The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Wednesday, October 29, 2003

TVA cuts needed to woo USEC
An immediate cut in power rates has been called the key factor in persuading USEC to build its new plant in Paducah.

By Bill Bartleman bbartleman@paducahsun.com--270.575.8650

An agreement three years ago by the Tennessee Valley Authority to cut power rates was a major factor in USEC's decision to keep the Paducah Gaseous Diffusion Plant open. Now Paducah officials hope TVA will cut rates even more and soon to help persuade USEC to build its new gas centrifuge plant in Paducah.

Ken Wheeler, chairman of the Greater Paducah Economic Development Council, said an immediate cut in power rates is now the key factor in persuading USEC to build the plant here rather than in Piketon, Ohio.

He said USEC could use the savings to help finance the new plant, expected to cost $1.5 billion. U.S. Rep. Ed Whitfield, who has been assisting in negotiations with TVA, said lower rates could save USEC as much as $200 million over six or seven years.

When the new plant opens in about 2010, the gaseous diffusion plant will be closed, eliminating hundreds of high-paying jobs. The new plant will employ about 500 people.

"Power costs at the gas centrifuge plant are about one-half of USEC's total operating budget," Wheeler said. "Any kind of a rate change would certainly be helpful."

USEC's power costs in 2001 totaled more than $330 million.

Whitfield said the value of any cut in power rates would be added to the value of an incentive package the state submitted to USEC earlier this month. Details of the state's package have not been made public, but Wheeler said "it is very attractive."

USEC is expected to announce where the new plant will be built by the end of the year, Wheeler said. Piketon is believed to have an advantage over Paducah because of an existing building that could be used for the centrifuge plant. Estimates are that it would cost more than $100 million to duplicate that building in Paducah.

The new gas centrifuge plant will use only a fraction of the power used in the power-intensive gaseous diffusion process, which was developed more than 50 years ago.

Whitfield said TVA officials maintain "they are as low as they can go, but they also say they are interested in helping with economic development."

Wheeler said he's encouraged because TVA has not closed the door to further discussions about lowering rates. Whitfield said he planned to talk with TVA Chairman Glenn McCullough today.

"Hopefully, I'll have a clearer understanding of TVA's position after I talk with the chairman," Whitfield said. "TVA makes the argument that the rates already are extremely low based on the volume, but I have no access to their records.

"We're doing everything we can to ask TVA to extend the very best rates possible to USEC. It is critical to getting the new plant."

TVA spokesman Gil Francis said he wasn't familiar with the request for lower rates at USEC. He said no one would be available for comment until today.