Exhibit 10.5
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS. THE
CONFIDENTIAL
REDACTED PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
ASTERISKS DENOTE SUCH REDACTIONS.
AMENDATORY AGREEMENT
Between
TENESSEE VALLEY AUTHORITY
And
UNITED STATES ENRICHMENT CORPORATION

         
 
  Date: April 3, 2006   TV-05356W, Supp. No. 3                    

          THIS AGREEMENT, made and entered into by and between TENNESSEE VALLEY
AUTHORITY (TVA), a corporation created and existing under and by virtue of the
Tennessee Valley Authority Act of 1933, as amended (TVA Act), and UNITED STATES
ENRICHMENT CORPORATION (Company), a corporation created and existing under the
laws of the State of Delaware;
W I T N E S S E T H:
          WHEREAS, Company has been purchasing power from TVA under Power
Contract TV-05356W, dated July 11, 2000, as amended (2000 Contract), for the
operation of Company’s uranium enrichment facilities near Paducah, Kentucky; and
          WHEREAS, the parties wish to amend the 2000 Contract to provide for
the pricing and quantity of power and energy for the time period commencing on
June 1, 2006, and ending on May 31, 2007;
          NOW, THEREFORE, for and in consideration of the premises and of the
mutual agreements hereinafter set forth, and subject to the provisions of the
TVA Act, the parties mutually agree as follows:
SECTION 1 – DEFINITIONS
1.1 Defined Terms. Initial capped terms used in this agreement which are defined
in Article I of the 2000 Contract shall have the meaning there defined.
1.2 References to the 2000 Contract. References to “this contract” in any
section of or attachment to this agreement shall be deemed to refer to the 2000
Contract as amended by TV-05356W, Supp. No 1, dated March 2, 2006, TV-05356W,
Supp. No 2, dated March 2, 2006, and this agreement.
SECTION 2 – QUANTITY OF ENERGY
Subject to the terms and conditions of this contract, Baseline Energy, in the
monthly MW amounts set forth in Exhibit A, shall be made available to USEC for
the first year of

 

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Period Two (June 1, 2006, through May 31, 2007). Of each monthly amount, 300 MW
would continue to be Firm Baseline Energy and any remaining amount would be
Interruptible Baseline Energy, as provided in the 2000 Contract.
SECTION 3 – BASE CHARGES
Pursuant to section 2.3(b) and in accordance with section 2.4 of the 2000
Contract, the Baseline Energy Price during the first year of Period Two shall be
as follows:

  (i)   $***** from June 1, 2006, through August 31, 2006, and     (ii)   $*****
from September 1, 2006, through May 31, 2007.

SECTION 4 – FUEL COST ADJUSTMENT
The Baseline Energy Prices as set forth in section 3 above of this agreement are
subject to the TVA Fuel Cost Adjustment (FCA) as calculated under Exhibit B,
attached hereto and hereby incorporated herein. The FCA shall mean the per-MWh
amount by which the Baseline Energy Prices under section 3 above of this
agreement are increased or decreased from time to time in accordance with the
formula designed to reflect changes in TVA’s fuel costs, purchased power costs,
and related costs as shown in Exhibit B. It is recognized that TUm (as defined
in Exhibit B) has a lag integrated into the formula and that unless otherwise
agreed between the parties, any such amount shall remain an obligation even
though the payment of the bill for power taken during May of 2007 has been made.
SECTION 5 – RATIFICATION OF THE 2000 CONTRACT
This contract is ratified and confirmed as the continuing obligation of the
parties.
          IN WITNESS WHEREOF, the parties to this agreement have caused it to be
executed by their duly authorized representatives, as of the day and year first
above written.

              UNITED STATES ENRICHMENT CORPORATION
 
       
 
  By        /s/ Robert Van Namen
 
       
 
           Title: Senior Vice President
 
                      Uranium Enrichment
 
            TENESSEE VALLEY AUTHORITY
 
       
 
  By         /s/ Kenneth. R. Breeden
 
       
 
            Executive Vice President
 
           Customer Service and Marketing

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EXHIBIT A
BASELINE ENERGY
JUNE 1, 2006, THROUGH MAY 31, 2007
(TOTAL OF FIRM AND INTERRUPTIBLE BASELINE ENERGY IN MW)*

                      2006   2007
January
            1,550  
February
            1,525  
March
            1,540  
April
            1,540  
May
            1,400  
June
    300          
July
    300          
August
    300          
September
    1,450          
October
    1,560          
November
    1,600          
December
    1,590          

 

*   The monthly MW amounts shall be multiplied by the number of hours in that
month to determine the required quantities of Baseline Energy. The actual hourly
MW amounts shall be essentially constant except during ramp up/ramp down periods
and will be scheduled in accordance with operating procedures jointly developed
under section 2.2(f) of the 2000 Contract.

