FRANKFORT, Ky. — The operator of a Cold War-era plant in western Kentucky that supplies enriched uranium to nuclear power plants said Friday it planned to cease production after federal energy officials decided to end its work, putting more than 1,000 workers out of high-paying jobs with benefits.
The Paducah Gaseous Diffusion Plant is the only government-owned and operated uranium enrichment facility in the country. It's operated by USEC Inc. under a lease deal with the U.S. Department of Energy.
USEC executive Robert Van Namen said the company pursued potential opportunities to continue the enrichment work, but DOE concluded "there were not sufficient benefits to the taxpayers to extend enrichment."
"I am extremely disappointed to say we must now begin to take steps to cease enrichment," USEC's senior vice president and chief operating officer said.
Department officials said they looked at possibly keeping the Paducah plant operating longer, but couldn't reach an agreement that was "viable for us as responsible stewards for the taxpayers."
Last May, the plant faced closure until officials reached a deal that gave it a reprieve for another year. Under that deal, the plant enriched depleted uranium for Tennessee Valley Authority and Energy Northwest, a utility in Washington state.
The plant opened in 1952 to develop enriched uranium for military reactors and to produce nuclear weapons. The plant began selling uranium for commercial reactors in the 1960s, and has been operated since the late 1990s by Bethesda, Md.,-based USEC.
Local union officials criticized the Energy Department's decision.
"It's kind of shocking because there was profit to be made," said Mike Myers, a nearly 23-year plant worker and a vice president with a steelworkers union local representing about 580 plant employees.
"It looks to me like DOE is throwing us all under the bus," he said.
Soft demand for enriched uranium, stemming partly from the disaster in Japan when a tsunami crippled a nuclear plant, coupled with steep production costs triggered the decision, USEC spokesman Jeremy Derryberry said. Production will be phased out in the next month.
"We've been telegraphing for a long time that the plant had a limited lifetime," Derryberry said. "That was only accelerated by what happened in Japan."
Japan was an important market for the Paducah plant's enriched uranium, but nearly all of Japan's workable reactors have been offline since the March 2011 earthquake and tsunami triggered multiple meltdowns at the Fukushima Dai-ichi plant.
"What that essentially does is take a huge chunk of demand out of the market, at least in the near term," Derryberry said. "With no demand, there's an excess of supply. Prices go down. We just haven't been able to find additional customers for the plant's capacity."
Employees were notified of the decision in a meeting about 6:30 a.m. Friday, ending years of uncertainty about their jobs.
"It was sort of anticlimactic in the sense that you knew it was coming," said electrical supervisor Barry Miller, 58, who started work at the plant in 1977. "There was almost a sense of relief in a very strange sense. I think that was true of a lot of employees, where they just wanted to know. ... It's not a joyful relief. You can imagine what it's doing to people who have families and literally don't know what they're going to do."
Miller, whose daughter-in-law also will lose her job at the plant, said Paducah doesn't have another plant with high-paying jobs to absorb the furloughed workers.
"There's going to be a whole lot of people debating leaving town and trying to go someplace else," he said. "That's what I worry about more than anything. I certainly don't want my son and his wife to move."
Besides the downturn in demand for its enriched uranium, the Paducah plant also was beset by high production costs mostly because of the vast amounts of electricity used in the process, Derryberry said.
The company plans to turn the plant site back over to the Energy Department sometime in 2014. Until then, some workers will remain to manage inventory and meet customer orders and to prepare the site for the handover.
DOE will try to locate another company to operate the facility, department spokesman Tim Echelard said.
"Right now there are a couple of different options out there," he said.
Jim Key, another vice president with the steelworkers union local, said the plant remained productive and efficient, and was an important cog in meeting the nation's energy demands.
"This is the last remaining U.S. government-owned uranium enrichment facility in our nation," he said. "It makes no sense to me why we as a country would even consider shutting down this facility, and thereby having to rely on foreign sources."
It's anticipated that plant workers will receive severance packages, Derryberry said. The average salary for plant workers, including benefits, is $125,000.
Paducah Mayor Gayle Kaler said the Kentucky plant deserves the same treatment given by DOE to similar facilities, where she said millions have been spent on cleanup to make the sites viable for future work.
"We strongly urge that our economic development team be given the opportunity to secure property for future use for our trained workforce," she said.
Reaction was swift from Kentucky top political leaders.
U.S. Senate Republican Leader Mitch McConnell and Democratic Kentucky Gov. Steve Beshear lamented the DOE's decision. Beshear called the news disappointing and painful even though he said it had been expected.
"We know there are 1,100 very talented and hardworking people at that facility, and we had hoped that an alternative might have been found to keep it open," the governor said. "As disheartening as this news is, we pledge our full assistance and support to the employees and community to absorb this loss and find new opportunities for those skilled and experienced workers."
The plant stores 40,000 cylinders of depleted uranium.
"Paducah is a strong, resilient city full of dependable, creative people," Beshear said. "We are confident that those characteristics will carry citizens through this difficult time."
McConnell released a joint statement with fellow Kentucky Republicans U.S. Sen. Rand Paul and U.S. Rep. Ed Whitfield expressing disappointment that the DOE had been unable to reach an agreement for at least another four months of work. The three have requested a meeting with Secretary of Energy Ernest Moniz.