Oversight Committee Presses Department of Energy on More Problematic Loan Guarantees
Washington, DC – House Oversight and Government Reform Committee Chairman Darrell Issa, following the loss of taxpayer money in the bankruptcy of Solyndra, continues to press the Department of Energy for answers about other questionable and problematic loans funded by the $787 billion stimulus. Letters released today by the Committee ask the Department of Energy to respond to questions related to taxpayer backed loan guarantees to Beacon Power and Nevada Geothermal.
• Regarding Nevada Geothermal, the committee is seeking answers and documents related to a $98.5 million partial loan guarantee, purportedly for a new construction project. However, very little of the loan guarantee was used to fund new construction. At the time DOE conditionally approved its loan guarantee, Nevada Geothermal was already in violation of contract terms and debt covenants from its primary lender and would have defaulted without the DOE loan guarantee. Instead of funding new construction, the overwhelming majority of the loan guarantee Nevada Geothermal secured was used to bailout their existing creditor. This arrangement appears to be inconsistent with existing law.
• In the case of Beacon Power, the Department of Energy made a $43 million loan guarantee for a project despite the fact that an S&P credit analysis, had concluded that even if Beacon Power secured the DOE loan guarantee it would only be worthy of a CCC+ credit rating. S&P defines a CCC rating as “currently vulnerable, and … dependent upon favorable business, financial, and economic conditions to meet its financial requirements.” Despite this warning, DOE approved the loan guarantee on August 9, 2010. Beacon Power filed for bankruptcy on October 30, 2011.
“American taxpayers continue to foot the bill for this administration’s poor choices,” said Chairman Issa. “The Department of Energy has engaged in reckless speculation that has led to the squandering of taxpayer dollars. The American people have a right to know how and why these decisions were made.”
The Oversight Committee is currently investigating multiple Department of Energy loan guarantees made to companies that appear to pose substantial risk of default to American taxpayers.