 

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EXHIBIT B
FUEL COST ADJUSTMENT
In accordance with the formula below, the Fuel Cost Adjustment amount
(FCA) shall be determined for each month by applying data from TVA’s forecasts
of TVA’s actual operations, as well as actual data when it becomes available.
The FCA consists of two parts. The first part is the monthly adjustment (Am) (as
defined below), which is an adder to be applied to each Megawatthour (MWh). TVA
will publish the amount of Am no later than 15 days in advance of the month of
application, and the formula will be applied as part of the monthly USEC bill.
In addition to the Am, there is a monthly true-up to bring TVA’s forecasts to
actual amounts (TUm) (as defined below) that will add or credit a lump sum
amount on the monthly bill once actual data is collected.

                 
 
               
 
  Am   =   CFm
 
95%    

          m =   a particular month.
 
        Am =   The FCA adjustment to be applied to the MWh sales during the
current billing period and computed to the nearest cent per MWh.
 
        CF =   The core FCA adjustment amount. CF = FFm/SFm - Bm
 
       
 
  FF =   TVA’s estimate of FA (as described below) for month m, based on the
latest TVA Financial Forecast.
 
       
 
  SF =   TVA’s estimate of SA (as described below) for month m, based on the
latest TVA Financial Forecast.
 
       
 
  B =   The monthly per MWh Base Fuel Rates (as shown in the table below).

         
June
  $ 16.07  
July
  $ 20.40  
August
  $ 17.21  
September
  $ 15.96  
October
  $ 14.36  
November
  $ 14.57  
December
  $ 13.28  
January
  $ 14.02  
February
  $ 13.62  
March
  $ 13.59  
April
  $ 14.17  
May
  $ 14.30  

 

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          TUm =   The true-up adjustment amount necessary to reconcile prior
estimates to actual data, which shall be computed with the formula below. The
true-up will be a dollar payment or credit on the bill two months after a
forecast FCA month.
 
       
 
      (FAm-2/SAm-2-FFm-2/SFm-2)*USECSm-2/.95
 
        FA =   Actual total fuel and purchased power expenses (in dollars) under
the framework and accounts provided below (or such similar or successor accounts
as may be proscribed by FERC in the future).
 
       
 
   (1)   Fossil Fuel Expense – Account 501 – Direct cost of fuel burned in TVA
coal plants, including transportation and fuel treatments. Costs to be excluded
are lease payments for rail cars, maintenance on rail cars, sampling and fuel
analysis, and fuel handling expenses in unloading fuel from shipping media and
the handling of fuel up to the point where fuel enters the bunker or other
boiler-house structure.
 
       
 
   (2)   Reagents Expense – Account 501.L – Cost of emission reagents such as
limestone and ammonia that are directly related to the level of generation
output.
 
       
 
   (3)   Emission Allowance Expense – Account 509 – Cost of emission allowance
expense such as SO2 and NOx that are directly related to the level of generation
output.
 
       
 
   (4)   Nuclear Fuel Expense – Account 518 – Cost of nuclear fuel amortization
expense dependent upon burn, including DOE spent fuel disposal charges.
 
       
 
   (5)   Gas Turbine Fuel Expense – Account 547 – Direct cost of gas and oil
delivered to TVA plants, including transportation. Costs to be excluded are
costs of gas storage facilities and sampling and fuel analysis that do not vary
with changes in generation volume.
 
       
 
   (6)   Purchased Power Expense – Account 555 – Energy cost of purchased power
to serve native load demand or to displace higher cost generation. Costs to be
excluded are fixed demand or capacity payments in tolling agreements and
purchased power agreements that do not vary with volume and costs of purchased
power linked to off-system sales transactions.
 
        SA =   Actual total TVA energy sales (in MWh) for month m, as determined
from TVA’s General Ledger with specific accounts 442, 445, 447, 447.1, and 448
(or such similar or successor accounts as may be proscribed by FERC in the
future), excluding any displacement sales reflected in account 447.1.

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          USECSm   = USEC actual sales in a particular month, excluding
Additional Energy sales (as defined in Power Contract number TV-05356W between
USEC and TVA dated July 4, 2000) unless otherwise agreed between the parties.

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