URANIUM

Former DOE deputy to lead controversial enrichment company

Former Energy Department Deputy Secretary Daniel Poneman is slated to take the helm of a uranium enrichment company that the federal government was found to have illegally propped up in recent years.

Later this month, Poneman will step up as chief executive and president of Centrus Energy Corp., a company formerly known as the U.S. Enrichment Corp. that produces enriched uranium for nuclear power plants.

He will replace John Welch, who served as president and CEO for nine years before leaving to join Huntington Ingalls Industries, the country's largest military shipbuilding company.

Poneman, who left DOE's second-highest position in October 2014 after serving more than five years, is known for defending the Obama administration on a number of high-profile energy issues, and is slated to lead Centrus as it tries to rebrand itself, shed past controversy and produce fuel for reactors that are being built more quickly abroad than in the United States.

The company emerged from bankruptcy with a new name and a public image overhaul, its motto: "Fueling the future of nuclear power" (Greenwire, Sept. 30, 2013). USEC blamed the bankruptcy on waning demand for reactor fuel following the 2011 Japan tsunami and earthquake, which prompted reactor closures in Japan and Germany.

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Poneman's connections, clout and policy chops will surely help the company as it angles for billions of dollars in federal loan guarantees and attempts to secure footing as a critical facility in the production of domestic tritium, a key component to nuclear warheads.

Centrus is waiting for market conditions to improve before attempting once again to secure a $2 billion loan guarantee to support its $5 billion uranium-enriching American Centrifuge Project in Piketon, Ohio, where it would enrich uranium that would later be used to make tritium at a civilian reactor in Tennessee. The government is expected to release a cross-agency review in the coming months that will gauge the government's need for domestic tritium -- and the Ohio plant.

But the company continues to be steeped in controversy surrounding transactions that occurred under Poneman's watch, and the move is already raising eyebrows among consumer advocates.

Federal watchdogs last year accused DOE of breaking the law to support USEC, accusations the agency denied.

The Government Accountability Office found the agency had violated laws on fair pricing and national security when it arranged four uranium transfers in 2012 and 2013 to bolster USEC. The agency lacked authority to transfer "tails," or leftover depleted uranium, to a third party for re-enrichment under restrictions imposed by the USEC Privatization Act, GAO found (Greenwire, June 9, 2014).

DOE called the underlying legal analysis "unfounded" and "erroneous," and defended the transactions and its legal standing and authority under the Atomic Energy Act. The agency also questioned whether GAO has legal authority to interpret federal laws and gauge an agency's compliance (Greenwire, June 9, 2014).

Tyson Slocum, director of the energy program for the consumer advocacy group Public Citizen, said Poneman's move is one of the most glaring examples of the revolving door he has seen. The move also shows that the government's decision to privatize the company in the 1990s -- spinning the company off from DOE -- has failed, he said.

"This doesn't really pass the smell test," he said. "You're putting a top former government official in charge of the company; it's safe to say his appointment as CEO is all about maximizing their influence with key federal officials for all types of federal support."

Centrus' business model relies heavily on access to and securing government assistance, he added, calling it "one of the more problematic revolving-door issues that I can remember." Poneman could provide the company leverage in both federal assistance and its effort to secure billions in loan guarantees.

Jeremy Derryberry, a spokesman for Centrus, said Poneman would not be lobbying.

"The company and [Poneman] will [comply] with all applicable post-employment restrictions," he said. "He wouldn't have come if he didn't feel very strongly about the importance of deploying U.S. technology for enrichment."

"There's no question he's going to help open a lot of doors; that's the reason you make him CEO," Slocum said. "His real value is his high-profile government service and his Rolodex."

In recent months, Poneman also has taken positions as a senior fellow at the Harvard Kennedy School's Belfer Center for Science and International Affairs and on the board of directors at Venture Global LNG, a firm that is proposing to build a natural gas liquefaction and exporting terminal in Louisiana.

At DOE, Elizabeth Sherwood-Randall, a defense policy expert and former top adviser to President Obama, has since taken over as top lieutenant to Energy Secretary Ernest Moniz.

Twitter: @HMNorthey | Email: hnorthey@eenews.net

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