USEC, traded on the New York Stock Exchange as USU, had a very bad year last year. According to a report on the Motley Fool website, the company lost $35 million dollars last year. The company suffered from world wide reconsideration of nuclear power in the wake of the melt down of Fukushima Daiichi nuclear plants in Japan following a devastating earthquake and tsunami in March, 2011. See Why did USEC melt down in 2011?
USEC was not the only nuclear company that felt the tremor from Japan. NRG wrote off a half billion dollar investment in South Texas. Germany halted its nuclear program and, according to published reports, countries around the world slowed or halted their own nuclear power programs.
West Kentucky may soon feel the tremor from Japan. USEC employs approximately 1200 workers in Paducah at the Paducah Gaseous Diffusion Plant. It sent a letter to the Department of Energy (DOE) informing the regulatory agency that it may end its involvement in Paducah and return management of the site to the government if three of its issues are not met.
The company told DOE that it has concerns about electric costs rising when its contract with TVA ends in May. The company, according to a report in West Kentucky Star.com gets a “significant rate reductions.” If the company cannot continue the sweetheart deal with TVA, operating costs will rise.
The company also wants to be allowed to re-enrich uranium tails. According to testimony given to Kentucky Representative Whitfield and the House Subcommittee on Energy and Power in June 2011,
“…Since 1993, uranium enrichment activities at DOE-owned uranium enrichment plants have been performed by the U.S. Enrichment Corporation (USEC), formerly a wholly owned government corporation that was privatized in 1998. However, DOE still maintains over 700,000 metric tons of depleted uranium tails in about 63,000 metal cylinders in storage yards at its Paducah, Kentucky, and Portsmouth, Ohio, enrichment plants…
It must safely maintain these cylinders because the tails are dangerous to human health and the environment. Uranium hexafluoride is radioactive and forms extremely corrosive and potentially lethal compounds if it contacts water… In addition, DOE also maintains large inventories of natural and enriched uranium that are also surplus to the department’s needs.” (Emphasis added)
To read the full report, go to DOE's Uranium Tails Could Be Source of Income for Government pdf
In June, DOE told Congress that the agency would have to contract with a private contractor to convert the depleted uranium into a reusable product. That would be work for USEC.
Converting uranium to be used in nuclear power production will not solve the third issue cited by the company. The company wants some sort of guarantee from DOE that its product will be in demand. Demand after the Japanese disaster remains problematic.
The Government Accounting Office included its opinion of the value of uranium tails in the hearing before Whitfield’s energy subcommittee.
“…Based on May 2011 uranium prices and enrichment costs and assuming sufficient re-enrichment capacity is available, GAO estimates the value of DOE’s tails at $4.2 billion—about $3.4 billion less than GAO’s March 2008 estimate. However, this estimate is very sensitive to changing uranium prices, which have dropped since GAO’s March 2008 report was issued…” (Emphasis added).
Even if permission was granted immediately to refurbish the uranium, the market dropped by almost half in three years – and is forecast to continue to drop.
USEC’s losses in 2011 do not visibly relate to the performance of the Paducah plant. It is traceable to world market conditions. And USEC leaving the Paducah Gaseous Diffusion Plant does not automatically mean the plant will close. It simply means that the government will be back in control – as it was prior to 1996.
USEC may be asking the Department of Energy and its employees to do the impossible – control the price of electricity; pass legislation in a deadlocked Congress and create a market where none may exist.