Platts - Friday, June 01, 2007 http://www.platts.com ------------ USEC signs five-year power supply deal with TVA, company says Washington (Platts)--1Jun2007 Uranium enrichment company USEC on Friday said it had signed a five-year contract with the Tennessee Valley Authority for electricity at USEC's enrichment plant in Paducah, Kentucky. Financial terms of the deal and the load of the gaseous diffusion plant in Paducah were not disclosed. But Bethesda, Maryland-based USEC said the power prices in the deal will increase moderately on an annual basis and be adjusted for changes in TVA's fuel and purchased power costs. The deal replaces a one-year contract that expires June 1, and in the new deal that expires May 31, 2012, USEC said it contracted for more supply to meet expected demand and to allow the company to be responsive to the rapidly changing uranium market. USEC's baseload power needs make it TVA's largest industrial customer, John Welch, USEC's president and CEO, said in a statement. "USEC needs the certainty and predictability of a long-term power agreement as it continues to provide a reliable source of enriched uranium fuel to our nation's nuclear power plants," Welch said. ------------ Uranium price said to hit $133/pound U308 after auction Washington (Platts)--1Jun2007 The spot price of uranium rose by more than $8 to between $133 and $134/pound of U3O8 based the results of Wednesday's auction of 100,000 pounds of U3O8 by Texas-based Mestena Uranium, market sources said Friday Price reporting firm TradeTech early Friday said its exchange value had risen to $133/pound at the end of May from $113/pound at the end of April. But the price was expected to move even higher--possibly to more than $140/pound after a second auction--scheduled for Friday by Georgia-based trader American Fuel Resources. AFR, on behalf one of the investment funds it works with is offering 250,000 pounds of U3O8 and 100 metric tons uranium as UF6, which is equivalent to about 260,000 pounds of U3O8. Given the confidential nature of the bidding process, only sketchy information is generally available after uranium auctions and most of that information comes from companies that submitted unsuccessful bids. On top of these auctions, Canada's Denison Mines has informed market participants that it will offer for auction about 125,000 pounds of U3O8 on June 12. The uranium is believed to be from the recovery of usable uranium from alternate feed processing at the company's White Mesa uranium mill in Utah. Market sources told Platts that spot U3O8 deals over the next two weeks are likely to occur within the range of $135-$150/lb U3O8. --Mike Knapik, newsdesk@platts.com ------------ USEC has begun construction of uranium enrichment plant Washington (Platts)--31May2007 USEC Inc. began construction of a uranium enrichment plant in Piketon, Ohio, the company said May 31. USEC President/CEO John Welch called the work on the American Centrifuge Plant an "important step toward deploying US developed centrifuge technology to provide enriched uranium fuel for nuclear power plants." USEC said it expects to operate a lead cascade of centrifuge machines at the new facility later this year, to begin commercial operations in late 2009, and to further expand plant operations by 2012. USEC now operates the only uranium enrichment facility in the US. That facility is based on an older technology. ------------ Bush calls for mid-term national, long-term global GHG targets Washington (Platts)--31May2007 US President Bush on Thursday called on major developed and developing nations to commit to a "long-term global goal for reducing greenhouse gases" and "mid-term" national GHG targets. The president outlined his proposals in a speech in Washington to the US Global Leadership Campaign in advance of a G8 meeting in Germany. Bush's proposal, which would involve China, India, Brazil and about a dozen other countries, would succeed the Kyoto Protocol. The protocol expires with the end of its compliance period in 2012. Bush wants agreement on both strategies by the time he leaves office 18 months from now, White House Council on Environmental Quality Chairman James Connaughton told reporters at a briefing before Bush's speech. Energy and climate change was just one part of the speech, which Bush framed as a call for "developed countries to help poor nations lift themselves out of poverty and despair." He also called for the elimination of tariffs that prevent imports and exports of low-carbon technologies, which should be available "at a low cost or no cost at all" to countries that need them as their economies grow. Bush touted clean coal technology and renewable energy in the power and transportation sectors while emphasizing the need for "clean, safe nuclear power," which does not emit GHGs. He did not mention mandatory emissions caps. The president also said the 18 months of talks should include the development of a "strong and transparent process for measuring each country's results" in cutting GHGs. Connaughton told reporters that reaching agreement on all parts of the Bush plan was a "Herculean" objective. ------------ UK utility Scottish and Southern in talks on new nuclear build London (Platts)--31May2007 UK utility Scottish and Southern Energy Thursday said it is talking to generator British Energy and other companies about developing new nuclear power stations in the country. "We have to develop optionality on nuclear--optionality to buy...and optionality to invest," Ian Marchant, SSE's chief executive, said in a conference call. British Energy is the country's largest generator and operates eight nuclear power stations that have a combined capacity of almost 10 GW. The company is pushing the government to encourage nuclear development, and is courting potential partners to help support new stations on its existing sites. Marchant said any decision on SSE's role in nuclear energy would take years, but that the company wanted to maintain options to buy power from generators or partner in new construction. "Therefore we are talking to people and it would be bizarre not to talk to the largest nuclear generator in the UK. Of course we are discussing...but not only with them," Marchant said. The UK government last week said it favored private construction of new nuclear power stations but would wait until October before making a final decision on the technology's role in the country's energy mix. "We don't know how it will turn out in the next year or 18 months, but we need to be involved in the debate," Marchant said. The UK government announced Wednesday