The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Tuesday, September 16, 2003

Paducah seek TVA deal for USEC
The GPEDC is trying to negotiate a favorable rate that would help lure USEC's gas centrifuge plant to Paducah.

By Joe Walker

Local negotiators will meet again today with Tennessee Valley Authority officials to try to secure more favorable power rates to protect the future of the 1,200-job Paducah Gaseous Diffusion Plant.

Ken Wheeler, chairman of the Greater Paducah Economic Development Council, said the 4:15 p.m. meeting here is one of several in ongoing talks with TVA. The council is working with the state on a bid for a $1.5 billion, 500-job gas centrifuge plant that will replace the Paducah plant by early next decade.

The tentative deadline to submit the package to USEC Inc. is Oct. 10. USEC said the plant site would be announced by the end of the year.

Paducah is competing with Piketon, Ohio, which USEC says has an advantage because of having a gas centrifuge complex and lacking Paducah's seismic problems. Wheeler said the power issue is one that could level the playing field.

"It could be a major, major point in our favor," he said, "depending on how TVA responds."

USEC is saving millions of dollars annually in production costs under a power contract signed three years ago with TVA. The deal was a major reason USEC upgraded the Paducah plant and closed its sister plant in Piketon.

TVA representatives are visiting Paducah three weeks after their board approved a 7.4 percent increase in wholesale home and business rates charged to 158 distributors in seven states, including Paducah Power System, and a 2 percent decrease in wholesale rates for 1,500 large manufacturers. The increase will take effect Oct. 1.

Although the hike does not affect the USEC contract, Paducah Power System board members talked at length before the TVA decision as to whether their response would affect the USEC power talks. The Paducah Power board agreed not to respond until after the vote.

Paducah Power General Manager David Clark wrote TVA Chairman Glenn McCullough Sept. 9 saying Paducah Power would not sign a rate-change agreement. The increase is still binding because under a rolling contract, Paducah Power can't change suppliers for five years.

Clark wrote that unlike with prior rate increases, TVA did not negotiate meaningfully this time with distributors. TVA did not fairly consider Paducah Power concerns about the adequacy of a cost-of-service study, competitiveness of industrial rates and a credible business plan to support TVA economic development objectives, the letter said.

"It is our understanding from representations made by TVA staff that there are no penalties to be assessed or punitive actions taken against any distributor that fails or refuses to sign the rate change agreement," Clark wrote, "and that no TVA programs or credit programs will be delayed or denied to us."

Thirty-one Tennessee Valley companies needing at least 1,000 kilowatts at a time will save about $2.5 million out of a combined annual bill of about $700 million, TVA said. Local examples are H.B. Fuller and Dippin’ Dots in Paducah, Continental General Tire in Mayfield and most Calvert City plants.

More than 100,000 customers of 10 western Kentucky distributors will bear the increase, ranging from about $4 to $6 during a typical month.