|(L-R) President and CEO of the Center for American Progress John Podesta, U.S. Senate Majority Leader Harry Reid (D-NV) and U.S. Secretary of Energy Steven Chu|
In a DOE press release, Reid actually bragged about how he included the green loan guarantee in the stimulus bill: “As I led passage of the stimulus bill, I worked to include the loan guarantee program to help finance clean energy projects” that will “bring us closer to energy independence.”
We’ve already unveiled two of these expensive and politically explosive projects through our Special Seven series––those that received the touted loans as a part of the stimulus bill (even though they were rated as “non-investment” grade) and grants, as well as “special” Department of Interior treatment. As the “Special Seven” moniker indicates, there are more companies and/or projects to reveal.
Before we start on the new information, here’s a highlight of the previous players’ specific connections to Senator Harry Reid—the focus of this chapter.
Last week, we exposed BrightSource Energy that received a $1.6 billion DOE loan. BrightSource’s executives donated almost $4000 to Reid’s 2010 campaign, including $2400 from the CEO John Woolard, who in September 2010, along with Peter Darbee, then Chairman of PG & E, hosted a fundraiser for the majority leader in his corporate offices.
The week before, we uncovered the fact that a couple of SolarReserve (with its $737 million loan) board members are big Democrat donors, including contributions to Obama’s 2008 campaign as well as Senator Reid. The Washington Free Beacon divulged, “…Nevada Geothermal, Ormat Nevada, and SolarReserve—are located in Reid’s home state. Executives from all three companies have donated to Reid and his fellow Democrats, contributing more than $58,000 since 2008.”
However, what you are about discover is that the two projects we’ll profile in this chapter have similar direct ties, some sly connections to the Senator, and some stinky consequences.
Nevada Geothermal Power
First we’ll look into Nevada Geothermal Power (NGP) as recent news exposes that its power is dimming. NGP may be the next green-energy bankruptcy.
Here’s the NGP thumbnail presented in the introduction to the green-energy crony-corruption story:
Nevada Geothermal Power (NGP) holds leasehold interests in six geothermal projects located in the Western United States. They hold a BB+ rating and received a $78.8 million loan, guaranteed by the DOE, in September of 2010. Executives from NGP contributed in 2008 to Harry Reid’s campaign.
Additionally, since 2009, NGP was the recipient of more than $69 million in federal grants, under the American Recovery and Reinvestment Act.
The New York Times reports: “Reid was instrumental in securing that financing for Nevada Geothermal.” The NYT noted: “Mr. Reid has taken the nascent geothermal industry under his wing, pressuring the Department of Interior to move more quickly on applications to build clean energy projects on federally owned land and urging other members of Congress to expand federal tax incentives to help build geothermal plants, benefits that Nevada Geothermal has taken advantage of.” You might think Reid has altruistic motives, such as creating jobs for his state, however, as the NYT points out: “Mr. Reid has received some support from the industry, in the form of at least $43,000 worth of campaign contributions from the geothermal industry since 2009, according to an analysis of federal campaign finance records.” The “campaign contributions” could be why, in a 2010 press release, he declared “Northern Nevada is the Saudi Arabia of geothermal energy.”
Despite the flowery rhetoric, at the time the DOE approved the conditional loan guarantee in September 2010, they were well aware of NGP’s “well-documented” financial difficulties. The House Oversight and Government Reform Committee (HOGRC) called the loan a “bailout”—which “violated the spirit and, quite possibly, the letter of the law” and provided “an opportunity for private industry to exit an investment, deleverage and transfer the extraordinarily high default risk to taxpayers.”
Less than a year after the loan was issued, leading accounting firm Deloitte & Touche did an audit of NGP and concluded: “significant doubt” about Nevada Geothermal Power’s “ability to continue as a going concern.” The company’s vital signs are not looking good: it “has incurred net losses over the past several years, has an accumulated deficit of $44.0 million and an anticipated inability to retire its long-term liabilities.”
The project continued to have “operational and financial problems.” In the October 2011 NYT article, it states: “Executives expressed confidence that they can recover” and that “the government investment is not at risk.” As CEO Brian D. Fairbank stated: “We’re doing OK.”
During Fairbank’s “Green Energy Gamble” May 16, 2012 testimony before the HOGRC, he spoke “about the many good things occurring at Blue Mountain” and stated that they “remained bullish on the future of geothermal resource potential” at Blue Mountain. However, the future of Nevada Geothermal is looking dim, it still faces financial problems, and the company’s internal auditors have questioned whether it can stay in business.
The audit report states: “NGP has incurred $98 million in net losses over the past several years, has substantial debts and does not generate enough cash from its current operations after debt-service costs.”
With the audit completed in March 2012, one as to wonder how much did Fairbanks actually know about the status of NGP during that May 16 testimony when he claimed he “remained bullish?”
