A Department of Energy no-bid contract for advanced uranium enrichment has a key Senate Republican balking at the award. For some long-time observers of the troubled tale of uranium enrichment in the U.S., the deal suggests that DOE is interested in saving Centrus Energy, a Maryland-based firm that is the spawn of the government’s ancient enrichment monopoly.
DOE awarded a $115million contract with Centrus to develop 16 advanced gas centrifuges to produce “high assay low enriched uranium,” with the predictable acronym HALEU. Current reactor fuel is enriched to only about 5% U-235, but DOE says advanced reactor concepts, including small modular reactors, may require enrichment levels of up to 20%.
Centrus is the offspring of DOE’s long-held enrichment monopoly that used inefficient gaseous diffusion technology at plants in Ohio and Kentucky, for nuclear weapons material in the 1940s and 1950s. When civilian reactors came onto the scene, the government insisted that it keep control of nuclear fuel and uranium enrichment.
In the 1970s and 1980s, more efficient gas centrifuge technology arose in Europe, undercutting DOE’s monopoly. The Nixon administration in the 1970s first proposed privatizing uranium enrichment services, an idea that went nowhere for a decade. By the 1980s, with enrichment competitors in western Europe and Russia winning the uranium fuel markets, the idea gained traction.
In 1992’s Energy Policy Act, Congress created the U.S. Enrichment Corp., still a government-owned endeavor, with plans to fully privatize the venture, endowed with the energy agency’s inefficient World War II plants. In a public offering in 1998, USEC Inc. (stock symbol LEU) was born. The aged technology was a drag on USEC’s performance. The company hoped to take over a failed DOE advanced enrichment facility in Piketon, Ohio, with commercial operation set for 2012, to make it commercially competitive.
That plan failed when the Obama administration denied the company a $2 billion loan to build the plant. At the same time, a competitive U.S. enrichment business, Urenco USA – an offshoot of a European firm – opened a gas centrifuge enrichment plant in New Mexico.
USEC eventually shut down its elderly diffusion plants, began operating as an enriched uranium broker, and filed for a “pre-arranged” Chapter 11 bankruptcy at the end of 2013. It emerged as Centrus Energy in September 2014.
In 2015, the Obama administration canceled a contract with Centrus for a HALEU demonstration project, after DOE found that the work had “minimal incremental value.” DOE announced in early January that it would make a new award for the HALEU project if no other qualified bidder emerged, and announced Jan. 22 that Centrus would get the work. Foreign bidders were banned.
That award got under the skin of Republican Senator John Barrasso of Wyoming, chairman of the Senate Environment and Public Works Committee. In a letter to DOE, first reported by the Houston Chronicle, Barrasso wrote, “This contract appears to use American taxpayer funding to bailout Centrus, an unsuccessful business that relies on commercial relationships with Russian state-owned corporations to stay in business. Congress did not authorize or fund this project.”
The long and close relationship between Centrus and its predecessors with DOE may have played a role in the award. The Centrus CEO is Daniel Poneman. From 2009 to 2014, he was the deputy secretary of energy, also serving as the chief operating officer of the U.S. Department of Energy.
In 2015, Barrasso wrote a tough letter to Energy Secretary Energy Moniz, protesting Poneman’s hiring at Centrus. Barrasso wrote, “Under Mr. Poneman’s tenure, the Department of Energy (DOE) gave away significant quantities of publicly-owned uranium for the benefit of USEC. In 2014, the Government Accountability Office found that DOE’s uranium transfers involving USEC violated federal law on numerous occasions.” Poneman was also the chairman of a DOE panel that turned down USEC for the $2 billion loan in 2009.
The award for the 16 advanced centrifuges could be just first step. Dan Brouillette, deputy energy secretary, tweeted that DOE is “on its way to creating fuel for the next generation of advanced reactors critical to our future.” There may also be presidential politics in the back story. Ohio will be a 2020 battleground state. The DOE award won kudos from Ohio Republican Senator Rob Portman, who praised the “Department of Energy and the Trump administration for reconsidering the Obama administration’s decision to end the domestic uranium enrichment demonstration program.”
— Kennedy Maize