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EMD-81-75 1 (1981-04-14)

handle is hein.gao/gaobabbug0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 ENERGY AND MINEALS APRIL 14,1981 DIVISION B- 15 9687IiIIIHI The Honorable James B. Edwards 114915 The Secretary of Energy Dear Mr. Secretary: Subject: Uranium Enrichment Pricing(EMD-81-75) In view of the vigorous emiphasis by th Administration and the Congress on balancing Federal revenues and expendi- tures, this letter is to apprise you, as the Administration's Secretary of Energy, of our longstanding position in favor of changing the basis of the Department of Energy's price for uranium enrichment services from cost recovery to a so-called fair value price. Such a change would eliminate an existing subsidy to the commercial nuclear industry, and would assist in balancing the Federal budget by increasing Federal revenue from enrichment services. On June 9, 1980, we reported that, based on the price then in effect, this change would increase enrichment service revenues by an es- timated $1.3 billion from fiscal years 1981 to 1985. 1/ This estimate included about $500 million which would come from foreign countries. A change in the pricing policy will require amending section 161(v) of the Atomic Energy Act of 1954, as amended, to depart from the cost recovery basis and instead, use a basis which would permit recovery of costs plus other charges that a private enriching enterprise would otherwise levy (factors for taxes, return on equity, etc.). On three occasions since 1975, the Department has proposed changing the basis for charging its customers from a cost recovery to a fair value price. Unfortunately, except for the Depart- ment's fiscal year 1978 authorization bill, the Congress has not acted upon these proposals. The 1978 bill authorized fair value pricing, but former President Carter vetoed the bill because it authorized the continuance of the Clinch 1/Letter to the Chairman, Subcommittee on Energy and Water Development, House Committee on Appropriations, entitled Uranium Enrichment Pricing, B-159687, June 9, 1980. (301567)

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