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THE OBAMA ADMINISTRATION’S GREEN ENERGY 

GAMBLE PART II: WERE ALL THE TAXPAYER 

SUBSIDIES NECESSARY? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON REGULATORY AFFAIRS, 

STIMULUS OVERSIGHT AND GOVERNMENT 

SPENDING 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JUNE 19, 2012 

Serial No. 112–150 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

CONNIE MACK, Florida 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

ANN MARIE BUERKLE, New York 

PAUL A. GOSAR, Arizona 

RAU ́ L R. LABRADOR, Idaho 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

MIKE KELLY, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

EDOLPHUS TOWNS, New York 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

DANNY K. DAVIS, Illinois 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

CHRISTOPHER S. MURPHY, Connecticut 

JACKIE SPEIER, California 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS OVERSIGHT AND GOVERNMENT

SPENDING

JIM JORDAN, Ohio, Chairman 

ANN MARIE BUERKLE, New York, Vice 

Chairwoman 

CONNIE MACK, Florida 

RAU ́ L R. LABRADOR, Idaho 

SCOTT DESJARLAIS, Tennessee 

FRANK C. GUINTA, New Hampshire 

MIKE KELLY, Pennsylvania 

DENNIS J. KUCINICH, Ohio, Ranking 

Minority Member 

JIM COOPER, Tennessee 

JACKIE SPEIER, California 

BRUCE L. BRALEY, Iowa 

(III) 

C O N T E N T S 

Page 

Hearing held on June 19, 2012 ............................................................................... 1 

WITNESSES 

Mr. David Crane, President and CEO, NRG Energy, Inc. 

Oral statement .................................................................................................. 5 

Written statement ............................................................................................ 8 

Mr. Walter C. Rakowich, Co-Chief Executive Officer, Prologis, Inc. 

Oral statement .................................................................................................. 12 

Written statement ............................................................................................ 14 

Mr. Robert S. Mancini, Chief Executive Officer, Cogentrix Energy, LLC 

Oral statement .................................................................................................. 17 

Written statement ............................................................................................ 19 

Ms. Dita Bronicki, Chief Executive Officer, Ormat Technologies, Inc. 

Oral statement .................................................................................................. 23 

Written statement ............................................................................................ 25 

Ms. Veronique De Rugy, Senior Research Fellow, Mercatus Center at George 

Mason University 

Oral statement .................................................................................................. 28 

Written statement ............................................................................................ 30 

APPENDIX 

The Honorable Jim Jordan, a Member of Congress from the state of Ohio, 

opening statement ................................................................................................ 80 

Follow-up questions regarding Project AMP/Prologis ........................................... 82 

Independent Engineer Certificate from Black & Veatch Corporation ................. 83 

Technical and Project Management Division, (LP–30), Certification of Commencement of Construction for Project AMP (FIPP)-Revised .......................... 87 

(1) 

THE OBAMA ADMINISTRATION’S GREEN ENERGY GAMBLE PART II: WERE ALL THE 

TAXPAYER SUBSIDIES NECESSARY? 

Tuesday, June 19, 2012 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON REGULATORY AFFAIRS, STIMULUS

OVERSIGHT, AND GOVERNMENT SPENDING, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:04 a.m., in Room 

2154, Rayburn House Office Building, Hon. Jim Jordan [chairman 

of the subcommittee] presiding. 

Present: Buerkle, Kelly, and Kucinich. 

Also Present: Representative Mulvaney. 

Staff Present: Ali Ahmad, Majority Communications Advisor; 

Alexia Ardolina, Majority Assistant Clerk; Robert Borden, Majority 

General Counsel; Molly Boyl, Majority Parliamentarian; Drew 

Colliatie, Majority Legislative Assistant; Brian Daner, Majority 

Counsel; Adam P. Fromm, Majority Director of Member Services 

and Committee Operations; Tyler Grimm, Majority Professional 

Staff Member; Peter Haller, Majority Senior Counsel; Christopher 

Hixon, Majority Deputy Chief Counsel, Oversight; Mark D. Marin, 

Majority Director of Oversight; Kristina M. Moore, Majority Senior 

Counsel; Laura L. Rush, Majority Deputy Chief Clerk; Scott 

Schmidt, Majority Deputy Director of Digital Strategies; Cheyenne 

Steel, Majority Press Secretary; Noelle Turbitt, Majority Assistant 

Clerk; Michael Whatley, Majority Professional Staff Member; Jaron 

Bourke, Minority Director of Administration; Lisa Cody, Minority 

Investigator; Kevin Corbin, Minority Deputy Clerk; Ashley Etienne, 

Minority Director of Communications; Devon Hill, Minority Staff 

Assistant; Chris Knauer, Minority Senior Investigator; Brian 

Quinn, Minority Counsel; Donald Sherman, Minority Counsel; 

