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Clean-Energy Guarantees by U.S. Should Be Probed, Upton Says

March 8 (Bloomberg) -- Lax record-keeping at the U.S. Energy Department underscores the need for an investigation into the agency’s loan guarantees for clean-energy projects, the head of the House Energy and Commerce Committee said.

The Energy Department’s inspector general said in a report released yesterday that the department’s loan guarantees haven’t met U.S. standards for record-keeping.

“The lack of accountability identified by the IG is exactly why Congress is investigating this loan program,” Fred Upton, the Michigan Republican who heads the energy panel, said today in an e-mailed statement.

The program, created by energy legislation in 2005, can cover as much as $71 billion in loans for renewable energy, transmission lines and other projects. Republicans in Congress have proposed eliminating the guarantees as part of an effort to slash federal spending.

The inspector general’s office found the program’s electronic information system had limited data for 12 of the 18 projects with loan guarantees or conditional commitments, and no information for three of those projects.

The lack of documentation “leaves the department open to criticism that it may have exposed the taxpayers to unacceptable risks associated with these borrowers,” the inspector general said.

The report didn’t say which projects the audit evaluated. The Energy Department has issued more than 25 loan guarantees or conditional commitments so far.

Solyndra’s Plant

Among the projects were a $535 million guarantee to support solar energy at Solyndra Inc.’s manufacturing plant in Fremont, California. Upton said Congress is examining the “much-hyped” guarantee to the company.

David Miller, a spokesman for Fremont, California-based Solyndra, declined to comment on Upton’s remarks about the company.

More than a year after receiving its loan guarantee for a new facility in September 2009, Solyndra closed an older manufacturing plant, resulting in the loss of about 140 jobs. Miller said equipment from the old plant was moved to the new, more efficient one.

“We can drive down our costs quickly, which is what we really need to remain competitive,” Miller said in an interview today.

The inspector general faulted the loan-guarantee program for failing to improve record-keeping after previous government reports found documentation inadequate. It didn’t find flaws in the agency’s decision-making for guarantee approvals.

‘Vast’ Data

“The loan program analysis and review is so comprehensive that it generates and collects vast amounts of data,” Stephanie Mueller, an Energy Department spokeswoman, said in an e-mail. “Given the speed with which the funds are being deployed, these documents have not always been filed in one, single location.”

While House Republicans have proposed eliminating funding for renewable-energy loan guarantees for the remainder of this fiscal year, “it’s unlikely that the program is going to be shut down,” said Salo Zelermyer, an energy and environment attorney at Bracewell & Giuliani in Washington and a former Energy Department official.

The program, sometimes criticized for not moving quickly enough to guarantee loans, is now under fire for failing to keep adequate records in its rush to approve projects, he said in an interview.

“It’s a very difficult position for the department to be in,” said Zelermyer in a phone interview.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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