DOE's Denial of Loan Guarantee Forces USEC to Demobilize Enrichment Plant

The Department of Energy (DOE) on Tuesday said it had encouraged USEC to withdraw its application for $2 billion in loan guarantee funding for the American Centrifuge Plant in Piketon, Ohio. The decision has forced the nation’s only domestic uranium enrichment firm to begin demobilizing the project.

The DOE said that withdrawing its application would allow USEC to work over the next 12 to 18 months to continue research, development, and testing “to resolve the technology issues facing the [American Centrifuge Plant] without hurting the chances of USEC to secure approval for a loan guarantee in the future.”

The DOE added that it “sees promise” in American Centrifuge technology as a next-generation uranium enrichment technology but that a technical and financial review had indicated that the project is not yet ready to move to commercial-scale operations.

“USEC’s application would likely not meet the legal requirements of the 2005 EPACT statute and the subsequent Title 17 loan guarantee regulations,” it said. “Therefore, the Department is offering up to $45 million over the next 18 months to support ongoing [American Centrifuge technology] research and development activities. Should USEC accept this offer, it would allow them to continue operations, maintenance, and research activities at Piketon and Oak Ridge, and give USEC additional time to strengthen the technical and financial aspects of the application should USEC decide to resubmit it.”

USEC President and CEO John Welch said in a statement on Tuesday that the company was “shocked and disappointed” by the DOE’s decision not to provide the desperately needed loan guarantee.

“Our application has been pending for a year, and we have addressed any concerns the Department raised,” he said. “Technically, we operated the American Centrifuge technology in a lead cascade for approximately 235,000 machine hours. Financially, we have invested $1.5 billion dollars in the project and offered $1 billion of additional corporate support. It is unclear how DOE expects to find innovative technologies that assume zero risk, but the American Centrifuge clearly meets the energy security and climate change goals of the Obama administration.”

American Centrifuge technology is based on U.S. gas centrifuge technology originally developed by the DOE, but with significant design material and manufacturing improvements incorporated by USEC, according to the company.

“Instead of reducing our dependence on foreign sources of energy, we are now increasing it. President Obama promised to support the loan guarantee for the American Centrifuge Plant while he campaigned in Ohio. We are disappointed that campaign commitment has not been met,” Welch said.

USEC received a license in April 2007 from the U.S. Nuclear Regulatory Commission to construct and operate the plant and commenced construction shortly thereafter. The plant was designed to produce 3.8 million separative work units (SWU) a year of low enriched uranium fuel for commercial nuclear power plants.

The company continues to “believe strongly” in the technology, and it would continue development work in Piketon, Ohio, and Oak Ridge, Tenn., Welch added.” We remain focused on shareholder value and have engaged outside advisors to evaluate our strategic alternatives.”

Sources: USEC, DOE

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