The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Tuesday, June 18, 2002

Group vies with USEC for new plant
Paducah is also high on the list for the consortium's competition for a gas-centrifuge uranium enrichment plant.

By Joe Walker jwalker@paducahsun.com--270.575.8650

A group of USEC customers and competitors has Paducah among the finalists for a gas-centrifuge uranium enrichment plant whose site is expected to be picked by the end of the month.

The development puts the consortium, Louisiana Energy Services, in a race with USEC to build a facility using technology that is faster and cheaper than the outdated process used by the USEC-run Paducah Gaseous Diffusion Plant. Pending an agreement with the Department of Energy, which owns the plant, USEC wants to apply to the Nuclear Regulatory Commission by December for a license to operate gas centrifuge. That also is the Louisiana consortium's schedule.

"I think we should be selecting a site probably in the next two weeks," said Rod Krich, vice president of licensing for Exelon, a large USEC customer and member of the group. "It will be by the end of June. If it goes later than that, we'll probably have trouble filing an application with the NRC by the end of the year."

He said Paducah is a "serious" contender among eight possible sites for the $1 billion plant, which would be built by the end of 2005 and partly running a year later. It would produce several hundred construction jobs, 200 to 250 permanent jobs and an annual production capacity of a million units of enriched uranium by late 2007 or early 2008.

The plant would add 600,000 units annually to reach an ultimate capacity of at least 3 million units by sometime in 2011. By comparison, the 1,500-employee Paducah USEC plant produces and sells about 3.5 million units a year.

Exelon, a large nuclear power firm based in Chicago and Philadelphia, is involved in the new venture with Urenco a European uranium-enrichment company and chief USEC competitor along with Duke Power, Louisiana Power and Light, and Fluor Daniel. The companies form Louisiana Energy Services, which because of environmental and other issues dropped a plan seven years ago to build a gas-centrifuge plant in Louisiana.

"We're a big customer of USEC," Krich said. "We'd like to see them succeed, but at the same time, we think a competitive market is always better than having a single supplier."

Nuclear power plants, which produce power for about 20 percent of the nation's population, need about 11 million units of enriched uranium annually. Most of that comes from USEC and the rest from European competitors such as Urenco. Fearing a near monopoly, the power industry has opposed USEC attempts to control prices even more by lowering its cost for uranium dismantled from Russian nuclear warheads.

Last year, USEC won a trade case alleging Urenco was undercutting its prices by importing uranium subsidized by European governments. The consortium plan would use Urenco's decades-old centrifuge technology, and USEC would use newer technology developed by the Energy Department.

Ken Wheeler, chairman of a local nuclear energy task force, said he expects USEC and the Energy Department to sign an agreement soon, approving lower Russian prices and permitting USEC to move ahead with gas centrifuge. In return, USEC must keep the Paducah plant running at near its current level.

Wheeler said USEC, which is struggling financially, has indicated it needs a financial partner to deploy centrifuge. The agreement is expected to require the company to have monetary backing by a certain date, he said.

"There's no question that financially, Exelon is in a very strong position, comparatively speaking," Wheeler said. "What they don't have is the Russian uranium exclusive agency agreement, and it's beginning to appear that USEC will consummate that deal fairly quickly."

If Exelon were to build a centrifuge plant first and supply its own enriched uranium, that would cut so heavily into USEC profits that it would guarantee closure of the Paducah plant unless the Department of Energy intervened, he said. Wheeler said DOE probably would step in rather than lose its only remaining enrichment plant.

"The best of both worlds would be for Exelon and USEC to merge, or Exelon or somebody to buy (USEC) out," he said. "Then they've got the site immediately here. Now it turns out to be a great place again, because now they've got the work force, and they can simply ratchet from one plant over to the other."