By Tom LoBianco, The Washington Times
The Department of Energy’s failure to give out $38.5 billion in energy project support is raising questions about whether the program can handle three times as much money in the pending stimulus package.
The beleaguered Department of Energy Loan Guarantee Program was established in the 2005 energy bill with the idea that the federal government would co-sign on loans for potentially risky power plant projects, spurring new energy development. But four years later the program has not approved any projects for support.
Sen. Robert F. Bennett, Utah Republican, amended the stimulus plan, which cleared the Senate to add $90 billion in lending capacity for the program. But at least one of his colleagues questioned the wisdom of adding to the program.
While debating the stimulus bill Sen. Claire McCaskill, Missouri Democrat, criticized the addition of between $40 billion and $90 billion in lending capacity for the unproven program along with other earmarks that were “not stimulative or lacked efficiency,” said spokeswoman Maria Speiser.
A spokeswoman for Mr. Bennett did not return numerous calls and e-mails for comment this week.
The reason the aid never went out, said the former department official charged with overseeing the program, is because the department was never equipped to decide which projects should receive billions in loan support. But lawmakers have said it is too soon to provide additional funding for a program that has been untested and needs major reforms.
The Senate Energy and Natural Resources Committee plans to quiz the current and former directors of the loan program Thursday about why no projects have been supported yet.
“Fundamental reform of the means and mechanisms for disbursing loan guarantees that enables consistent and continuous capital formation in the markets is indispensable if the new administration has any hope of achieving it’s stated goals for doubling renewable energy production in the next 36 months,” said Andy Karsner, the former assistant energy secretary who is now a distinguished fellow at the Council on Competitiveness..
Mr. Karsner, who directed the program under the Bush administration, said he plans to tell senators Thursday that a “clean energy bank” should be established to administer the loans.
During his confirmation hearing last month, Energy Secretary Steven Chu said he would try to reform the agency to speed along the loans. An Energy Department spokesman did not immediately return requests for comment.
“There’s obviously been problems with the loan guarantee program,” said David Marks, a spokesman for New Mexico Democrat Jeff Bingaman who will oversee Thursday’s hearing. “We’re going to have this hearing to try and figure out what can be done to ensure that money for clean energy can be deployed.”
A 2008 Government Accountability Office report found that the department was having trouble implementing the program and questioned whether it could properly assess the financial risk assumed by the government and, ultimately, the taxpayers when signing on to a multibillion-dollar loan.
“I think part of the question is: ‘Is the agency that knows the energy science the right place to put the authority to give out the energy money?’ ” said Kevin Book, a senior energy analyst with Friedman, Billings, Ramsey and Company Inc.
Mr. Book, who also plans to testify Thursday, likens the experience to a potential homebuyer applying for a mortgage and being told the rules are not in place.
“Nobody ever wants to go to a bank for a mortgage and wait five years,” he said.
Copyright 2009 The Washington Times