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RCED-84-18 1 (1983-10-11)

handle is hein.gao/gaobabnef0001 and id is 1 raw text is: Al, UNITED STATES GENERAL ACCOUNTING OFFICE *tCOI ' r~TT --Pla~t tO b9,A14INGT6N- Ci5b AND ECONOMIC DEVELOPMENT October 11, 1983 DIVISION B-207463 RELEASED The Honorable Gordon J. Humphrey Chairman, Subcommittee on Regional and Community Development Committee on Environment and Public Works United States Senate Dear Mr. Chairman: Subject: Estimated Effect of Eliminating TVA Electricity Demand Charges on the Price of Enriched Uranium (GAO/RCED-84-18) Your letter of August 16, 1983, requested information on the estimated effect of eliminating the Tennessee Valley Authority's (TVA's) demand charges for power not taken on the price of the Department of Energy's (DOE's) uranium enrichment services. Demand charges are that portion of the power rate which is basi- cally intended to recover capital costs a utility incurred to be able to provide the full amount of power required by its cus- tomers. TVA is one of the three electric utilities which supply power to DOE's uranium enrichment plants. Our July 15, 1983, report1 stated that DOE is paying TVA demand charges for power DOE is contracted to purchase but does not use. You asked us to obtain from DOE its estimates of the effect of those TVA demand charges on the price of enriched uranium assuming three different TVA electricity rates and to provide our response in early October 1983. In making its estimates DOE was to assume, at the recuest of your office, a high rate of 35 mills2 per kilowatt hour.3 This rate reflects DOE's current projection that TVA will charge 35.38 mills per kilowatt hour (in 1984 dollars) for fiscal years 1984-95. DOE was also to assume a low rate of 25 mills per 1Data on DOE's Uranium Enrichment Power Contracts and the Cost of Power (GAO/RCED-83-196). 2A mill is one-tenth of one cent. 3A kilowatt hour is the measure of a unit of power steadily supplied to or taken from an electric circuit during a 1-hour period of time. (301642) I pka v-1 I

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