DOE denies loan guarantee for Ohio uranium plant
CINCINNATI — Department of Energy officials will not guarantee a loan to a company that had been developing a uranium enrichment plant project in southern Ohio, saying Tuesday that the facility has promise but they don’t believe it’s ready to move forward.
Energy Department officials said in a conference call it asked USEC Inc. to withdraw its loan application so it can resolve technology issues and be considered again in 12 to 18 months.
“We are convinced the technology has promise, but the project is neither technically or financially ready to move forward to commercial construction,” Matt Rogers, a senior adviser to Energy Secretary Steven Chu.
The Bethesda, Md.-based USEC Inc. responded by suspending project construction. USEC President and CEO John K. Welch described the government’s decision as shocking and disappointing in a statement.
However, energy officials also announced Tuesday a plan to spend between $150 million and $200 million per year for the next four years to accelerate cleanup efforts at the site, which once housed a gaseous diffusion plant. The cleanup effort is expected to create 800 to 1000 new jobs, the government said.
USEC has been developing the new project in Piketon, about 65 miles south of Columbus. The company says the $3.5 billion project would create thousands of jobs.
USEC shares plummeted, falling nearly 35 percent, or $2.14 a share, to close at $4.05.
DOE has offered to provide up to $45 million dollars over the next 18 months to support ongoing project research and development activities and would allow USEC to continue operations at Piketon and Oak Ridge, Tenn. where some of the research has been done.
USEC spokeswoman Elizabeth Stuckle said the company is not withdrawing its application and will look for other financing, saying it will be tough in the current economy. She said USEC believes the American Centrifuge technology is ready to deploy today.
USEC has spent $1.5 billion on the project and offered an additional $1 billion in collateral to DOE, in addition to securing over $3.5 billion in commitments for planned plant output, Stuckle said.
“We believe we are in a strong financial position to be able to receive this loan guarantee,” Stuckle said.
The company applied for the loan 11 months ago under a U.S. Department of Energy program launched by former President George W. Bush. The plant was announced five years ago and was supposed to open in 2011, employing about 400. Enriched uranium from the plant would be used in generating electricity at nuclear power plants.
Gov. Ted Strickland had written to President Barack Obama in March urging approval of the $2 billion federal loan guarantee to prevent the delay or loss of thousands of new jobs expected to be generated.
The governor hopes that DOE and the company can resolve outstanding questions in less than 12-18 months so that USEC can reapply soon, Strickland spokeswoman Amanda Wurst said Tuesday.
“If it becomes apparent the ACP project cannot move forward, the governor hopes USDOE would work with the state to create a viable redevelopment plan for the site,” Wurst said.
Republican Congresswoman Jean Schmidt, whose district includes the Piketon facility, said she has asked Obama in a letter to overturn the DOE decision and encourages everyone from the governor to community residents to call the White House.
“He is our only hope at this point,” Schmidt said.
Pike County Commission President Harry Rider was optimistic that the project can still happen.
Contributing to this report were Associated Press writers James Hannah in Dayton, Ohio; Dan Sewell in Cincinnati; and Doug Whiteman in Columbus, Ohio.
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