The Paducah Sun

January 12, 2000

TVA contract not slowing review by USEC

Staff and wire reports

USEC Inc. still is looking at ways to cut costs at enrichment plants at Paducah and near Portsmouth, Ohio, despite a new 10-year, $725 million contract to supply enriched uranium to three Tennessee Valley Authority commercial reactors.

Although the contract solidifies the USEC-TVA business relationship, it has no bearing on ongoing financial reviews, said USEC spokeswoman Elizabeth Stuckle.

"Based on the contract, it would not have any near-term effects on the company's finances. It would have some long-term effect," she said. "We're still evaluating ways to cut costs."

Among the potential cuts is the rumored layoff of as many as 850 workers this year at Paducah Gaseous Diffusion Plant and its sister plant near Portsmouth. Atomic workers' union officials and federal lawmakers from Kentucky and Ohio say they fear job cuts, but USEC has not confirmed any layoffs.

Stuckle said Tuesday that she could not comment on the status of jobs. She did say employment levels is among a variety of issues the company is reviewing to be more cost competitive.

In December, the TVA board of directors approved a contract with USEC's subsidiary, the U.S. Enrichment Corp., to supply enriched uranium to commercial reactors that could make weapons material. The contract is part of a deal with the U.S. Department of Energy to produce tritium, which is then used to manufacture nuclear weapons. DOE has selected TVA's Watts Bar Nuclear Plant at Spring City, Tenn., as its future production source for tritium, a hydrogen isotope used to enhance the explosive force of every nuclear weapon in the U.S. arsenal.

TVA's two-unit Sequoyah Nuclear Plant near Chattanooga, Tenn., would be Watts Bar's backup plant, though TVA officials don't expect it will ever be needed for the simultaneous production of tritium and electricity.

Under the uranium pact, TVA is assured of a reliable source of domestically produced enriched uranium. Some other sources in Canada and Australia are barred by international agreements from selling uranium for weapons use.

"This long-term contract ensures the continuity of our relationship with TVA, an important USEC customer and supplier," said USEC President and Chief Executive Officer William H. "Nick" Timbers.

The two USEC plants are the country's only suppliers of enriched uranium. The pact with TVA begins in 2001 and could be extended. USEC and TVA have had a business relationship for nearly 30 years.