Republicans Grill BrightSource CEO Over Energy Loans

May 17, 2012 Updated: May 17, 2012

WASHINGTON, D.C.—House Republicans used whistle-blower evidence Wednesday in an endeavor to implicate the White House in influencing Department of Energy (DOE) loan approvals.

The evidence was presented at a House Oversight & Government Reform Committee hearing in the form of emails that suggest President Obama had discussed a DOE loan application with a stakeholder affected by the decision.

The email, written by John Woolard, CEO of solar energy company BrightSource, was sent to the DOE in January 2010.

“Darbee at PG&E [Pacific Gas and Electric Co.] talked directly to Obama about the program’s challenges and the bad situation it puts him in,” Woolard wrote to Matt Rogers, then-senior advisor to the secretary of the Energy Department’s Recovery Act.

Woolard said “Darbee” referred to Peter Darbee, then-CEO and chairman of Pacific Gas and Electric Co. PG&E is one of three electric utilities that had agreed to buy power from the Ivanpah Solar Electric Generating System, if they received the loan.

Ivanpah eventually received a $1.6 billion loan guarantee from the DOE and is jointly owned by BrightSource, Google, and NRG Energy.

Rep. Jim Jordan (R-Ohio) noted that one month after that email, conditional approval was granted. “They had a vested interest in getting this thing approved, because you were providing them their required commitment for green power,” he told Woolard at the hearing.

Woolard countered that Darbee was simply concerned, as he had a number of projects resting on the loan guarantee. He noted that the loan application had been a rigorous process that had taken longer than they had expected.

Founded in 2006, BrightSource Energy Co. uses the sun’s energy to create high-energy steam, which turns turbines to generate power. It has energy contracts with some of the top international energy companies, as well as many high-profile investors, including Morgan Stanley, Goldman Sachs, Chevron, and BP.

Woolard told the hearing that BrightSource had 13 long-term contracts, called power purchase agreements (PPAs), with PG&E and Southern California Edison (SCE). Together, these 13 contracts constitute “the largest solar contracts in the world, and represent one of the largest utility-scale solar pipelines in the United States,” Woolard said.

The Ivanpah solar project will be comprised of three solar fields in California’s Mojave Desert, and may serve as many as 140,000 homes in California when completed, according to the projects website.

“It’s this scale that allows us to drive down future costs.” Woolard said. The loan guarantee had allowed the company to move from the research and development phase to large-scale production. “As we look forward to constructing the additional projects in our pipeline, and having established operational experience, we will look to private debt markets for financing,” he added.

Woolard repeatedly told the hearing that he believed the loan was granted on its merits and did not believe there had been political influence.

Further Evidence

Rep. Jordan, however, was not impressed. He produced another email, which he said the committee had gained from a whistle-blower. The email was between Woolard and Jonathan Silver, who at that time was the DOE executive director in charge of the loan program.

According to Jordan, the email was sent after BrightSource had received a conditional commitment but not a final commitment.

In the email, Woolard asks Silver to proofread a draft of an email from BrightSource’s then-Chairman John Bryson—now President Obama’s commerce secretary. The draft email was to be sent to then-White House Chief of Staff Bill Daley.

The email requested that the White House help move BrightSource’s loan application along: “We need a commitment from the WH to quarterback loan closure between OMB and DOE by March 18,” the email reads. It also added a request for “guidance and support from the White House.”

“You stick by the statement that there was no political decision,” Jordan said pointedly to Woolard after presenting the email.

“Yes sir, to the best of my knowledge, this project was judged on its merits,” Woolard replied.

Congressman Dennis Kucinich (D-Ohio) said it was important to address concerns of political influence in the loans program, but noted the program had bipartisan support and had been a success.

He referred to the testimony of Greg Kats, president of Capital-E and former director of financing for Energy Efficiency and Renewable Energy at the DOE. Kats said that the loan program had been set up to facilitate loans for companies unlikely to receive commercial funding because they “were viewed as early stage, somewhat risky and/or not fully commercial proven.”

To date, the loan program has approved 28 loans worth $16.1 billion. Of those, there have been two highly publicized defaults, Solyndra and Beacon, worth just under $600 million. The federal government is expecting to recoup around two-thirds of that amount, according to Kats.

Looking at the loan portfolio as a whole, Katz said total defaults were estimated to be in the range of $400 million to $800 million.

“Based on a reasonable assessment of outstanding portfolio financial profile and risks, the DOE loan program can therefore rationally only be viewed as a big success,” he said.

House Oversight & Government Reform Committee Chairman Darrell Issa (R-Calif.) said the issues raised that day were a concern. The committee would recall Energy Secretary Steven Chu to address those concerns. “It’s clear that there was direct conversation leading to a form of favoritism for BrightSource,” Issa said.

Kucinich welcomed the additional hearing and noted that former Republican Gov. Arnold Schwarzenegger was also on the record as supporting BrightSource, having written a letter to Secretary Chu advocating for the company. Kucinich suggested that Schwarzenegger should also testify before the committee.

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