Former Deputy Secretary of Energy Dan Poneman, who will soon head Centrus, a company
critics say already has too close of ties to the government.
It's another story of the revolving-door between the corporate world and high-level government officials. But this one about the uranium enrichment company—Centrus Energy Corp.—is unique.
For nearly five years Dan Poneman was deputy secretary of the U.S. Department of Energy and as acting secretary before Ernest Moniz got the post. Effectively, he was the department's chief operating officer. During that time, DOE directed hundreds of millions of dollars to the struggling Centrus, which was then called the United States Enrichment Corporation (USEC). The company emerged from a Chapter 11 bankruptcy just last September.
Later this month Poneman, who left DOE in October, will take over as president and CEO for an annual paycheck of $1.7 million. That has disturbed some people:
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."
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Nobody is directly accusing Poneman of any shadiness. Under ethics rules, he cannot have any direct contact with officials at DOE for two years, and a company spokesman said earlier this month that all the government's revolving-door restrictions placed on Poneman will be adhered to. But since the company's business is so profoundly entangled with DOE, and everybody at Centrus will report to him, the prohibitions about contact are not exactly the most effective method of keeping matters on the up and up.
"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."
Centrus's history is highly unusual. A government operation until 1993, it was spun off as a private corporation under the Energy Policy Act of 1992 and took the USEC name. In 1998, the sale was completed, with the company paying the Feds about $3 billion, but it kept needed infusions of government money.
Over the next few years it consolidated its operations in Paducah, Kentucky. It had previously used gaseous diffusion as a means to concentrate uranium, which is used at relatively low levels to fuel nuclear electricity-generating plants. Most of those plants are overseas. USEC then proposed a $5 billion gas centrifuge plant, the American Centrifuge Project in Piketon, Ohio. Fast-spinning centrifuges are another technique for concentrating uranium. The concentrate was meant to be used in a Tennessee civilian reactor to manufacture domestic tritium for nuclear warheads.
But in 2009, the government said it wouldn't provide a $2 billion loan guarantee to USEC because the proposed plant had technological issues and was not ready to go fully operational. That, plus the move away from nuclear power in some countries because of the Fukishima reactor meltdowns, caused the market for concentrated uranium to contract and USEC's stock price plunged. The bankruptcy filing followed.
And then there was a Government Accountability Office report that concluded DOE had violated the law several times when it arranged four uranium transfers in 2012 and 2013 to bolster USEC. DOE argued the GAO had got the law wrong.
Last September, the company emerged from bankruptcy with its new name—Centrus—and a bland branding slogan: "Fueling the future of nuclear power." Last week, Senator John Barrasso (R-WY) sent a letter to Secretary Moniz, reminding him of the transfers and asking for more transparency in such matters in the future: He also wrote:
DOE has long had an improper relationship with USEC. Mr. Poneman’s appointment as President and CEO only promises to make that record worse. His appointment to the Board of Directors of the Traxys Group, the sales agent for the current recipient of publicly-owned uranium, is also troubling. For these reasons, I ask that you conduct a rulemaking, with full notice and public comment, before authorizing all future sales or transfers of uranium. Only by adhering to the transparency and accountability requirements of the Administrative Procedure Act will DOE be able to restore confidence in its management of publicly-owned uranium.”
On the barbs being addressed at him and Centrus, Poneman
says:
“It’s got to operate successfully on its own two feet as a viable commercial operation to get away from the perception that it’s running to the government all the time,” he said.
Given the volatility of the business he's in, that could be a tall order.