Agency official defends loan program, says no decision has been made on Cape Wind funding

Source: John McArdle, E&E reporter • Posted: Tuesday, March 5, 2013

The head of the Department of Energy’s loan guarantee program last week defended the funding practice after House Republicans expressed concern that the agency is preparing to start issuing new loans.

DOE Loan Program Office acting Executive Director David Frantz said in a letter to top Republicans on the House Space, Science and Technology Committee on Thursday that the Loan Program Office plays an important role in accelerating the United States’ transition to clean energy technologies. But Frantz also seemed to indicate that the office has a way to go before any decision is made on a potential loan for the Cape Wind project off Massachusetts.

Last week, Reps. Paul Broun (R-Ga.) and James Lankford (R-Okla.), who chair two Science subcommittees, said in a letter to DOE that the issuance of an environmental impact statement for the Cape Wind project has them concerned that DOE is accelerating its efforts when it comes to the controversial program (E&E Daily, March 1).

The price tag for the Cape Wind project has been estimated at $2.6 billion, but a source familiar with the company’s funding efforts said the loan request to DOE is well short of that total and in the “several hundred million dollar” range.

DOE’s Loan Program Office hasn’t issued a new loan since about a month after the bankruptcy of the Solyndra LLC solar energy company in the fall of 2011. Since Solyndra and the failure of two other loan guarantee recipients, DOE officials have moved to institute a series of new controls and safeguards over the program. But Solyndra’s downfall and the eventual loss of more than half-a-billion dollars in DOE loans made to the company became a subject of intense debate on Capitol Hill and on the presidential campaign trail.

Broun and Lankford aren’t confident that DOE has fixed the problems that led to Solyndra.

“We are concerned that the Department is moving forward with [the Cape Wind] loan guarantee despite the extensive controversy surrounding departmental management and decision-making associated with the program,” the two wrote in a letter to Energy Secretary Steven Chu in January.

Frantz said in his response Thursday that the agency has made no decision on issuing a loan or even a preliminary commitment to Cape Wind. And he assured the House members that the agency would consider any new information before deciding whether to approve a loan for Cape Wind.

But as DOE considers the project, Frantz said his office continues to oversee a “broad” portfolio of loan investments in technologies that are “helping accelerate America’s transition to a clean energy future.”

“In doing so, the Department remains intently focused on serving as a strong steward of taxpayer dollars while investing in the clean energy technologies that will power the 21st century,” he wrote.

Mark Rodgers, a spokesman for Cape Wind, said this morning that it doesn’t make any sense to compare Cape Wind to Solyndra.

“Cape Wind has long-term contracts with major utilities for over three-quarters of our power output,” Rodgers said. “There are going to be several major commercial banks involved in the financing of Cape Wind. … To compare Cape Wind to a manufacturer of solar panels, having to compete on the global market with Chinese firms with an uncertain business plan, that’s nonsensical.”