The Columbus Dispatch...
No word on nuke-plant loan; investors hang on
By  Jessica Wehrman
Monday August 15, 2011 

WASHINGTON — In a state struggling for jobs, it sounds almost too good to be true: A Maryland-based company hopes to transform an abandoned Department of Energy site in southern Ohio into an economic engine that would create 4,000 jobs and provide nuclear fuel for the world. 

But more than two years after the Department of Energy first rejected a loan guarantee for the American Centrifuge Project and project organizers went back to the drawing board, the long-awaited project — mentioned in presidential campaigns and touted by Ohio’s two senators and the region’s congressional delegation — remains more promise than reality. 

If completed, the new facility at the site of the old Portsmouth Gaseous Diffusion Plant in Piketon, Ohio, would bolster a hardscrabble region that traditionally suffers the highest unemployment in the state. 

In late June, USEC extended a June 30 deadline to receive a conditional $2 billion federal loan guarantee until today. 

Now, the company, based in Bethesda, Md., looks likely to extend that deadline yet again. 

USEC set the initial June 30 deadline with the agreement of two strategic investors, Toshiba and Babcock & Wilcox, telling them they could walk away from the deal if they hadn’t received the conditional federal loan guarantee by then. 

The guarantee represents a contractual obligation among the government, private creditors and a borrower that the federal government would cover the borrower’s debt obligation if the borrower defaulted. 

But when June 30 passed and the Department of Energy had not yet offered the loan guarantee, the two investors entered into a “standstill agreement” — an accord by both companies that they would not abandon the deal although the deadline had not been met. Toshiba and Babcock & Wilcox have committed $50 million to the project if USEC receives its loan guarantee and a total of $200 m illion. 

“We’re in ongoing discussions with Toshiba and Babcock & Wilcox about (today’s) deadline,” Paul Jacobson, a spokesman for USEC, said late last week. He said both companies have representatives on USEC’s board of directors. “We believe their interest in USEC and the centrifuge project remains strong.” 

He said Department of Energy officials have indicated they have concerns about financing. A spokeswoman for the federal agency declined to comment because the application is pending. 

It’s the latest hurdle in a project that has already faced many. 

USEC first applied for a federal loan guarantee from the Energy Department three years ago to help support the $5 billion project. In 2009, the application was denied because of concerns about the commercial viability of its technology as well as its financial viability. The company worked to address those concerns and, after feeling satisfied it had done so, continued to press the agency for the loan guarantee. 

But on June 11, an electrical outage at the plant led to a failure of some of the machines. The company said there were no injuries, release of radiation or contamination as a result of the event, which occurred during a lead cascade test and demonstration program aimed at uncovering potential operational issues. 

Jacobson said the cause was related to the support systems of the auxiliary plant infrastructure and not to the machine technology, design or manufacturing. Still, the incident damaged some machines. Most were operating on uranium gas at the time, USEC said. The company says all the damaged centrifuges are now operating again. 

Opponents of the project cite the incident to argue that the project isn’t ready. 

“The technology is unproven,” said Pat Marida of the Ohio Sierra Club, which opposes the project primarily because of concerns about the safety of nuclear energy. 

Geoffrey Sea, a USEC critic who lives along the fence line of the American Centrifuge Project, said the project is little more than a boondoggle designed to collect government dollars. He said he believes USEC doesn’t have the financing for the project and thus will not receive the loan guarantee. 

“I believe that the American Centrifuge Project has zero chance of ever opening,” he said. 

But John K. Welch, USEC president and chief executive officer, said in an August call with investors that the Department of Energy has indicated it wants to see the project move forward, despite concerns about finances. The company has hired financial advisers to help them review alternatives that would satisfy the department’s concerns. 

“We believe they recognize the national significance of the project, the importance of having a U.S.-owned and operated enrichment plant, the long-term implication for both nuclear energy and national security, and the project’s economic benefits, including approximately 8,000 jobs during construction,” Welch said. 

During the 2008 presidential campaign, Barack Obama indicated he supported the project. 

This summer, Portsmouth hotel owner Jeff Albrecht and a group of other southeastern Ohio businessmen traveled to Washington to lobby their lawmakers for the loan guarantees. The group returned home feeling as if it was on the verge of progress. 

But a month and one deadline later, nothing has happened. 

“It’s disheartening to people in the community, to say the least,” Albrecht said. “The president of the United States pledged to support this project. He either needs to support the project, or he needs to recant.” 

Read it at the Columbus Dispatch