The nuclear power industry may reap a multi-billion dollar windfall if new legislation passes that imposes regulatory limits on carbon dioxide emissions from power plants. Emissions-free nuclear power facilities would benefit, as would nuclear fuel suppliers Uranium Resources, Inc. (Nasdaq:URRE) and USEC, Inc. (NYSE:USU).

USEC Inc. supplies uranium fuel to commercial nuclear power plants worldwide. This company operates the only uranium enrichment facility in the United States and supplies fuel to more than half the U.S. market and one-quarter of the world market. USEC also performs contract work for the U.S. Department of Energy; it maintains two uranium processing plants, transports nuclear materials and provides nuclear fuel cycle consulting.

Demand for enriched uranium will likely rise if Congress votes to limit carbon dioxide emissions under a so-called “cap and trade” system. The intent of the program is to cut greenhouse gas emissions 65% below 1990 levels by 2050. As part of this program, the Environmental Protection Agency will create 125 billion purchasable emission allowances, enough for all 38 years of the program, which is scheduled to commence in 2012.

Nuclear facility operators will benefit in two ways. First, since nuclear plants do not emit carbon dioxide, these plants will not be required to purchase emission allowances, giving them a major cost advantage over coal-powered plants. Second, to recover emission-allowances costs, coal-fired utilities would be forced to jack up electricity rates. As a result, nuclear plants would enjoy higher prices for their electricity without higher costs. Finally, carbon emissions penalties would make the economics of developing a new nuclear plant more attractive.

At present, there are some 439 nuclear reactors operating worldwide. Another 33 are under construction and 94 new plants are scheduled to come online over the next five to 10 years. These plants currently consume some 79,000 tons of uranium each year, but each new gigawatt of capacity will require 195 tons of additional uranium production.

The majority of reactors served by USEC are refueled on an 18- to 24-month cycle, and most of the company’s customers refueled in 2007. As a result, USEC . . .

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