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FOR IMMEDIATE RELEASE:
September 19, 2013
NERA Study: Utilities at Risk of Higher Prices, Reduced Competition among Fuel Suppliers without American Centrifuge
BETHESDA, Md. -USEC Inc. (NYSE: USU) today released key findings from a study conducted by NERA Economic Consulting of the enrichment market and the positive effect of USEC's American Centrifuge Plant. NERA's study concluded that without the American Centrifuge Plant, U.S. nuclear utilities will be dependent on foreign-owned sources of low enriched uranium, and all nuclear utilities will be at risk of losing purchasing power, facing higher prices and being subject to anti-competitive behavior by foreign enrichers.
"NERA's report makes it clear that the entire nuclear industry has a stake in the success of the American Centrifuge," said John Welch, USEC president and chief executive officer. "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."
Key Findings
NERA analyzed multiple scenarios for future market concentration. It determined that the current enrichment marketplace becomes very highly concentrated in several scenarios without the American Centrifuge Plant. NERA concluded that the American Centrifuge Plant will preserve and increase competition in the enrichment industry and would provide economic benefits to enrichment buyers through a range of scenarios. NERA also concluded that without the American Centrifuge Plant the enrichment market will be dominated by the remaining suppliers, and utilities will face increased risk of higher enrichment prices.
NERA compared the loss of American Centrifuge Plant to a merger that would similarly reduce the number of competitors in a market. NERA found that the market concentration increase that would result from the loss of the American Centrifuge Plant would be so high that world competition authorities would likely conclude that a merger causing the same change in concentration with no offsetting benefits would result in significant harm to competition and should not be approved. The NERA report stated that "without the American Centrifuge Plant, the enrichment market faces a similar and equally unacceptable situation."
USEC commissioned NERA to conduct the independent market analysis. NERA is an industry leader who has performed similar analysis for numerous companies and the U.S. Department of Energy. The full report can be found at http://www.usec.com/nera.
Background
The American Centrifuge is an advanced U.S. gas centrifuge uranium enrichment technology. Commercial deployment of the American Centrifuge technology will provide a long-term, reliable and secure source of fuel for commercial nuclear power plants in the United States and around the world. American Centrifuge deployment will support U.S. manufacturing in 28 states, create thousands of U.S. jobs, and play a major role in ensuring America's energy and national security.
The value of the role that the American Centrifuge plant provides is highlighted further by the fact that without its successful deployment the United States will be without indigenous uranium enrichment technology - critical to national security - for the first time in nearly 60 years. The Center for Strategic and International Studies recently warned in its report titled "Restoring U.S. Leadership in Nuclear Energy" that "America's nuclear energy industry is in decline" and that the "nation is in danger of losing an industry of unique strategic importance and unique promise for addressing the environmental and energy security demands of the future." The national security oriented Lexington Institute recently warned that the decline of the U.S. uranium enrichment industry threatens the nation's energy and security goals.
USEC Inc., a global energy company, is a leading supplier of enriched uranium fuel for commercial nuclear power plants.
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Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 - that is, statements related to future events. In this context, forward-looking statements may address our expected future business and financial performance, and often contain words such as "expects", "anticipates", "intends", "plans", "believes", "will" and other words of similar meaning. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For USEC, particular risks and uncertainties that could cause our actual future results to differ materially from those expressed in our forward-looking statements include, but are not limited to: risks related to the ongoing transition of our business, including uncertainty regarding the transition of the Paducah gaseous diffusion plant and uncertainty regarding the economics of and continued funding for the American Centrifuge project and the potential for a demobilization or termination of the project; the impact and potential extended duration of the current supply/demand imbalance in the market for low enriched uranium; the impact of enrichment market conditions, increased project costs and other factors on the economics of the American Centrifuge project and our ability to finance the project and the potential for a demobilization or termination of the project; uncertainty regarding the timing, amount and availability of additional funding for the cost-shared American Centrifuge technology research, development and demonstration (RD&D) program with the U.S. Department of Energy (DOE) and the dependency of government funding on Congressional appropriations; restrictions in our credit facility on our spending on the American Centrifuge project; limitations on our ability to provide any required cost sharing under the RD&D program; uncertainty concerning our ability through the RD&D program to demonstrate the technical and financial readiness of the centrifuge technology for commercialization; uncertainty concerning the ultimate success of our efforts to obtain a loan guarantee from DOE and other financing for the American Centrifuge project or additional government support for the project and the timing and terms thereof and the potential for a demobilization or termination of the project if financing or additional government support is not in place at the end of the RD&D program; potential changes in our anticipated ownership of or role in the American Centrifuge project, including as a result of the need to raise additional capital to finance the project; the impact of actions we have taken or may take to reduce spending on the American Centrifuge project, including the potential loss of key suppliers and employees, and impacts to cost and schedule; the potential for DOE to seek to terminate or exercise its remedies under the RD&D cooperative agreement or June 2002 DOE-USEC agreement; changes in U.S. government priorities and the availability of government funding, including loan guarantees; and other risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q which are available on our website www.usec.com. We do not undertake to update our forward-looking statements except as required by law.
Contact
Media: Paul Jacobson (301) 564-3399
Investors: Steven Wingfield (301) 564-3354
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