The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Thursday, October 30, 2003

Lower rate offered to USEC from TVA
The proposal is part of an incentive package to help land the new USEC plant.

By Bill Bartleman

The Tennessee Valley Authority has submitted a proposal to USEC Inc. that lowers power costs as part of an incentive package to persuade USEC to build its new uranium enrichment plant in Paducah, TVA Chairman Glenn McCullough said through a spokesman.

The proposal for a new rate structure was submitted earlier this month as part of an incentive package submitted by the Kentucky Economic Development Cabinet, according to TVA and U.S. Rep. Ed Whitfield, R-Hopkinsville. McCullough said the staff of TVA met with USEC officials on Oct. 20 to discuss the proposal.

McCullough said that because of a confidentiality agreement, he could not discuss details of the proposal or what was discussed at the meeting. He would say only that it was "a good meeting with good discussion."

Whitfield said he spoke with McCullough Wednesday to emphasize the importance of the incentive to attracting the new plant.

"Chairman McCullough basically said that they had made a proposal to USEC as a supplement to what the state was doing, and that he had not heard back from USEC at this point," Whitfield said. "He indicated TVA would continue to be flexible in dealing with USEC."

Power costs at the Paducah Gaseous Diffusion Plant in 2001 were more than $330 million, more than half of the company's production costs. Whitfield said lowering rates immediately would give USEC some of the capital needed to finance the new plant, projected to cost about $1.5 billion.

The savings over six or seven years could top $200 million, making Kentucky's incentive package competitive with the package supporting building the plant at Piketon, Ohio, where a building already exists that could house the new gas centrifuge plant.

Whitfield said he tried to contact USEC President Nick Timbers, but Timbers was out of the country. He said arrangements were being made to talk with other USEC officials familiar with the talks with TVA.

Whitfield said that until he hears more about the proposal, "I'm not going to say if I'm optimistic or pessimistic" that an incentive can be offered by TVA to give Paducah an edge over Ohio.

"From a positive standpoint, Glenn didn't slam the door" to continuing discussions with USEC, "and as long as the door's open, there's room to talk," Whitfield said.