DOE to reduce funding on Centrus advanced uranium enrichment program

The U.S. Department of Energy (DOE) Oak Ridge National Laboratory in Tennessee has informed Centrus Energy (NYSE:LEU) that it plans to reduce its level of funding by about 60% for advanced uranium centrifuge technology, the company said Sept. 11.

Centrus is the post-bankruptcy successor to USEC, which was privatized from the DOE’s U.S. Enrichment Corp. during the Clinton administration.

 The new contract will cover the period from Oct. 1, 2015, to Sept. 30, 2016, with the possibility for additional extensions. It excludes continued operations of America’s only operating cascade of advanced uranium enrichment centrifuges in Piketon, Ohio. Funding will be reduced by approximately 60% to $35m per year, and the scope of activities will be limited to development activities in Oak Ridge, Tenn.

While continued funding will allow continued operation of a test facility in Oak Ridge, it will not support ongoing operation in Piketon, Ohio, which currently employs about 280 people, the company said.

“While obviously we are disappointed by the decision to significantly downsize America’s advanced centrifuge program, we appreciate the Laboratory’s recognition that the technology has been effectively demonstrated over the last two years of hard work at Piketon,” said Centrus Vice President Steve Penrod, who oversees the American Centrifuge program for the company. “We will work with the Laboratory and with Congress to protect as much of the core capabilities of the program as possible so that the technology will remain ready for deployment when the U.S. government calls upon it for national security purposes.”

“In the coming weeks, we will explore options to protect the technology and our workers in Ohio, whose expertise, creativity, and dedication represent an invaluable asset for the Nation,” said Daniel B. Poneman, president and CEO of Centrus. “Cuts to our workforce would impose hardship on families and communities, while jeopardizing future progress. We will do all that we can to ease transitions while preserving as much of our scientific, technical, and industrial expertise as we can with the available funding.”

Centrus is the only company that uses U.S.-developed technology to enrich uranium.

Rep. Bill Johnson (R-Ohio) criticized the move by DOE. “Today, we learned the Obama Administration officially broke their promise to continue the efforts of the American Centrifuge Project in Piketon,” Johnson said in a statement. “This is a major blow to many workers and communities in southern Ohio, and raises numerous, very serious national security concerns, not the least of which are ‘Who made this decision?’ and ‘Was the Pentagon consulted at all?’

“U.S. government officials and knowledgeable third parties have repeatedly said that it is vital for the United States to have a domestic uranium enrichment technology for national security purposes.,” Johnson said.

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Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.