Federal officials have opted to funnel millions more tax dollars into a troubled nuclear energy company that is near bankruptcy and admits it has no viable business model.
The United States Enrichment Corp. told the U.S. Securities and Exchange Commission Nov. 21 that it will receive from the Department of Energy “additional government obligated funds of $15.7 million, bringing total government obligated funding to $256.9 million.”
The company also said the DOE action “extends the current funding period and end-date of the program until January 15.”
The funds are supposed to enable USEC to demonstrate a working technology process for uranium enrichment that would enable it to continue functioning.
But even if USEC succeeds in the effort, its future remains problematic because it must somehow raise $4 billion to fund construction of a new enrichment plant.
Company officials have said in official filings that they don’t know where that funding might be found. The new plant would produce enriched uranium for use in nuclear power-generating plants in the U.S. and overseas.
Even so, USEC stock inched up after months of sharp declines, but is still 1/1,600th what it once was.
“Just want to says thanks for the series. Looks like it’s had a big effect on the stock,” USEC spokesman Paul Jacobson said of the stock’s improvement.
Jacobson was mocking the Washington Examiner's three-part series -- "Enrichment at the public till" -- that ran earlier this month detailing USEC's years of failure despite receiving billions of dollars in federal help in the form of subsidies, and technology and facilities transfers.
The increase in USEC's stock value likely was in response to the announcement of continued federal assistance and new regulatory action that could hobble some of the firm's international competitors.
“The United States International Trade Commission (ITC) today voted 3-1 to leave in place duties on French low enriched uranium,” USEC said in a Nov. 13 news release. Lifting the tariff would have been “detrimental to America’s uranium enrichment industry,” USEC said.
USEC became a publicly traded corporation in 1998, when President Clinton and the Republican Congress converted it from a government project that had functioned since the early 1950s.
The firm has paid its CEO nearly $7 million a year despite having lost more than $1 billion last year. It has relied mainly on federal support throughout its existence.
Since 1998, USEC has spent millions of dollars on an army of high-priced lobbyists with Capitol Hill connections and donated more than a million dollars to politicians, with most of it going to high-ranking Republicans from the states where it operates.
These include Senate Minority Leader Mitch McConnell of Kentucky and House Speaker John Boehner of Ohio.
The $4 billion production plan USEC must build to survive would be located near Boehner’s district. The firm has long operated a facility in Paducah, Ky.
Some Democrats, including President Obama, have also supported the company.
Over the years, Washington politicians have kept the spigots open for USEC to operate using World War II-era technology, even as the company repeatedly failed to devise modern technology.
During those years, USEC’s competitors unveiled new enrichment plants that were 20 times as efficient. At its peak, USEC’s Kentucky plant used as much power as the entire city of St. Louis.
The Paducah facility produced enriched uranium even though supply far exceeds demand, according to USEC’s SEC filings.
USEC’s efforts to bring to the market new technology originally created by the government have been delayed by a decade, while the cost of doing so has surged to an estimated $4 billion.
It asked DOE for a $2 billion loan guarantee — the same process made infamous by the $500 million lost when Solyndra went bankrupt — even though USEC could not say where it would get the rest of the needed funding.
DOE asked USEC to withdraw its loan guarantee application and pointed out multiple flaws in the company’s plans, but lawmakers have maintained pressure on the department to continue funding.
Energy department officials said they would consider the application after the $256.9 million test period is concluded.
CORRECTION: The photo that was originally published with this story was a photograph of Ur-Energy's Lost Creek ISR Processing Plant in Wyoming. Neither Ur-Energy nor the Lost Creek plant is related to U.S. Enrichment Corp or USEC's Paducah, Ky., facility. The Washington Examiner regrets the error.