Energy Dept. to rescue cash-strapped uranium enrichment project


This June 6, 2007, photo shows the American Centrifuge Plant in Piketon, Ohio. (Al Behrman/AP)

The Energy Department has reached a deal to rescue a ura­nium-enrichment development whose owner did not have the money to complete the project.

The department said Wednesday that it will immediately provide $88 million and in return take ownership of giant centrifuges used in the uranium-enrichment process. Ultimately, taxpayers would contribute as much as 80 percent of a $350 million research and development program to determine whether the technology can work and be commercially viable.

Critics of the deal called it a bailout of U.S. Enrichment Corp., a former government company privatized in the 1990s, and an unproven technology. Supporters of the agreement said it will protect national security and jobs.

Because those jobs are in the swing state of Ohio, the Energy Department’s efforts to rescue USEC have received bipartisan support from the state’s congressional delegation, including House Speaker John A. Boehner (R-Ohio). USEC said the project would directly employ about a thousand people in Piketon, Ohio.

Rep. Edward J. Markey (D-Mass.), a senior member of the House Energy and Commerce Committee, said in a statement that “the decision by the Department of Energy to provide $88 million to purchase non-functional centrifuges from USEC, whose entire market value is $92 million, is a complete and total waste of taxpayer dollars.” He has called for an investigation by the Government Accountability Office.

Michael Steel, a spokesman for Boehner, said, “The speaker has not yet reviewed the matter and will defer to the members of the Ohio congressional delegation who represent the Piketon community.”

A senior Energy Department official, speaking on the condition of anonymity, said that the project included “milestones” to protect taxpayers and a new USEC subsidiary that would provide a greater management role for project partners and equipment suppliers Toshiba and Babcock & Wilcox.

If the technology works and is commercially viable, the Energy Department will transfer ownership of the centrifuges back to the company. Because the federal funds would be grants for research, taxpayers would not reap financial rewards. If the technology is not commercially viable, the department will keep the centrifuges for possible use to make material needed for nuclear weapons.

Administration officials say that international agreements prevent the United States from making tritium, which is used in nuclear weapons, from enriched uranium that is made with a foreign technology, even if that foreign company is enriching uranium in a U.S. facility. A European consortium owns a uranium-enrichment plant in New Mexico, and the French company Areva is set to begin construction on one in Idaho. Critics of the plan to fund USEC say that there is enough tritium to last a decade or more.

A Congressional Research Service report said that there is a “substantial argument” that fuel could be used from those facilities, and Markey has noted that USEC’s American Centrifuge plant also relies on foreign companies for parts.

The immediate chunk of money from the Energy Department would keep the project going until December, USEC and an Energy Department official said. The $88 million would come from the Energy Department assuming responsibility for the disposal of depleted uranium, known as tails. That frees up money USEC had set aside for the purpose.

Additional funding set out in the agreement announced Wednesday would depend on a congressional appropriation.

Steven Mufson covers energy and other financial news.
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