‘Crunch time’ at troubled nuclear fuel plant

For now, USEC is getting nothing. Some experts and a few lawmakers, including Rep. Edward J. Markey (D-Mass.), say that’s exactly what should happen.

“Boehner deserves credit for at least forcing this out in the open,” said Henry Sokolski, a former Pentagon official and executive director of the Nonproliferation Policy Education Center, a Washington-based nonprofit group. “So let’s have a debate, because I think if we have a debate this could look foolish.”

“The U.S. government sold USEC to the private sector and should now treat USEC like it treats other private-sector companies,” said Matthew Bunn, a nuclear expert and associate professor at Harvard University’s John F. Kennedy School of Government. “I think USEC shouldn’t be given any special preferences.”

The only concrete help for USEC recently has come not from Washington, but from Russia. Techsnabexport (Tenex), USEC’s Russian counterpart and a unit of a subsidiary of the State Atomic Energy Corp. (ROSATOM), has agreed to provide a 10-year supply of low-enriched uranium (LEU) to the company.

But the Tenex deal will provide a fraction of the uranium USEC obtained from dismantled nuclear weapons.

Under the new agreement, USEC will essentially act as a broker for Russia’s commercial enrichment firm, which has been seeking access to the U.S. market. USEC will also explore the possibility of a joint Russian-American enrichment plant in the United States.

Fuel from the USA

It’s a tough time to be in the business of selling fuel to nuclear power plants. The Nuclear Energy Institute says that there are 63 nuclear plants under construction (26 in China). USEC executives, seeking support, quote optimistic forecasts of a near doubling of demand for uranium enrichment services by 2030.

But those prospects are decaying. Japan has postponed its plans for nuclear expansion and closed down plants damaged by last year’s earthquake and tsunami. Germany has closed eight of its 17 reactors and will shut down the rest by 2020. U.S. nuclear power plans have been scaled back because of high construction costs and competition from new supplies of cheap shale gas.

In December, Luc Oursel, the new chief executive of French nuclear giant Areva, said he was suspending work on the $3.2 billion Eagle Rock enrichment plant west of Idaho Falls, Idaho, even though the Nuclear Regulatory Commission had given Areva a license and the Energy Department had given it a $2 billion loan guarantee. The company, which is largely owned by the French government, plans to use centrifuge technology, but says it will start construction in late 2013 or 2014 instead of this spring.

“If Areva has decided it doesn’t pay, why are we throwing money at it?” Sokolski said. “If Areva is inclined to say no, why is Congress inclined to say yes?”

There are only a handful of firms in the uranium enrichment business. In addition to Tenex, Areva and USEC, there is Urenco, which opened a plant in New Mexico in June 2010. The British, Dutch and German governments each own one-third of the firm.