With a failure rate of less than 3 percent, supporters yesterday defended the Department of Energy Loan Programs Office’s $32 billion portfolio as "fairly low-risk" compared to the private sector.
But the struggles of Abengoa SA, the Spain-based renewable energy giant that is on the brink of bankruptcy, dominated much of the discussion during a joint subcommittee hearing of the House Science, Space and Technology Committee on DOE’s loan guarantees. The focus on Abengoa recalled the Republican attacks on DOE following the 2011 bankruptcy of another loan-guarantee recipient, California solar manufacturer Solyndra.
At issue yesterday were three projects in Arizona, California and Kansas.
In 2010, DOE provided a $1.45 billion loan guarantee to finance Solana, an Arizona-based solar project that represents the first U.S. deployment of thermal energy storage technology. It went online in October 2013.
In 2011, the Mojave concentrating solar power plant in California also received a $1.2 billion loan guarantee.
Both projects are still repaying interest on the DOE loans, as scheduled.
The department also issued a $132.4 million loan guarantee in 2011 to finance Abengoa Bioenergy Biomass of Kansas, one of the first commercial-scale cellulosic ethanol plants in the nation. Abengoa Bioenergy U.S. Holding Inc., one of the owners of the Kansas plant, has seven locations in the United States. Amid financial problems, two ethanol plants halted operations at the end of last year.
Today, Abengoa Bioenergy U.S. Holding, won access to bankruptcy financing that may help it restart operations at the stalled plants.
Loans for the project have been fully repaid, but Republican lawmakers yesterday sought to score political points on the company’s fallout.
Republicans blasted Mark McCall, executive director of the DOE office since July, for not responding to a letter from Chairman Lamar Smith (R-Texas) and subcommittee leaders. Nearly three months ago, they sent a request for information on loans to Abengoa or subsidiary companies.
"I am willing to commit to continuing to be responsive to the committee and its request," McCall repeatedly responded to Oversight Subcommittee Chairman Barry Loudermilk (R-Ga.) when he asked for the emails and documents requested in the letter. This caused other Republicans on the dais to roll their eyes and shake their heads.
McCall, who spent 17 years at a private equity firm focused on investing in the oil and gas sector before stepping into his new role with the federal government, assured the panel he was "not concerned about the viability of those loans in any way," when pressed on Abengoa.
Opponents kept swinging.
Rep. Dana Rohrabacher (R-Calif.) accused McCall of using "weasel words," then said he had come to expect a lack of responsiveness from the Obama administration.
"It’s more than unbecoming," Rohrabacher said. "It’s depressing to see that someone of your stature will take that approach instead of just saying, ‘Yes, we will provide all of the documents to an investigative body of Congress that they have requested.’"
Later in the hearing, McCall clarified that the loan office has been responsive to the committee’s requests.
"We made it clear that we actually did not loan any money to Abengoa SA, which is the company that’s referred to in the letter," he said. "So we actually don’t have exposure to that company, and so we have responded."
McCall said DOE had reached out before the Dec. 9 letter "in a proactive way to try to clarify the confusion in the marketplace. … We feel that we have been responsive to the important thrust of those letters, and we will continue to go through and try to be responsive."
The loan office also took heat for not following through on recommendations from the U.S. Government Accountability Office.
Since 2007, GAO’s oversight of the program has resulted in a dozen reports and congressional testimonies. According to the watchdog, nearly two dozen key positions in portfolio and risk management remain unfilled, though the office is acting to hire people for the posts.
Democrats defended the program, pointing to successes that they say include the resurgence of the automotive industry.
"The loans that we’re guaranteeing on behalf of the federal government actually are fairly low risk compared to what’s happening in the real world, the private sector," said Rep. Don Beyer (D-Va.). He cited the failure of 30 percent of venture-capital-backed businesses and nearly 5 percent of corporate businesses in the energy sector as proof that the loan program, with a 2.7 percent failure rate, is relatively low risk.
Beyer also noted over $470 billion has been paid in "subsidies" to the oil and gas industry over the past century, with little criticism from Capitol Hill.
"A loan guarantee is paid back, but a subsidy is never paid back," Beyer said.
Correction: An earlier version of this article said the Mojave project had been delayed by the state of California; it started operating in December 2014. The previous version also misidentified Abengoa Bioenergy U.S. Holdings Inc., which has an equity partnership in Abengoa Bioenergy of Kansas.