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B-286661 1 (2001-01-19)

handle is hein.gao/gaobacxzt0001 and id is 1 raw text is: I 7inAccountabilty * Integrity * Reliability United States General Accounting Office Washington, DC 20548 B-286661 January 19, 2001 The Honorable Pete Domenici United States Senate Subject: USEC Portsmouth Gaseous Diffusion Plant Cold Standby Plan Dear Senator Domenici: You asked us to review the availability of funds for a reported plan of the Department of Energy (DOE) to (1) keep the Portsmouth gaseous diffusion plant, leased and operated by the United States Enrichment Corporation (USEC or Corporation), in a cold standby status and (2) build an advanced centrifuge technology demonstration plant for gas centrifuge uranium enrichment. DOE intends to cover the cost of this plan from $725 million transferred from the USEC Fund to miscellaneous receipts of the Treasury on September 30, 1998, and subsequently transferred back to the USEC Fund on October 20, 2000. The USEC Privatization Act of 1996 authorized use of the USEC Fund to pay expenses of USEC privatization. DOE has taken the position that it may pay the costs of implementing its plan from the USEC Fund. DOE views the costs of implementing its plan as expenses of privatization and hence allowable charges to the USEC Fund. As set forth below, we conclude that the $725 million was properly credited back to the USEC Fund and remains available for obligation. We further conclude, however, that expenses of privatization authorized by the USEC Privatization Act do not include costs such as those associated with the DOE plan and, accordingly, the USEC Fund is not available to cover such costs. BACKGROUND USEC leases and operates DOE uranium enrichment plants in Piketon, Ohio and Paducah, Kentucky, but has not been able to operate both uranium enrichment plans at an economically efficient level. Under a July 1998 agreement with the Department

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