that it is to sell off a 25% stake in British Energy, reducing its interest from 64% to 39%. The share offering would raise more than GBP2.2 billion (Eur3.2 billion, $4.3 billion) at current prices. ------------ Spot uranium price likely to jump after two auctions this week Washington (Platts)--30May2007 While the spot price of uranium is likely to rise sharply after two auction-like sales are completed Wednesday and Friday, the two leading price-reporting firms late Tuesday were keeping their prices at last week's levels. Ux Consulting maintained its price at $125 per pound of U3O8, while TradeTech kept its price at $122/pound U3O8. The first auction this week is by Texas-based Mestena Uranium, which is accepting bids Wednesday for delivery of 100,000 pounds of U3O8 in June. The second auction is set for Friday by Georgia-based trader American Fuel Resources, which is said to be acting on behalf of an investment fund. In this auction, AFR has told potential buyers that it has available for sale 200,000 pounds of U3O8 and 100 metric tons of uranium as UF6 (the equivalent of about 260,000 pounds of U3O8). Ux Consulting, in its weekly report, did raise its long-term price by $10 to $95/pound. But Ux Consulting said this base-escalated price was just one component of pricing mechanisms being offered by sellers. Ux also noted that its long-term price represented the "bottom end" of a range of base-escalated offers. ------------ Progress Energy deferring potential nuclear construction Washington (Platts)--30May2007 Progress Energy said it is deferring potential nuclear construction in North Carolina while it pursues energy conservation measures. The company said in a May 30 statement that it has notified the NRC that if it moves forward with new nuclear construction at its Harris-1 site, a new unit would be online in 2018 or later. That date would put the unit online at least two years later than initial energy demand forecasts had indicated, it said. In early 2006, Progress Energy said it had picked the Harris-1 site as the location for building up to two Westinghouse AP1000 PWRs. At that time, Progress Energy said a new unit could be online in 2015. The Harris-1 site was originally planned for four reactors, but only one was built. The company said a final decision on new nuclear construction was still more than a year away. Progress Energy also said it has proposed a two-year moratorium on new coal plants while it pursues demand-side management and energy-efficiency programs. The company said it will evaluate the effectiveness of the programs over the next two years to determine their viability in reducing electricity demand. ------------ All four units at UK Hinkley, Hunterston nuclear plants back soon London (Platts)--30May2007 All four units at the UK's Hinkley Point B and Hunterston B nuclear power plants should be back in operation soon, British Energy executives said in a conference call Wednesday morning. Boiler problems at the plants helped push down output in the latest financial year. The BE executives said that the first unit to come back at Hunterston B was now at 70% output. The first at Hinkley Point B was in start up mode now. The second at Hunterston B was in the process of start up. After that the company would move on to the second at Hinkley Point B. You did not try to restart two units at a plant at the same time, CEO Bill Coley said, but rather brought them back in sequence. Asked if all four should be back by mid-June he said that was "not unreasonable at all." They are expected to return to 70% output, rather than maximum capacity. STUDYING SITES FOR NUCLEAR NEW BUILD Asked about the timetable for possible nuclear new build BE said that the government's consultation on issues such as waste and decommissioning would run until mid-October. In parallel BE is talking to potential partners in new build and potential electricity sales customers, including industrial users hoping to hedge future costs. The government is also conducting site studies and BE is carrying out its own study of which of its existing sites would be most suitable for new build. The BE executives were asked if the government could seize BE's existing nuclear power plant sites by compulsory purchase and possibly award them to a different operator for new build. The executives said government could seize the land if BE was not exploiting it. But since BE was in talks with partners about new build, it was not leaving the sites to go fallow. The BE executives said they thought the government was "content" with the way things were going. ------------ URS Corp. to acquire WGI for $2.6 billion Washington (Platts)--29May2007 The engineering and design firm URS Corp. will acquire Washington Group International for approximately $2.6 billion in cash and stock, the companies announced May 28. The combined company, which will be called URS Corporation, "will offer a full range of engineering, construction, operations and maintenance services for both fossil fuel and nuclear power plants globally," and "will have one of the largest teams of nuclear scientists and engineers in the industry, as well as a leading nuclear decommissioning and remediation business, enabling it to meet the anticipated resurgence in the nuclear energy market," the companies said. Under an agreement approved unanimously by both companies' boards of directors, Washington Group shareholders will receive $43.80 cash and 0.722 shares of URS common stock for each Washington Group share, they said. The combined company would have projects in over 50 countries and more than 54,000 employees, with projected combined 2007 revenues of approximately $8.6 billion, the companies said. ------------ Areva, EDF to seek UK assessment of EPR design Paris (Platts)--25May2007 Areva welcomes the new UK nuclear consultation process and will apply for assessment of its EPR reactor design "shortly," jointly with Electricite de France, the company said May 25. The joint project with EDF covers the "pre-licensing" phase only, after which Areva will have the right to sell EPR to "whomever we want" for UK deployment, said Robert Davies, Areva NP's UK marketing director. Areva is organizing a group of "interested potential licensees" who must better understand the EPR design to be able to apply for a site license to build the 1,600-MW PWR in the UK, he said. E.On has signed onto that group and "Areva is at an advanced stage of discussions with other major European utilities, some of whom have a long history of investment and collaboration in the EPR design," the company said. ------------