Here's something for fundamentals again,
USEC Urges Congress to Act Now to Make Recent Trade Agreement with Russia Enforceable
John K. Welch, USEC Inc. president and CEO, told the U.S. Senate Committee on Energy and Natural Resources today that Congress needs to act on legislation that would give the U.S. government the authority it needs to enforce a recent trade agreement on nuclear fuel imports from Russia. USEC (NYSE:USU) believes a recent trade agreement that gives Russia limited access to the U.S. nuclear fuel market starting in 2011, access to 20 percent of the market beginning in 2014 and full access by 2021 reflects an industry consensus on how to proceed with Russian fuel imports. However, the agreement is threatened by a 2005 decision by the U.S. Court of Appeals for the Federal Circuit in a case involving French nuclear fuel. The court decided that certain enrichment transactions between foreign enrichers and U.S. utilities are outside the scope of the U.S. trade law used to control imports of Russian fuel. If the Russian fuel can be sold and delivered pursuant to transactions that meet the specific terms of the French case, this fuel will enter the U.S. market over and above the quotas negotiated in the trade agreement with Russia. Welch explained that one of the most pressing challenges facing the industry today is how to integrate Russia’s huge nuclear fuel supply into the U.S. market without endangering America’s own nuclear fuel industry. The recent agreement provides a critical transition period to deploy new domestic capacity while giving Russia an opportunity to sell in the United States without threatening the stability of the U.S. market. "Today’s stable market conditions won’t hold if the U.S. government cannot enforce limits on Russian uranium imports,” Welch testified. "Without an enforceable agreement with Russia during the transition, our Paducah plant, our advanced technology project and, I suspect, all the projects underway to ensure America has a secure fuel supply may be in jeopardy. "No one, including USEC, wants to exclude Russia from the U.S. market,” Welch said. "But we need Congress to give the administration the authority to make the agreement work.” Kentucky’s U.S. Senators Mitch McConnell and Jim Bunning, as well as U.S. Rep. Ed Whitfield, recently introduced legislation clarifying that all nuclear fuel imports are subject to U.S. trade law. This legislation would ensure that the agreement with Russia can be enforced according to its terms. "USEC will support any measure that will ensure that the terms negotiated with Russia can be enforced,” said Welch. "Those terms provide an extremely reasonable market opportunity for Russia and for utilities. And they give USEC and others who want to build a U.S. nuclear renaissance based on a secure domestic fuel supply the market stability we need to finance and complete our new enrichment projects.” USEC is deploying new enrichment capacity in Piketon, Ohio. The American Centrifuge Plant will help produce the nuclear fuel that American utilities need and replace the fuel that comes from dismantled Russian nuclear warheads under the Megatons to Megawatts nonproliferation program, which expires in 2013. "We are at a critical juncture in our efforts to support the nuclear renaissance,” Welch said. "Action now to ensure that the recent agreement with Russia is enforceable will facilitate the stable and strong U.S. nuclear fuel industry needed for the renaissance.” Welch testified along with Administration officials and nuclear energy industry leaders. A copy of Welch’s written testimony is available on USEC’s website under News Room:
http://www.usec.com/v2001_02/Content/News/NewsTemplate.asp?page=/v2001 _02/Content/News/Speeches/03-05-08.htm (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants. It expects to deploy the next generation uranium enrichment technology in Piketon, Ohio – the American Centrifuge. The United States Enrichment Corporation, a subsidiary of USEC Inc., operates America’s only uranium enrichment plant in Paducah, Kentucky, and does contract work for the U.S. Department of Energy in Piketon.
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