ARM Nuclear Client Advisor Copy: R. Miller, J. Hernick, B. Smith, S. Moyer Enclosures

Xcel Energy 201 1 Advance Premium Summary Plant Named Insured Prairie Island Northern States Power Company Sub-Total Monticello Northern States Power Company Sub-Total Fort St. Vrain Public Service Company of Colorado Sub-Total Pathfinder Northern States Power Company Sub-Total SBT - Xcel Energy Xcel Energy, Inc.

Sub-Total Policy Limit NF-0197 $375M End. t 164 NW-0580 $375M N-0036 SFP N-0037 SFP NW-0564 $375M N-0017 SFP M A R S H Actual 2010 Advance Premium

% Change

$ 1,194,605

-0.7%

We conduct our Aggregate Shutdown Credit Audit in January of each year and notify you if you have a potential premium refund opportunity.

3. Fort. St. Vrain Facility Form 8 Master Worker comments: