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Study: USEC’s Enrichment Plant Will Benefit Customers

Sept. 26, 2013—The deployment of USEC’s American Centrifuge Plant (ACP) will “preserve and increase competition in the enrichment industry and provide economic benefits to enrichment buyers,” a recent study by NERA Economic Consulting has concluded.

On the other hand, the study said, if the Piketon, Ohio, facility is not deployed, U.S. nuclear utilities will become increasingly dependent on foreign-owned sources of enriched uranium. This will become particularly evident after 2020, when enrichment demand is expected to increase to meet existing capacity, NERA said.

The USEC-commissioned NERA study “ACP and World Enrichment Market” analyzed seven future market scenarios and found in all cases that without the ACP the global enrichment market would become highly concentrated, with higher risks of anti-competitive behavior among existing enrichment suppliers.

The study notes that 90 percent of world enrichment in 2012 came from four suppliers—USEC, Europe’s AREVA and URENCO, and Russia’s TENEX. In addition, NERA says, AREVA and URENCO could be considered to be linked via their cooperative business and technology arrangements.

USEC is developing an updated plan for financing and commercializing the centrifuge plant. But current market conditions have made it difficult to secure long-term contracts to support the commercial startup of the facility, NERA said.

NERA’s report said enrichment buyers should be looking beyond current market conditions to the period after 2020. At that time, enrichment capacity will be more fully used and enrichment suppliers may be more likely to exercise market power.

“NERA’s report makes it clear that the entire nuclear industry has a stake in the success of the American Centrifuge [Plant],” USEC President and CEO John Welch said. “In the long term, the presence of the American Centrifuge Plant will increase competition in the enrichment industry and provide utilities with more competitive enrichment prices and better contract terms.”