WASHINGTON – The top federal official in charge of the controversial clean-energy loan guarantee program told a congressional committee Thursday that its loans to Loveland, Colo.-based Abound Solar were made with “market considerations” in mind.
David G. Frantz, acting executive director of the loan programs office for the U.S. Department of Energy, suggested that the $70 million in federal loans to the solar panel maker were made on the basis of sound economics and public policy. When Rep. Cory Gardner (R-Yuma) asked Frantz why the troubled company received federal loan guarantees, Frantz said “marketplace considerations were the deciding factor” in the government’s decision.
Frantz’s remarks before a House Energy and Commerce subcommittee Thursday represent the Obama administration’s fullest public explanation of its loan to Abound, which filed for bankruptcy July 2 and plans to lay off 125 employees in addition to the 280 workers it dismissed from its Longmont plant in February.
Billionaire heiress Pat Stryker, a Fort Collins-based donor to progressive political causes and bundler for President Obama in 2008 and 2009, had been a major financial backer of Abound Solar. Indiana Gov. Mitch Daniels, a Republican, offered the company tax credits to build a manufacturing plant in the Hoosier state.
Conservatives have seized on the connection between Stryker and Obama to label the administration’s loan program as a pay-to-play scheme. Progressives believe that “many of the guarantees are to innovative companies trying new things who can’t get enough money from entrepreneurs,” Rep. Henry Waxman (D-Calif.) said in an interview.
The federal government’s loan guarantee program began in 2005 under President George W. Bush’s administration, but it expanded after President Obama took office. In May 2010, Obama declared that “companies like Solyndra are leading the way toward a brighter, more prosperous future” and his administration has handed the firm $528 million in loans. After the company collapsed in September 2011, it became a symbol of the government’s failure to make private companies profitable and highlighted the Obama administration’s cozy relationship with big-money green energy donors.
At the subcommittee hearing Thursday, witnesses disagreed about the loan-guarantee program’s merits.
David W. Kreutzer, a research fellow in energy economics and climate change at the conservative Heritage Foundation, concluded that the Energy Department’s loans were of two types. He said those given to Abound Solar and Solyndra “were not market viable, as demonstrated by subsequent economic performance.”
Kenneth Berlin, a general counsel & senior vice president for policy and programming for the D.C.-based nonprofit Coalition for Green Capital, disputed that the loan guarantee program was a failure, noting that 87 percent of the Energy Department’s loans were low-risk. The loan-guarantee program has aided 26 projects in all.
Under consideration at the hearing was the No More Solyndras Act. Committee Chairman Rep. Fred Upton of Michigan said his legislation was necessary to protect taxpayers. “We all want to see innovations and breakthroughs in the energy sector … But when a Department of Energy program is not delivering on this goal while costing hundreds of millions of dollars, we owe it to the American people to pull the plug,” he said in his opening statement.
Upton’s legislation would prevent the Secretary of Energy from issuing a new loan guarantee for any application submitted after 2011 and phase out the Energy Department’s loan guarantee program.
Rep. Phil Gingrey (R-Ga.) said he was uncertain if he would support the bill, because he supports giving federal loans to a wide range of energy companies such as nuclear plants. “Put me down as undecided,” he said in an interview. Representatives Gardner and Diana DeGette (D-Denver), who also sits on the Energy and Commerce Committee, were not available for comment.
Subcommittee chairman Rep. Cliff Stearns (R-Fla.) expressed confidence the Republican-controlled House would approve the bill this session, most likely in September.