USEC centrifuge agreement extended, but future uncertain as workers receive WARN notices

Note: This story was last updated at 11:11 a.m.

The American Centrifuge Project, a program that would enrich uranium for commercial nuclear power plants and has operations in Oak Ridge, got a little extra time this week.

Several billions have already been spent and funding was set to expire April 15, but USEC announced Tuesday morning that the research, development, and demonstration agreement was extended through April 30. That was done at no additional cost to the taxpayer through “prudent management of existing program funds by USEC,” the company said in a press release.

In the meantime, USEC said it continues its discussions with Oak Ridge National Laboratory, which could take over the management of the project for national security purposes. The DOE takeover was announced by Energy Secretary Ernest Moniz during a House Appropriations subcommittee hearing earlier this month.

The future of the project is not clear and several hundred workers have received notices that they could be laid off. On Friday, USEC Inc. spokesperson Paul Jacobson said the 60-day notices, which were effective March 19, were sent to 174 USEC employees in the Oak Ridge area and a total of 400 workers. Most of the other workers are in Piketon, Ohio, but there are also a few at USEC headquarters in Bethseda, Md.

“No decisions have been made,” Jacobson said. “There is no answer right now.”

Aimee Mills, spokesperson for Babcock and Wilcox Co., said the notices, known as WARN notices, were issued to 122 of its employees. USEC has a joint company with B&W.

“B&W is working closely with USEC and DOE in determining what the next steps will be,” Mills said. “In the meantime, we are providing appropriate assistance to employees who could potentially be impacted.”

Jacobson said the uranium-enrichment technology is “clearly proven and ready to go,” and USEC has received “encouraging words” of support. He cited the ongoing discussions between USEC, DOE, and the lab.

Jacobson said ORNL has an excellent record of executing DOE projects, so it “makes a great deal of sense to USEC that the department would turn to the lab to manage the national security issue for them.” USEC has had an ongoing research and development agreement with ORNL, and the lab has been involved with the centrifuge program all along.

“We look forward to supporting the lab in any way we can,” Jacobson said.

He said the original technology was developed by the U.S. Department of Energy in Oak Ridge, but the program was “mothballed” in the 1980s. But USEC resurrected it and spent $2.5 billion of its own money to bring it up to the current standards. Meanwhile, taxpayers have invested more than $3 billion.

USEC would retain the right to commercialize the technology.

USEC says the uranium-enriching American Centrifuge Plant in Piketon, Ohio, would replace its previous energy-intensive, Cold War-era production facility. That would create a long-term, reliable, and secure source of fuel for America’s nuclear plants, which provide 20 percent of the country’s electricity; support U.S. energy and national security; reduce greenhouse gas emissions; and create nearly 8,000 jobs in the United States, the company says.

The centrifuges for the project are made in Oak Ridge, where USEC has a manufacturing center, and shipped to the Piketon plant, where they are installed.

Jacobson said there are two “buckets of funding” available for the project. One would immediately infuse $9.6 million. DOE has that money, and it would keep the project going for about a month, Jacobson said.

A longer-term goal is to get congressional approval to transfer $57 million within the budget to support the project for the rest of fiscal year 2014, which ends Sept. 30. But funding for FY 2015 would still be in question.

During his congressional testimony, Moniz said the technology is important to national security, and the country needs to keep the centrifuges spinning, according to Jacobson.

The USEC spokesman said the program, which has successfully completed all 10 of its technical milestones, has been funded on an intermittent basis since it started, and officials have faced deadlines before.

“We’re back into that environment one more time,” Jacobson said.

This time is different, though, because the commercial market has been troubled by a drop in demand for enriched uranium after the 2011 meltdown of three reactors in Fukushima, Japan, caused by a tsunami. Jacoboson said there are now 50 reactors not operating in Germany and Japan, as well as a glut of natural gas on the market.

“There is no commercial support for deployment of that technology right now,” he said.

In March, USEC Inc., the parent company, announced a Chapter 11 bankruptcy filing and financial restructuring plan, although Jacobson said the plan would not affect daily operations in Oak Ridge or at the American Centrifuge Project. Jacobson said the company was trying to strengthen its balance sheet and be a stronger sponsor of the American Centrifuge Project, which the company describes as a “next-generation” U.S. uranium enrichment technology. USEC Inc. is a global energy company that is a leading supplier of enriched uranium fuel for commercial nuclear power plants.

More information will be added as it becomes available.