Under the terms of the new deal, if USEC fails to meet its end of the bargain, DOE would resume operation of the plant.
By Joe Walker email@example.com
If USEC fails to meet its end of the bargain, DOE would resume operation of the plant, where the outdated, 50-year-old gaseous diffusion process burns massive amounts of electricity.
Under terms signed Monday night, USEC must:
Run the plant at an annual production level of at least 3.5 million units of enriched uranium. It currently produces about 5 million units. The level may be reduced only after USEC is within six months of operating a replacement facility that uses gas centrifuge technology and has a 3.5-million-unit capacity.
Provide quarterly historical production and annual projected production reports to DOE. If USEC falls short of the 3.5-million mark, it has a year to get back on track or waive its right to lease the plant from DOE.
Give the department at least 120 days' notice of a plant closing or "mass layoff." DOE may replace USEC with another operator to avoid a shutdown.
Have a replacement gas centrifuge plant operational by 2010 if it is located at Piketon, and 2011 if in Paducah. The reason for the time difference is that the closed gaseous diffusion plant in Piketon has a gas centrifuge building that has been out of commission since the 1980s, when the government abandoned the idea of using centrifuge. It would take an extra year to build a facility in Paducah.
Paducah Mayor Bill Paxton praised the agreement but said a problem could arise if a competing consortium beats USEC's schedule by having a gas centrifuge plant partly running by 2006 and fully operational by 2011. The group includes Urenco, a European enrichment firm, and large USEC customers including the Exelon nuclear power company.
The consortium has targeted Paducah among eight finalists for the plant and is expected to pick a site by the end of the month.
"Then obviously the only thing USEC would have would be the deal with the Russians," he said. "There wouldn't be any excess uranium capacity for the plant to sell to anybody."
The agreement gives USEC assurance of remaining the exclusive buyer of enriched uranium taken from dismantled Russian warheads. Although the Bush administration still has not approved USEC's contract for cheaper Russian prices, that is expected, perhaps as early as today, said Leon Owens, president of the Paducah plant's energy workers' union.
"The exclusive agency is the prize," he said. "If USEC doesn't perform, there is a mechanism in place allowing the government to remove it as executive agent for the Russian uranium."
The agreement was expected last fall before the events of Sept. 11 swung the federal government's attention to terrorism. USEC said it needed to continue buying the cheaper Russian uranium to keep the plant running by offsetting its higher-priced uranium. After protracted negotiations in which the union refused to have the Russian issue tied to the contract, the two sides reached a short-term contract in November pending approval of the agreement.
"This is very positive for the Paducah plant and the workers," Owens said. "One of the main pieces we were looking for was that the agreement be transparent. By that, I mean USEC has to notify us of business failures that could lead to closure."
He said he was hopeful the minimum operational level would be 4.5 million to 5 million units a year, "but 3.5 million is definitely a level we feel we can work with."
Amid financial difficulty, USEC has cut about 350 jobs since 1998, and Owens said rumors persist of more layoffs. Considering that USEC will remain as exclusive Russian agent, the union hopes the company will provide enhanced severance benefits so that layoffs could be voluntary rather than forced.
The agreement requires USEC to buy 30 million metric tons of Russian uranium annually. It also says DOE will back the company's exclusive agency as long as it meets its performance guidelines. Energy Secretary Spencer Abraham said the pact "accomplishes two very important goals" of assuring the nation can produce enriched uranium for its own nuclear power plants and continuing nuclear disarmament.
William H. Timbers, USEC president and chief executive officer, said the deal strengthens the firm and gives it "a clear path to developing what we believe will be the industry's best technology."
First District U.S. Rep. Ed Whitfield and U.S. Sens. Mitch McConnell and Jim Bunning of Kentucky said the deal protects Paducah jobs and recognizes that the nation must develop new, cost-efficient technology.
"The fact that Paducah is one of only two potential sites for this technology is a testament to the workers and their 50-year legacy of achievement," McConnell said.