Safiya Simmons, Minority Press Secretary; and Mark Stephenson, 

Minority Director of Legislation. 

Mr. JORDAN. The Committee will come to order. 

We want to welcome our witnesses here. We will get to you in 

just a minute. Typically, what we do is you have to listen to us talk 

for a few minutes first, kind of the normal procedure. 

Today’s hearing continues the Committee’s examination of President Obama’s green energy agenda that directed $90 billion of taxpayer money in an effort to create a government-engineered green 

energy utopia. 

2 

The Department of Energy’s loan guaranty program, in particular, is of great concern. After the bankruptcies of Solyndra and 

Beacon Power, and with other taxpayer-funded companies teetering 

on the brink, taxpayers have a right to know how and why their 

money was spent in such poor ways. 

The Committee has uncovered a troubling pattern of questionable projects sponsored by companies with political connections to 

this Administration receiving billions of dollars in taxpayer subsidies. The Obama Administration frequently claims that the 1705 

loan guarantee program and other stimulus-funded green energy 

programs create green jobs in America and will develop a strong 

American green energy sector. 

In contrast to these optimistic predictions from the Administration, at the last hearing before this Subcommittee we heard from 

four loan guarantee recipient companies that were struggling financially, finding workers, and halting production, despite receiving billions of dollars in taxpayer subsidies. 

Today’s hearing will examine other beneficiaries of the 1705 loan 

guarantee program, large, successful companies that had plenty of 

access to capital to fund green energy projects if they thought they 

were sensible investments, but saw Obama Administration programs as an easier and more profitable way to make money with 

little or no risk to themselves. 

Today we will hear testimony from the CEOs of NRG Energy, 

Prologis, Cogentrix Energy, and Ormat. These companies, none of 

which can claim to be either small or startups, took over $5 million 

in taxpayer loan guarantees and all had ties to either the Obama 

Administration or powerful politicians. 

The New York Times described the loan guarantee program and 

other government programs as a ‘‘banquet of government subsidies 

and a windfall for the industry.’’ This profit opportunity wasn’t ignored by the companies represented today. David Crane, the CEO 

of one company here today, described these programs as a once in 

a generation opportunity. He said, ‘‘I have never seen anything 

that I have had to do in my 20 years in the power industry that 

involved less risk than these projects, and we intend to do as much 

business as we can get our hands on.’’ 

The business model of these companies is clear: sign long-term 

contracts with utilities that are required by State mandates to purchase renewable energy, and then seek Federal Government backing to build renewable facilities. In the meantime, use political connections to grease the wheels of the Federal Government. 

As Mr. Crane implied, the companies are clear winners; they get 

all the profit. However, the losers are consumers of electricity all 

over the Country who pay higher prices and the American taxpayers who bear the risk if the projects fail. This, my friends, is 

the Obama Administration’s green energy economics in a nutshell. 

I want to thank our witnesses for being here today. Ultimately, 

today’s hearing gets to the core of the problem with government 

pretending that it can be a venture capitalist. Businesses benefit 

not by pleasing their customers, but, rather, by using their lobbying savvy and political connections to get billions of dollars from 

the American taxpayers. 

3 

With that, I would yield to my good friend from Ohio, Mr. 

Kucinich. 

Mr. KUCINICH. Mr. Chairman, thank you very much for calling 

this hearing. I look forward to our witnesses today and to learn 

more about the Department of Energy’s 1705 loan guarantee program and what it has achieved for the American people. 

But before the witnesses take their oath to provide true and accurate testimony, I want to make sure our congressional record is 

accurate to the best of our ability. On March 20th, 2012, our Chairman, