CQ TODAY ONLINE NEWS – ENERGY
Nov. 16, 2011 – 6:35 p.m.
Energy Secretary Defends Loan Program Ahead of Capitol Hill Appearance
By Geof Koss, CQ Staff
In addition to high political theater, Energy Secretary
Chu’s presence before the Energy and Commerce Oversight and Investigations Subcommittee will make him the highest-ranking administration official to testify in the months-long investigation into Solyndra. The California solar manufacturer filed for bankruptcy in September after receiving $535 million in federal loan guarantees authorized under the 2009 economic stimulus (PL 111-5), which steered tens of billions of dollars to clean energy.
Republicans have accused the department of rushing the loan guarantee out the door to reward politically connected donors to President Obama, despite clear warning signs about the company’s shaky financial state. White House critics have also used the company’s saga to broadly attack President Obama’s clean energy agenda.
Chu on Thursday is expected to offer a full-throated defense of the clean energy push.
“When it comes to the clean energy race, America faces a simple choice: Compete or accept defeat,” Chu said, in testimony released in advance to the committee Wednesday. “I believe we can and must compete.”
Program Has Had Support
The Nobel-Prize winning physicist is also expected to defend the loan guarantee program at the heart of the controversy. First authorized in a 2005 energy law (PL 109-58), the program is intended to deploy innovative energy technologies by providing federal backing for projects that otherwise would have a hard time securing financing.
The program has enjoyed broad bipartisan support, a point that Chu will make to lawmakers in his remarks, which note that the Energy Department has received 500 letters of support from members of Congress for projects in their states.
“While we are disappointed in the outcome of this particular loan, we support Congress’ mandate to finance the deployment of innovative technologies, and believe that our portfolio of loans does so responsibly,” Chu said in the statements.
Before the stimulus, the loan program was criticized for moving too slowly in approving financing for innovative job-creating projects. The expansion of the program in the stimulus to cover renewable energy projects and the elimination of a requirement that applicants pay up-front subsidy costs have soured many Republicans on the program and prompted complaints that financing was approved too quickly.
“The overall program is being impacted by the reality that many of these loans aren’t being successful,” Sen.
That assertion is supported by the Energy Department Inspector General’s Office, which earlier this week added the loan guarantee program to a “watch list” of programs that warrant “special attention.”
Amendments that Senate Republicans planned to offer to the fiscal 2012 Energy-Water spending bill (
Energy Secretary Defends Loan Program Ahead of Capitol Hill Appearance
Chu will almost certainly have to field questions about the department’s decision to subordinate $75 million of the Solyndra loan guarantee to private investors. The move — which prompted Sen.
Defense Preview
Chu rejected the core allegation that political favoritism influenced loan decisions, in remarks this week on NPR’s radio program “All Things Considered.”
“First of all, I was not aware and certainly no decision we made in the loan program had anything to do with who is investing in this company,” Chu told host Melissa Block when asked about the connection of billionaire Obama fundraiser George Kaiser to the loan.
House Republicans last week released emails that showed Kaiser — whose family foundation was invested in Solyndra — told associates he had discussed the firm with White House officials involved in the stimulus program. GOP critics maintained the emails rebutted repeated administration denials that Kaiser discussed the company during 17 White House visits. The emails did not, however, show that Kaiser had discussed the loan guarantee with the administration.
Chu also dismissed the assertion that the department had not properly vetted the loan.
“We were very thorough in the application of loan at the time,” he said, blaming the company’s demise instead on the unexpected drop in solar module prices that has occurred over the past two years. Clean energy supporters maintain that the collapse in prices — which some estimates have pegged at as much as 70 percent — rendered the technology at the heart of Solyndra’s business model unable to compete.
Chu said he was unaware of an early internal company audit that warned of financial troubles, but called it unsurprising that a firm building a highly advanced factory “would be burning through cash.”
He acknowledged the department did become increasingly alarmed about Solyndra’s financial footing.
“As time went on, there was a growing concern because of the cash flow. And so we certainly were watching this and looking at this very closely. And then eventually, we recognized that they were in deep trouble,” he said.