Another angle, in that DOE press release, both Secretary Chu and Senator Reid praised the potential job creation of the NGP project. Chu said: “Our support for the Blue Mountain project is part of the Administration’s commitment to reducing carbon emissions while creating clean energy jobs,” and Reid: “clean energy projects like Blue Mountain geothermal that will put Nevadans back to work...” In conflict with these claims, the HOGRC report states: “It was known to him [Secretary Chu] at that time [of the press conference], however, that the loan would not create a single job, but instead would simply refinance an existing loan, despite DOE’s claim that it would create over 200 jobs”
Instead of using the loan as Title XVI, Section 1602 of the American Recovery and Reinvestment Act of 2009, requires: “Recipients shall use grant funds in a manner that maximizes job creation and economic benefit,” the loan was used to pay off a creditor. According to the Washington Times report, “At the time the Energy Department announced its conditional approval of the guarantee, Mr. Issa said NGP would have defaulted on a loan from TCW Asset Management Co., then its primary lender, ‘had DOE not swooped in to save the failing company with taxpayer money.’ A committee report said the loan did not finance any new construction and ‘did not help to create a single job.’”
So, Senator Reid received money from the geothermal industry, he, apparently, then pressured the DOE to fund projects in Nevada based on the false promise of job creation—which he knew was not accurate at the time. Instead of creating jobs, Reid’s advocacy actually “bailed out” his cronies—that is really corrupt.
But the story continues. As we reported in the introduction, Kai Anderson, a lobbyist for NGP’s partner corporation, Ormat Technologies, Inc., is a former Senate aide to Harry Reid. Ormat’s CEO Paul Thomsen is another former Reid aide. Additionally, according to the Washington Times, “Mr. Fairbank denied knowing or lobbying Mr. Reid, but the House Oversight Committee said Ormat Inc., which was paid $80 million to build NGP’s Blue Mountain plant, has ‘strong ties’ to the senator.”
The thumbnail of Ormat in the introduction reads as follows:
Ormat Nevada is a wholly-owned subsidiary of Ormat Technologies, Inc., whose website touts “green energy you can rely on.” They have an S&P rating of BB and received $350 million in partial loan guarantees. Ormat’s lobbyist Kai Anderson and Director of Policy and Business Development Paul Thomsen were both former senate aides to Harry Reid and donors to his campaign.The May 2012 HOGRC report expands the connections: “During Senator Reid’s 2010 reelection campaign, Thomsen starred in a campaign ad for Senator Reid to advertise the benefits of Ormat’s loan guarantee for Nevada. In addition to Anderson and Thomsen, Ormat’s President, Yoram Bronicki, gave thousands in political contributions to Senator Reid. The strong ties between the company and the Senate Majority leader raise questions about whether the DOE acted in the best interests of the American people when it approved the loan guarantee.”
Yoram Bronicki is the son of Ms. Yehudit Bronicki (also known as Dita). She is CEO and Director of Ormat Technologies. In addition to the $350 million loan guaranteed by the DOE with John Hancock in aggregate principal amount, Ormat Technologies’ projects received more than $200 million in various DOE grants.
The 2010 campaign ad, starring former Reid staffer Thomsen, heralded “Geothermal means 16,000 Nevada jobs… Harry Reid saw the potential before just about anybody else.” With projects like NGP, it seems those jobs have never materialized and the reason Harry Reid was such a soothsayer is the same reason a fortune teller tells you what you want to hear: you are holding the money. With the geothermal industry “contributing more than $58,000 since 2008” and, in just these two stories, receiving $700 million in loans and grants, they’ve gotten an amazing return on their investment. In the bad economy, the best way to grow your money just may be to invest in green energy—just make sure you have friends in high places.
All this, and it does nothing to “bring us closer to energy independence.” Geothermal—and wind and solar—power generates electricity. America is already electricity independent. We have enough coal, natural gas, and uranium to power us for centuries! We even export coal, we have so much.
So why are we killing good-paying jobs in the coal industry, preventing thousands of union jobs the Keystone pipeline would create, and potentially putting thousands out of work with a pending ban on hydraulic fracturing for natural gas extraction, for the supposed jobs in green energy—when we are already electricity independent? These green-energy projects can only raise the cost of electricity and waste public money, while the energy sources the administration’s efforts are killing or blocking can actually reduce costs—without taxpayer investment.
The green-energy crony-corruption story is explains it all.
Author’s note: Thanks to Christine Lakatos, the Green Corruption blogger for research assistance.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and much more...
This is Part Three of Obama's Green-Energy, Crony Corruption and The Special Seven, a collaboration between Christine and Marita and exposed first at Townhall.com. In case you missed any of the explosive parts.
Part Two: More Obama Green Energy Corruption covers BrightSource Energy ($1.6 billion DOE loan)
Part One: Obama’s Green-Energy, Crony-Corruption covers SolarReserve ($737 million DOE loan)
The INTRODUCTION gives an overview of the Special Seven: Eco Scare Scams Raise Obama Campaign Cash
Also, on the Green Corruption Blog, exposing this entire scandal.