USEC to likely shutter Paducah uranium enrichment plant in 2013
Washington (Platts)--1Nov2012/1149 am EDT/1549 GMT
After fighting to continue operations at its Paducah, Kentucky, uranium
enrichment plant earlier this year, USEC said Thursday it would likely cease
enrichment operations there in May 2013 and rely on sales of Russian-sourced
fuel and current inventories to meet its contracts until the company's
troubled Advanced Centrifuge plant comes online in several years.
"We had hoped to continue enriching at Paducah as we build out the
American Centrifuge plant, however, delays in the deployment of ACP, and
current market conditions have meant that we expect there to be a transition
period of several years until the ACP is in commercial operations," said USEC
president John Welch.
"During this period we would no longer be enriching uranium at Paducah,
but instead would make sales from our existing inventory and future purchases
through our supply agreement with Russia," he said during a call with
Article continues below...
|Request a free trial of: Electric Utility Week|
Electric Utility Week is a must read for top executives and policymakers in the utility business. It is even more vital today, as utilities find their way in the fastest-changing world ever. This newsletter focuses on the big, fundamental news that matters to every utility--investor-owned, municipal and cooperative.
USEC in May inked a deal with the US Department of Energy, Energy
Northwest and the Tennessee Valley Authority to keep its Paducah plant open,
and its 1,000 workers employed, for one year. Under the deal, DOE transferred
title to over 9,000 st of depleted uranium to Energy Northwest, which
contracted USEC to enrich it to low enriched uranium for use in Energy
Northwest and TVA reactors.
Welch said that while USEC would continue to look for ways to keep the
plant open, the Paducah enrichment facility is inefficient compared with its
competitors, and along with slacker demand from shuttered nuclear plants in
Japan and Germany, the plant cannot therefore compete.
When the current deal ends next year, USEC said it would be able to meet
its contracts with supplies on hand and through a contract to buy
low-enriched uranium from Russia through 2022.
"We are in the process of developing protocols and delivery mechanisms
for this transitional supply arrangement with Tenex. The amount we will
purchase from Russia will ramp up in volumes over a couple years," said
Philip Sewell, the senior vice president for ACP and Russian highly enriched
Sewell added that USEC would have an option to buy additional supplies
from Russia if demand increases. If the options are used, USEC will be buying
about 5.5 million separative work units (SWU) from Russia, he said, about the
same level as today under a program that expires in 2013.
While USEC said the use of Russian-sourced fuel and current inventories
would allow it to bridge between the shutdown of Paducah and the opening of
the American Centrifuge plant in Piketon, Ohio, that project's future is far
from assured. Currently, the company is reliant on DOE for research and
development funding to help prove the project.
USEC has applied for a $2 billion loan guarantee from DOE, but the
agency has said the advanced centrifuge technology has not yet been proven.
DOE has given USEC several hundred million dollars in funding to help do
that, and the company said it hopes to have a new loan guarantee application
ready for the department in 2013.
Both the Paducah and Piketon plant have attracted political controversy,
as US lawmakers from Kentucky pressed to keep the Paducah plant open, and US
House of Representatives Speaker John Boehner pushed DOE to approve a loan
guarantee for the American Centrifuge plant.
But the company has struggled financially, with commitments of $280
million this year from DOE for the ACP allowing the project to stay afloat,
and critics in Congress have charged the project is a boondoggle.
--Derek Sands, firstname.lastname@example.org
--Edited by Keiron Greenhalgh, email@example.com