- The Washington Times - Sunday, September 23, 2001

As a former chairman of the Senate Nuclear Regulation Subcommittee, I commend the Bush-Cheney adminis-
tration for acknowledging in their energy strategy the benefits of clean, safe nuclear energy, and their desire to make it a more favored energy option
Unfortunately, a company with one big stake in the future of the industry would seem to be putting its interests ahead of the interests of the American electricity consumers and American utilities.
The United States Enrichment Corp. (USEC), a former government entity, was privatized in 1996. USEC controls 70 percent of the U.S. enrichment services market today. Nevertheless, in an attempt to further severely limit competition, USEC filed a petition with the Commerce Department alleging that enrichment services were products, not services, and that USEC's European competitors, Eurodif and Urenco, should be assessed antidumping and countervailing duties for participating in unfair trade practices.
The 103 nuclear power plants now operating in the United States require uranium in order to fuel their reactors. These plants currently provide 22 percent of our nation's electricity with no greenhouse gas emissions. The electricity generated by nuclear power now costs less than electricity from any other source. However, before uranium can be used to generate electricity it must go through a critical process known as "enrichment."
USEC's allegation that uranium enrichment is a "product," instead of a "service" is false. In fact, power plant operators buy uranium, which is truly a product, and then separately purchase enrichment services, under long-term services contracts negotiated in highly competitive international markets.
Whenever it was previously in its interest to do so, USEC has argued in court that its enrichment contracts are for the sale of services, not for the sale of a product. That was USEC's defense against contract claims by its enrichment customers, and the court agreed. Moreover, in its U.S. Securities and Exchange Commission filings and its annual reports, USEC has routinely referenced its business as providing "enrichment services" to utilities.
Regrettably, the Commerce Department has already issued its preliminary findings in accord with USEC's revised definition of the enrichment services industry, at levels that will only increase the prices of competitive services by more than 30 percent. Since the preliminary determinations were announced, U.S. prices have skyrocketed. Without competition, USEC has been able to dictate terms to its U.S. customers. It is most interesting that enrichment prices in other world markets during this period have not changed at all.
U.S. nuclear utilities are basically the hostages of USEC.
As a private entity, USEC took over operation of two U.S. government enrichment plants, one in Piketon, Ohio, and the other in Paducah, Ky., under extremely low-cost leases. But the plants are from the 1950s era, and they use old technology which is not competitive with the newer technology of Eurodif and Urenco.
In 1993, the U.S. agreed to purchase 500 metric tons of Russian highly enriched uranium (HEU) over a 20-year period. As part this bilateral initiative to reduce stockpiles of weapons-grade nuclear materials, this HEU is being processed for use in commercial nuclear reactors. USEC was made the exclusive broker of the Russian enriched uranium for the first five years of the deal.
Since USEC's domestic enrichment facilities are increasingly noncompetitive, and Russian enriched uranium costs less than USEC's production costs, USEC has become increasingly dependent on Russian supplies. Russia now provides about half of USEC's enrichment services. The company is betting its future on maximizing revenue from its role as exclusive broker in the Russian HEU deal and then utilizing trade actions to force its two European competitors to relinquish U.S. market share.
However, in an unforeseen development, U.S. utilities, who are outraged by USEC's initiation of the trade action and the wrongful application of U.S. trade law, are vigorously petitioning the government to allow other companies to function as additional or alternative executive agents in competition with USEC.
U.S. utilities view USEC's actions as an effort to create a monopoly in the U.S. market. Unfortunately, USEC appears to be succeeding.
If Urenco and Eurodif were to be priced out of the market by virtue of these duties, then USEC would be the only game in town for the world's largest nuclear fuel market. USEC's trade case grotesquely manipulates trade law. It is not, as USEC insists, an effort to "level the playing field." Rather, it is an effort to increase the prices utilities pay for their nuclear fuel and the prices consumers will pay for nuclear generated electricity, when they are already burdened with heavy energy costs due to high gasoline and natural gas prices.
Furthermore, applying anti-dumping and countervailing duty laws to trade in enrichment services would establish a precedent that could place all U.S. service exporters at risk. A terrible precedent indeed considering that our country is the world's largest exporter of services.
The U.S. enrichment services market must remain open in order that European enrichment companies are able to sell their services in the U.S. Our trade policy should be consistent with our energy policy.
This administration's desire to enhance the utilization of the American nuclear industry should certainly not be undermined by a trade policy that acts only to increase costs and reduce competition for a service that is absolutely critical to the industry's success. Back to common sense.

Alan K. Simpson is a former Republican member of the United States Senate from Wyoming.

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