Uranium Enrichment: Observations on the Privatization of the United States Enrichment Corporation

GAO discussed the privatization of the U.S. Enrichment Corporation (USEC). GAO noted that: (1) the Energy Policy Act requires it to evaluate the USEC privatization plan before implementation and to report to Congress on whether the plan would result in any ongoing government obligations or undue costs and whether the expected sale revenues would meet or exceed USEC net present value; (2) its determination of USEC net present value will include an updated cash flow model for USEC to account for changes in the market since 1992; (3) there is a possibility that the net present value calculation of USEC future revenues will be greater than the USEC sale price, in which case the government should retain USEC; (4) proposed amendments to the act seek to enhance the value of USEC to facilitate its privatization; (5) each draft amendment should balance efforts to increase USEC value with the need to foster open competition between the privatized corporation and its competitors; and (6) each proposed amendment should also evaluate whether the increased liability imposed on the government is worth the increased returns to the government upon the sale of USEC.