The Paducah Sun
The Paducah Sun
Paducah, Kentucky

USEC delays Piketon centrifuge demonstration

Staff & Wire report

Thursday, September 15, 2005

USEC Inc. has delayed demonstrating gas centrifuge technology by several months, but that doesn't jeopardize plans to have a new plant fully operating in Piketon, Ohio, by early in the next decade, the company says.

The $1.7-billion, 500-job Ohio plant is slated to gradually replace the 1,270-worker Paducah Gaseous Diffusion Plant and its outdated, expensive technology.

USEC planned to show investors its energy-efficient centrifuge technology in Piketon by the end of the year, but now says that won´t happen until the first half of 2006. In an earnings report last month, the company said some parts being tested aren´t ready, and the permitting process is taking longer than expected.

"In the testing phase, you will find things that you have to fine-tune and that´s what we´re doing," USEC spokeswoman Elizabeth Stuckle said.

USEC also needs to work out a long-term lease with the Department of Energy, which owns the Piketon site. The firm wants to begin operating the plant in 2008 and be in full production of uranium for nuclear-power plants by 2010.

USEC officials need to have a successful demonstration "if they are going to get investors in the plant," said George Lobsenz, editor of The Energy Daily, a trade publication. "Anything that delays that demonstration is trouble. They don´t have the deep pockets to develop the plant on their own."

Ohio won a bidding war with Paducah for the American Centrifuge project, which will produce fuel for nuclear power plants. USEC closed a gaseous diffusion operation in Piketon in 2001. Workers remain on the job there doing maintenance, cleanup and other functions for the energy department.

State and Pike County, Ohio, officials offered USEC an incentive package worth $125 million to lure the centrifuge project to Piketon, about 65 miles south of Columbus.

Paul Clegg, an analyst with Natexis Bleichroeder in New York, wrote in a recent research note that USEC is unlikely to abandon the Piketon project.

"If the company believes centrifuge is necessary for long-term survival, it has a big incentive to do whatever is necessary to make ACP work," he wrote.

USEC is eliminating a third of the 132 people that work at its Bethesda, Md., headquarters. Stuckle said the cuts are through retirements, eliminating some jobs, moving others to Paducah and creating a smaller senior management team focused on enrichment and the new gas centrifuge program.

Energy Daily, citing industry sources, reported that the headquarters layoffs could mean USEC is positioning itself to be sold. "That´s absolutely not true," Stuckle said.

USEC also is offering voluntary reductions of at least 50 salaried jobs at the Paducah plant to try to offset rising production costs, notably tens of millions of dollars in electricity. The cuts will start Sept. 30.