By The Hill Staff - 05/25/06 12:00 AM EDT
Nuclear utilities are lobbying the Commerce Department to end its restrictions on the importation of enriched uranium from Russia, but are doing so at a time when U.S.-Russian relations may be at a post-Soviet low point.
Lobbyists for the utilities say restricted access to Russian uranium has increased market prices. That jeopardizes the “nuclear renaissance” in this country, where no new nuclear plants have been ordered for more than two decades.
Utilities that operate 85 percent of the nuclear plants in the United States have formed the Ad Hoc Utility Group, or AHUG, to lobby against the import restriction.
The restriction, which is effectively a ban on commercially produced Russian enriched uranium, has been in place since 1992. The Commerce Department determined then that Russia had been dumping enriched uranium, selling it at below production costs.
The Russian Suspension Agreement is the subject of an International Trade Commission hearing scheduled for today.
The only domestic enrichment service provider, United States Enrichment Corp. (USEC), has argued that the restriction is critical to its future viability, especially as it constructs a more efficient but technically challenging enrichment facility.
“Unlimited Russian imports will destabilize the existing U.S. market and undermine deployment of domestic sources of enriched uranium,” said Elizabeth Stucklee, a USEC spokeswoman.
Jim Tramuto, a lobbyist at PG&E, which has lobbied against the agreement, said Commerce was right to impose the import ban in 1992.
“But those market conditions have changed,” Tramuto said. “The idea Russians would be dumping is just not accurate.”
Tramuto called access to enriched uranium produced outside the United States “a very big issue” for nuclear utilities in AHUG.
In a separate case, nuclear utilities have also lobbied against Commerce-imposed countervailing duties on enriched uranium produced by Urenco, which is based in Germany, and Areva, which is based in France.
Commerce found these companies to be dumping in the U.S. market as well. Recent court cases have favored the utility position.
The twin cases have propelled uranium prices upward, Tramuto said. Higher prices could make it less likely that investors go forward with a series of new plants that are planned, he said.
Stucklee acknowledged that prices are higher but said U.S. utilities are not paying more than worldwide market prices. Prices were lower because of unfair market practices of USEC’s competitors, Stucklee said.
No new nuclear plant has been ordered for over two decades, but with energy costs rising across the board, from gas to electricity, the industry hopes to build “next generation” plants within the next decade.
There are 103 nuclear plants operating in the United States. Utilities have initial plans to develop 12 more. More than 400 nuclear plants are in operation worldwide, with dozens more planned.
The fight over fuel costs also comes as utilities embark on a lobbying campaign to build support for their industry as a partial solution to fears of global warming. Nuclear utilities do not emit carbon dioxide, which is a key greenhouse gas.
So far the fight over the price of enriched uranium has been limited to Commerce and not Capitol Hill. But utilities were able to convince House Energy and Commerce Committee Chairman Joe Barton, a Texas Republican, to weigh in on their side.
Barton wrote the department last year suggesting that additional enriched uranium from Russia be allowed into U.S. market and that Commerce impose a quota as a protection against future market abuses. Barton said an amount of Russian produced enriched uranium equal to 10 percent of domestic uranium market should be allowed in.
“Thus, the necessary supply for U.S. nuclear utility companies would be assured,” Barton wrote. In a separate letter, Barton criticized Commerce for imposing duties on European uranium-enrichment companies.
Stucklee, of USEC, noted that a significant amount of enriched uranium comes from Russia, even with the terms of the suspension agreement.
The uranium allowed in comes from the highly enriched variety used in nuclear warheads. To encourage Russia to dismantle is nuclear arsenal, the United States, through USEC, is buying highly enriched uranium converted to fuel in nuclear plants.
This type of fuel provides nearly 50 percent of the total nuclear fuel needs of America’s nuclear utilities.
But prices paid by USEC for this uranium have risen as well under the terms of a renegotiated contract. Stucklee said the price USEC pays is based on a formula that matches the price with market rates, which have risen in recent years on higher demand.
Opening the market further, Stucklee said, could result in the United States’ “overdependence” on Russia for uranium fuel.
Lobbyists working with AHUG expect Russian officials to bring up the suspension agreement during the G-8 Summit in Russia in July.
Russian nuclear officials met with Commerce officials this week and apparently urged them to end the suspension agreement.
A complication, though, is the seemingly deteriorating relationship between the United States and Russia. In a recent visit to neighboring Lithuania, Vice President Cheney scolded Russia for curbing civil liberties and using its vast energy resources to bully neighbors formerly under Soviet control.
That prompted Russian President Vladimir Putin to compare the United States with a hungry wolf that listens to no one.