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THE LOWDOWN ON THE LATEST UK NEWS

Who better than to explain the LES puzzle than Jim Ferland? As president of Louisiana Energy Services, Ferland came onboard nearly three years ago. At the time, the LES project was still in Tennessee, but rapidly losing traction. Ferland admits the situation had gotten so bad in Tennessee that his management team had to look elsewhere.

First, we wanted to clarify exactly who owns LES. Conflicting news reports, found in the news items after LES was awarded the first NRC license for a nuclear facility in nearly thirty years, confused us. Ferland straightened us out on this point, too. “LES is incorporated in Delaware. It’s a limited partnership. I’ll give you a quick rundown on the ownership. It is confusing.” Six month ago, Westinghouse Electric owned 24.5 percent of LES. British Nuclear Fuels, which owns a one-third stake in Urenco, owned Westinghouse. On March 3rd of this year, Urenco bought Westinghouse’s minority interest in LES.

Wait, it gets more confusing. “Back in the original LES, which was back in Louisiana in the early 1990s, the utilities did have an equity share at that time,” Ferland explained. “When the Urenco picked the project back up, to restart it in 2002, the utilities tagged along. The utilities, though, did not have an equity ownership share.” According to Ferland, Urenco bought out the three U.S. utilities – Entergy, Exelon and Duke – in exchange for some cash and more cash payments going forward. “All that is happening now is the utilities earn the rest of their money back as LES meets certain milestones going forward,” said Ferland. “One of those milestones was (achieved) the day LES received the NRC license. As of 2002, these three utilities had no management say and no equity participation. They simply had some rights to some future cash flows, depending upon whether or not LES was successful. Essentially, we’re paying the utilities back for the investment they made in the early 1990s.”

The upshot is simple. Louisiana Energy Services is a wholly owned subsidiary of Urenco Ltd. But then again, get ready for a tad more confusion on the ownership issue.

Urenco’s British partner wants to sell its one-third stake in the company. We asked Ferland if perhaps British Nuclear Fuels (BNFL) was unhappy with the New Mexico enrichment facility. “I don’t think so,” he answered. “This is my personal opinion because I’m certainly not a member of management of BNFL. BNFL is looking to get out of the nuclear business completely. Recognize that BNFL is a government-owned entity. I think the government has decided they don’t need to be in the nuclear business. They’ve done many things. They are in the process of closing the transaction of selling Westinghouse. Their nuclear decommissioning group is up for sale. The last major piece of the BNFL nuclear business is the one-third ownership they have in Urenco. Naturally, given that they’re selling the other two, they have some interest in divesting that ownership piece as well.”

Who will finally own BNFL, and thus become one-third owner of Urenco, and indirectly an owner of the New Mexico enrichment facility? Last week, London’s Daily Telegraph reported the French nuclear power firm, EDF, had offered to buy the BNFL stake for about two billion pounds sterling. An EDF spokesman denied an offer had been made. According to Reuters, both the German and Dutch stakeholders would oppose EDF’s participation.

This latest wrinkle is just one in another of several disruptive episodes as LES moves forward into operations. We talked with Ferland about charges of environmental racism in Louisiana, where LES first began its long journey to obtain an NRC license. As with every question and concern we voiced, Ferland did not dither or back down, but instead methodically responded, “Urenco and its partners did begin the licensing process for LES around 1990. Come 1997, they still did not have the NRC license. Seven years pursuing a license is a long time. There were a variety of issues. One of them was environmental justice.”

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