Uncertainty clouds plant's future
Last week the Paper, Allied-Industrial, Chemical and Energy Workers Local 5-550 and USEC reached a temporary agreement on seven issues. The company has until Nov. 15 to come up with a contract proposal.
Basically, the temporary deal creates a breathing space while both sides await the outcome of a Bush administration review of the domestic uranium enrichment industry.
The administration review is expected to answer some fundamental questions, including whether the nation should continue to process nuclear fuel and, if so, whether the federal government should support the effort through subsidies or, possibly, an extension of USEC's exclusive contract to purchase moderately-priced uranium from Russia.
USEC made its initial long-term contract proposal contingent on achieving three goals related to the sale of the Russian uranium. The union rejected the proposal in part because its workers have no control over the fate of the Russian uranium contract.
As long as questions about the enrichment industry's future remain unanswered, it's virtually impossible for USEC and PACE to reach a long-term agreement on issues such as salaries and production levels. The uncertainty would cloud the terms of any deal.
Unfortunately, this leaves the Paducah plant and its 1,500 employees in limbo. Philip Potter, the union's Washington, D.C.-based policy analyst, accurately described the situation when he told the Sun: "All the people who live in Paducah are caught in the middle of it. You don't want to be a pawn. You don't want to be powerless. You want to have some say over the outcome."
The Bush administration review is being conducted by top-level Cabinet members — Secretary of State Colin Powell, Defense Secretary Donald Rumsfeld and national security advisor Condoleeza Rice. Ultimately, the president — not USEC or PACE — will make the key decisions that determine the future of the Paducah enrichment operation.
We anticipate Bush will decide that the nation has a national security interest in maintaining domestic production of nuclear fuel. The alternative is to make the country's nuclear power plants totally dependent on enriched uranium imported from Russia and western Europe.
Beyond that, it's possible to envision at least several plausible scenarios for the enrichment business.
The one that is, perhaps, most promising for Paducah and the plant workers involves the president allowing USEC to remain as the sole agent for the Russian uranium. In exchange for this arrangement, which would help USEC offset its high production costs for nuclear fuel produced through the inefficient gaseous diffusion process, the company would agree to keep the Paducah plant open for at least the next 5-to-10 years.
This would protect national security and preserve jobs in Paducah. But it's not at all clear if the president is willing to guarantee USEC's status as executive agent for the Russian uranium, especially since U.S. utilities favor other agents handling some of the uranium.
The utilities argue that competition in the domestic nuclear fuel industry would keep prices down for consumers who rely on nuclear power.
Another scenario would have USEC dividing the Russian uranium with other agents, and the federal government subsidizing the Paducah plant to ensure that it remains open.
Given the tight situation with the federal budget and the fierce congressional scramble for dollars, it's unlikely that a large plant subsidy would pass political muster.
It's even more difficult to envision the scenario favored by some — the federal government reversing the privatization of the enrichment industry and returning as the plant operator. Again, we don't believe this costly move would attract much support in Congress.
We believe the president will opt for some combination of moves that will help USEC survive until it can replace the outmoded, 50-year-old gaseous diffusion technology. But nothing is certain except that Paducah is, indeed, caught in the middle.
The need to guarantee the nation's security is the best argument for the Paducah plant and the community that has supported it for so long. A hope is that the administration will soon remove the cloud of uncertainty and give the struggling enrichment facility a new lease on life.