GAO says DOE misused funds to keep privatized plant open

Former Energy Secretary Bill Richardson was not operating within the law last October when he allocated $630 million to keep a DOE facility in Ohio open, according to the General Accounting Office. The uranium enrichment plant, located in Portsmouth, Ohio, is one of the nation's two uranium enrichment facilities. Enriched uranium is used as fuel for nuclear power plants, which fulfill about 20 percent of the country's electricity needs. The Energy Department owns both plants, but the U.S. Enrichment Corp. (USEC) operates them. USEC was privatized in 1997. The Bush administration has put a temporary hold on funds intended to keep the Ohio plant on standby after it closes in June. The Energy Department is committed to funding operations at the plant, said agency spokesman Joe Davis. "We want to get it done the right way," he added. "Congressional intent plays in here in terms of how Congress wanted the funds appropriated. Once the money is out there, it's tough to bring back." The treasury's net gain from USEC's privatization was $1.9 billion, $725 million of which was set aside in a fund to pay for expenses associated with privatization. Since going private, USEC has failed to set financial markets on fire. Its stock price has dropped from $14 in 1997 to $4 and profits substantially between 1999 and 2000. Last spring, in a cost saving move, USEC announced that it would shut down operations in Ohio and consolidate production at its Paducah, Ky., facility. During the presidential election, both candidates pledged to keep the Ohio plant on standby, thereby ensuring that more than 1,000 union workers in a key battleground state would not lose their jobs. Richardson dipped into the $725 million to keep the plant on standby, which means it can be brought back into operation without a major ramp up. Richardson argued that the cost could be justified as an expense of privatization. With a number of conflicting legal interpretations over how the privatization fund can be used, the Bush administration decided to put Richardson's plan on hold until a formal deal can be worked out with Congress. Both of Ohio's Republican senators and its Republican governor have urged the Bush administration to uphold its campaign promise to keep the plant on standby. "We can't wait more than a few weeks to get this worked out," adds Rep. Ted Strickland, D-Ohio. The Portsmouth plant is in Strickland's district. "If the plant is not placed on cold standby it will be forever lost to the possibility of producing this fuel. That would be totally irresponsible. This is an energy security issue that extends well beyond Ohio and my district."