$USU Research, Development & Demonstration Program Overview

$USU Research, Development & Demonstration Program Overview USEC and the Department of Energy are moving forward with a $350 million cooperative research, development and demonstration (RD&D) program to confirm the technical readiness of the American Centrifuge, the next-generation U.S. uranium enrichment technology. The RD&D program supports building, installing, operating, and testing commercial plant support systems and a 120-machine cascade that would be incorporated in the full commercial plant in Piketon, Ohio, which is planned to operate 96 identical cascades. Over the last several months, USEC has prepared its demonstration facility for installation of a full-scale commercial cascade with related plant infrastructure. With the RD&D agreement in place, USEC is moving rapidly to build additional AC100 machines and related support systems to complete the demonstration cascade. The cooperative agreement between USEC and DOE defines the scope, funding and technical goals for the program. The total investment in the program will be up to $350 million, with DOE providing 80 percent, or $280 million, and USEC providing 20 percent, or $70 million, of the total. The demonstration program will support more than 1,000 direct jobs across the United States. Current Status 90 of the 120 centrifuges needed for the demonstration cascade have been assembled. Centrifuge manufacturing and assembly continues at a rate of approximately 10 a month. Machine assembly is ahead of schedule. Cascade and balance of plant support system design substantially complete. Construction is on schedule. Balance of plant construction work is underway. All six service modules for the demonstration cascade have been welded into place. DOE has certified completion of 2 of the 5 program technical milestones. The remaining 3 are due in December 2013. Performance Indicator A (10 machine years runtime with safety enhancement) achieved and documentation submitted to DOE for review and approval. The program is utilizing 169 companies from 28 states to support RD&D construction, manufacturing and operations activities. Added 160 workers in Ohio, Tennessee and other states, raising total project workforce to more than 1,000 workers. Recent Activities Achieved Performance Indicator B: Demonstrate AC100 production capability by manufacturing, assembling and delivering 78 centrifuges. Documentation for Performance Indicator B has been submitted to DOE for review and approval. Paducah Gaseous Diffusion Plant General Manager Jim Lewis has been named ACP Operations Deputy Manager, bringing his experience from Paducah enrichment operations to the program. Lewis will focus additional management attention on the successful execution of the RD&D program. Lewis has 25 years’ experience in uranium enrichment operations. Implemented Earned Value Management to assist in managing and running the program. Upcoming Activities Continue to operate AC100 machines in the lead cascade until construction activities for the new Demonstration Cascade require suspension of machine operations at the end of 2012. This construction period will allow removal of existing cascade support equipment, construction of new infrastructure equipment and integrated systems testing. Manufacture and assembly of AC100 machines will also continue during this period and through the end of the program. Centrifuge operations, including reliability testing, will continue at the test facility in Oak Ridge during this temporary suspension of operations in Piketon. Once the new equipment is installed and tested, 120 AC100 machines will be installed and operated in a commercial plant configuration. American Centrifuge Demonstration, LLC USEC and its newly created subsidiary, American Centrifuge Demonstration, LLC, will carry out the RD&D program. American Centrifuge Demonstration is putting in place a program management and enhanced program execution structure as agreed to in the cooperative agreement with DOE. In July 2012, USEC entered into a limited liability company agreement for American Centrifuge Demonstration that, among other things, establishes a board of managers in accordance with the enhanced program execution structure. The board of managers will oversee and direct the management of the RD&D program. The seven-person board is comprised of the following members: Luis Reyes, executive director for operations (retired), U.S. Nuclear Regulatory Commission (Chairman), M. Roger Eshelman, executive vice president and chief operating officer (retired), Savannah River Nuclear Solutions, LLC, Bruce Rash, director, nuclear project management, Exelon Generation Company, LLC, Philip G. Sewell, senior vice president, American Centrifuge and Russian HEU, USEC Inc., Randall J. Spickard, vice president, business development, Babcock & Wilcox Technical Services Group, Inc., Robert Van Namen, senior vice president, uranium enrichment, USEC Inc., and Hitoshi Yabuta, vice president, project management, Toshiba America Nuclear Energy Corporation. Activities The RD&D program funds the following activities: Installation and operation of a 120 machine cascade, that will be replicated 96 times in a commercial plant, along with related plant support systems Continued manufacture and assembly of the AC100 centrifuges used in the 120 machine demonstration cascade. Ongoing technical support for centrifuge manufacturing and lead cascade operations. Engineering, Procurement and Construction work needed to install and operate the 120-machine demonstration cascade. Maintain the centrifuge intellectual property and sustain the domestic centrifuge technical and industrial base for national security purposes and potential ACP commercialization. Activities to reduce risk and improve the prospects of future deployment of the American Centrifuge Program Milestones The agreement includes the following technical milestones for the RD&D program: Milestone 1 (Completed): DOE and USEC jointly agree upon a test program for the remaining milestones and for full system reliability and plant availability that takes into account human factors, upgraded Lower Suspension Drive Assembly (LSDA) and overall AC100 reliability, and full cascade separative performance, so as to achieve an overall plant availability and confidence level needed to support commercial plant operations; Milestone 2 (Completed): Confirm the reliability of the LSDA by accumulating 20 machine years of operation at target speed using AC100 centrifuges with upgraded LSDAs with no more than the projected number of LSDA failures; Milestone 3: Demonstrate AC100 manufacturing quality by operating the commercial demonstration cascade for a minimum of 20 machine years to provide the confidence level needed to support commercial plant operations; Milestone 4: Demonstrate AC100 reliability by accumulating 20 machine years at target speed and design condition with no more than the expected number of infant, steady-state and electronic recycles; and Milestone 5: Demonstrate sustained production from a commercially-staged, 120-centrifuge demonstration cascade configuration for 60 days (approximately 20 machine years) in cascade recycle mode with production availability needed during commercial plant operations using an average AC100 centrifuge production of 340 SWU per centrifuge year. Taxpayer Protections The agreement includes substantial taxpayer protections: USEC has granted DOE an irrevocable, non-exclusive, royalty-free license in centrifuge intellectual property for government purposes. USEC has granted to DOE title to certain existing equipment used in the RD&D program as well as all equipment, such as centrifuge machines, produced or acquired as part of the RD&D program. USEC is instituting a new governance structure for the RD&D program by forming American Centrifuge Demonstration, LLC. American Centrifuge Demonstration will be subject to the requirements USEC must meet under its NRC license. American Centrifuge Demonstration has a seven-member board of managers that is not controlled by USEC. RD&D Update Brief