Kenneth Fletcher
RW Monitor
4/4/2014
While the Department of Energy said this week that Oak Ridge will take over management of the American Centrifuge Project from USEC, a near-term question that remains to be answered is how the project will be funded going forward. Current plans appear to be for the Oak Ridge National Laboratory to manage the ACP, which is being built in Piketon, Ohio, but has research and manufacturing capabilities in Oak Ridge. But as Congressional appropriators prepare to mark up Fiscal Year 2015 spending bills, the Department has not requested additional money for uranium enrichment activities. A cost share program between the Department and USEC that has been completed successfully is set to expire on April 15 and no extension is planned.
An additional $56.65 million of reprogramming authority available to DOE is contingent on completion of a cost-benefit analysis that has not been submitted yet. But with the project spending at a rate of $10 million to $12 million per month, unless additional funding is provided a significant ramp down would need to occur. Several different options exist for ACP moving ahead: Continuing to run the facility and adding several centrifuges per month, a warm standby where the existing cascade will keep running but no additional capacity will be added, or a cold shutdown where the machines are shut off. “The most obvious glaring problem with their options is there is no funding requested in the ‘15 budget,” a Congressional staffer told RW Monitor. “There is no plan at the moment and I don’t think there ever will be [a plan] to submit a budget amendment. The only avenue the Department has if they feel like they need additional funding in ‘15 is to convince Congress to add funding to appropriations bills.”
Moniz: ‘Very Desirable’ to Keep Centrifuges Spinning
Secretary of Energy Ernest Moniz stressed the need for maintaining a domestic enrichment capacity for tritium production needs at a House Energy and Water Appropriations Subcommittee hearing this week. “It would be very, very desirable if we could make sure to keep the 120 machines spinning,” Moniz said. He noted: “Obviously, the ACP right now is a technology that has successfully gone through with meeting technical milestones in the RD&D project we have now finished funding. We have clearly a situation that perhaps unfortunately is very fluid for a couple of reasons.”
Work May be Subcontracted to USEC
The nearly two-year RD&D program that is wrapping up this month aimed to demonstrate the technology on a commercial scale by building and demonstrating the cascade of 120 centrifuges. But as a condition for government support, the Department can take over the intellectual property rights for the technology if USEC can’t commercialize it—and the company said recently that commercialization isn’t feasible in the near term. Instead, DOE may choose to build out the Ohio plant to provide material for only national security purposes. Moniz said at this week’s hearing: “Our current plan, and this is understood, is that the responsibility for managing it will novate to Oak Ridge, which is where the technology originates. I think it is quite reasonable to speculate that of course the skilled workforce working on those machines would then have to be kept on one way or another—if I had to guess, through a subcontract, for example, with USEC.”
‘USEC Stands Ready to Support ORNL’
With USEC undergoing a Chapter 11 bankruptcy debt reorganization, the management change could be beneficial for USEC by taking away the overhead costs for running the project. Additionally, USEC will continue to own the American Centrifuge Manufacturing facility in Oak Ridge as part of a venture with B&W Technical Services Group. USEC said in a statement this week: “ORNL is well positioned to support DOE’s program to ensure our nation maintains a domestic enrichment capability. As Secretary Moniz recognized, USEC has a skilled workforce and important experience that can assist ORNL in these efforts. In particular, USEC has personnel with unique technical, manufacturing, operations, design and construction capabilities that have demonstrated their expertise by successfully implementing the RD&D program over the past two years. USEC stands ready to support ORNL in carrying out DOE’s program to meet national security requirements, as requested.”
USEC Reports $158.9 Million Loss in 2013
Also this week, USEC issued its financial results for 2013, reporting a net loss of $158.9 million in a large part due to $194.2 million of non-production expenses incurred due to the end of enrichment at the Paducah Gaseous Diffusion Plant. “With the cessation of enrichment at the Paducah GDP, we have entered a transition period where the non-production costs of preparing this vast facility for turnover to the Department of Energy are affecting our gross profit,” USEC CEO John Welch said in a statement. “These costs and related employee severance costs will continue to reduce our profitability in 2014 until the facilities are returned to DOE.” The return of Paducah to DOE is unlikely to happen before October 2014, USEC said, and there is no agreement to turn it over before August 2015.
