By Frank Lewis
Centrus Energy, Inc. is reporting that, as reported on Sept. 11, Oak Ridge National Laboratory (ORNL) informed officials that DOE had decided to reduce funding for the American Centrifuge program and therefore ORNL intended to contract with Centrus at a reduced level for the period from Oct. 1, 2015, to Sept. 30, 2016, with the possibility for additional extensions.
Centrus reports the reduced scope excludes continued cascade operations at their Piketon, Ohio facility. Funding would be reduced by approximately 60 percent to $35 million per year, and the scope of activities would be limited to development and testing activities in Oak Ridge, Tennessee. The new contract is anticipated to be a firm fixed- price contract that would provide for payments on a monthly basis of approximately $2.9 million per month effective October 2015, down from approximately $6.9 million per month through September 2015.
“We have no assurance that a final contract will be executed or that the amount and scope of the contract will be at the $2.9 million per month level. We have been in discussions with DOE concerning obtaining additional funding to permit operations at Piketon to continue but have no assurance that additional funding will be provided,” a news release from Centrus reads. “We notified our American Centrifuge employees in September 2015 of possible layoffs beginning in November 2015 as a result of DOE’s decision to reduce funding under the contract with ORNL. We initiated a voluntary workforce reduction opportunity in October 2015 that is subject to management acceptance of volunteers. The voluntary selection process will be followed by an involuntary workforce reduction if funding for Piketon operations is not restored.”
The company expects to make payments for those workforce reductions over the next 18 months.
“While we are moving forward with actions to reduce costs and demobilize Piketon operations, we are doing so in a manner that preserves our ability to restore operations should funding be provided,” the release stated. “Unless funding for (the) Piketon operations is restored, we may begin to take actions in the first quarter of 2016, including beginning to dismantle installed equipment and machines, which would increase the cost, time and difficulty of restoring operations at the Piketon facility.”
Centrus said should funding not be restored for operations at the Piketon, Ohio, facility, they could incur costs associated with the reduction in scope. Those costs could commence in the fourth quarter of 2015 as the Piketon workforce shifted to demobilization efforts and could extend into 2016. In addition to severance and demobilization costs, Centrus ultimately will have costs associated with the decontamination and decommissioning (D&D) of the Piketon facility in accordance with the requirements of the U.S. Nuclear Regulatory Commission (NRC) and DOE.
In making the announcement that the DOE would halt operations at the ACP in Piketon, Secretary of Energy Ernest Moniz said – “The technical judgment made is that continuing to spin the (centrifuge) machines will not give us any more technical knowledge on the technology that we will preserve. We are not pulling the plug. But right now it’s hard to justify $50 million for something we think will have little to no technical return.”
DOE has title to certain American Centrifuge equipment. In the event they return the Piketon facility to DOE pursuant to their lease, DOE retains title to and responsibility for disposition of that equipment, and the company would seek reimbursement for any D&D costs we incurred related to that equipment.
Reach Frank Lewis at 740-353-3101, ext. 1928, or on Twitter @franklewis.