Energy Northwest has reached a deal with the Department of Energy and other organizations for a fuel purchase planned to save Northwest ratepayers money and keep about 1,000 people employed for the next year at a uranium enrichment plant in Paducah, Ky.
Depleted uranium stored by DOE will be transferred to Energy Northwest and will be enriched for use at its Richland nuclear power plant by the Paducah Gaseous Diffusion Plant. The Paducah plant was at risk of shutting down this month for lack of business.
Energy Northwest will pay U.S. Enrichment Corp. $706 million to enrich the fuel and pay $5 million to DOE for handling costs, under terms approved last week by its executive board to finalize negotiations. Energy Northwest also will have financing costs for the deal.
It will offset costs by selling some of the fuel to the Tennessee Valley Authority, which has seven nuclear power plants, for $731 million. The authority lacked the borrowing capacity to make the fuel purchase outright.
Energy Northwest does not need the fuel until 2020, but believes purchasing the fuel at below market rates now will save ratepayers money for electricity produced at the Columbia Generating Station.
"This will provide a substantial benefit to Columbia and Northwest ratepayers," said Mark Reddemann, chief executive of Energy Northwest, in a statement. "It will give us a stable fuel supply through 2028 and at a lower cost."
In the near term the financial structure of the deal is expected to decrease costs $20 million from 2014 to 2017, according to Energy Northwest. Millions of dollars more are expected to be saved long term, although the Bonneville Power Administration, which markets the power produced, has cautioned the deal is not without risk.
The planned program to enrich depleted uranium, rather than mined uranium, is similar to a pilot project at Energy Northwest in 2005 that reduced fuel costs by $100 million, according to Energy Northwest.
"After much hard work, the Energy Department, in cooperation with the other organizations, has identified a creative path forward to utilize a portion of our depleted uranium inventory in a way that brings together the public and private sector to advance America's national security interests at a reduced cost to taxpayers," said Energy Secretary Steven Chu in a statement.