The initial proposal is expected to arrive at USEC's head offices today, and flexibility is part of Kentucky's strategy.
By Joe Walker firstname.lastname@example.org
"We've met the deadline to file our initial proposal," state Community Development Commissioner J.R. Wilhite said Thursday. "It's leaving today to be in Bethesda (today)."
Wilhite, who led a state-local economic development effort, said representatives of both states will meet separately with USEC executives to answer questions, hear what is most important to the company and finalize proposals in early November. USEC spokeswoman Elizabeth Stuckle said the company will pick a site after reviewing the final packages.
"It's going to be an ongoing discussion with the company for the next four weeks," Wilhite said. "We don't send any package and say, 'Take it or leave it.' We want them to tell us how important the project is and what they think it will take for us to get it."
Paducah must overcome major hurdles to get the $1.5 billion gas centrifuge plant, whose construction is slated to start in 2006. It will replace the outdated, 1,200-employee Paducah Gaseous Diffusion Plant by 2010. USEC has accelerated the schedule and will be a year ahead by the time the commercial plant opens.
Unlike Paducah, Piketon presents no major earthquake concerns and has had a test centrifuge plant mothballed for nearly 20 years. Starting next year, USEC will refurbish the two-building Piketon complex and install newer centrifuges that spin at high speed to enrich uranium for use in nuclear fuel. The machinery is susceptible to earthquakes.
After picking Piketon for the test plant, USEC President William "Nick" Timbers said last December that Paducah could not overcome the added cost of having to erect buildings and make them earthquake-resistant.
"We know those are factors, and we're going to address them," Wilhite said of the new proposal.
A recent study by the Kentucky Geological Survey suggests the New Madrid Fault Zone may not extend to Paducah and the seismic risks are overstated. Survey teams want $500,000 from the state legislature to expand the study, based on six months of ground monitoring.
"We're making that information available to USEC," Wilhite said. "If they don't already have it, they'll certainly have access to it."
U.S. Rep. Ed Whitfield, R-Hopkinsville, said earlier that Paducah’s advantages are the quality work force, efficiency and public support that led USEC to close the Piketon diffusion plant and consolidate enrichment here.
The proposal reflects those strengths, Wilhite said. "What's really critical to the business decision is how USEC values those things."
Wilhite's team has asked the Tennessee Valley Authority for cheaper electricity to help offset the disadvantages. USEC is saving millions of dollars annually in production costs under a power contract signed three years ago with TVA. The deal was a major reason USEC upgraded the Paducah plant and closed its sister plant in Piketon.
Although the Paducah diffusion plant uses as much electricity as a major city, gas centrifuge uses only a fraction of that. The test gas centrifuge plant will yield cost, schedule and performance data for the commercial plant.
USEC's earnings have dropped steadily in recent years as it plows millions into centrifuge technology. Atomic workers' international union leaders doubt the firm can finance the commercial plant regardless of where it goes. Last month, they outlined a potential "perfect storm" of economic issues that might result in closing the Paducah plant and not building the centrifuge plant.
President Leon Owens said the Paducah union local, representing more than 500 plant workers, is focused on keeping the diffusion plant open. USEC in 2006-07 must pay $500 million in federal debt from privatization and find a partner to share the huge commercial plant cost, he said.
Owens said USEC is ahead on some parts of gas centrifuge and he hopes "the aggressive approach" taken by Wilhite's team will work in Paducah's favor. The union provided one piece of the proposal, he said.
USEC says it expects the test plant to reap financial backing for the commercial plant.