Summary: The Department of Energy's (DOE) current pricing policy for its uranium enrichment services constitutes a subsidy for commercial nuclear power. GAO has long been in favor of changing the basis of the DOE price for uranium enrichment services from cost recovery to a fair value price. Some of the advantages in adopting fair value pricing include: (1) removing a subsidy to the nuclear industry by eliminating a price which is lower than what it would be if the service were available in the commercial market; (2) sizeable revenues for the U.S. Government and enhancing the U.S. balance of payments position; and (3) permitting U.S. enrichment pricing to be on a more businesslike basis. One disadvantage to the new pricing concept is the potential for a negative impact on the Nation's nuclear nonproliferation goals. GAO believes, however, that such an impact could be avoided through carefully formulated criteria for implementing the fair value concept and by close monitoring by Congress and the Administration.
