Comments on Smith Barney's Uranium Enrichment Analysis

GAO discussed an independent assessment of the Department of Energy's (DOE) uranium enrichment program. GAO noted that the assessment concluded that: (1) the enrichment program should be restructured as a government corporation and operate on a competitive basis; (2) DOE could reduce total costs by making various adjustments and policy decisions; and (3) the government should retain responsibility for environmental and decommissioning costs associated with enriched uranium production. GAO also noted that: (1) past unrecovered costs have hindered congressional initiatives to restructure the program as a government corporation; (2) DOE government customers were responsible for about $764 million of the $9.6 billion in unrecovered costs; (3) a $5.7-billion write-off was not necessary to ensure competitiveness, since DOE priced its enrichment services to recover $3 billion over the next 12 years and projected $3 billion in net income by 2000; (4) restructuring the enrichment program would require the establishment of a fund to decommission the three existing nuclear fuel plants; and (5) several factors concerning the establishment of a private sector enterprise involved licensing old facilities, increased competition, and the resolution of liabilities.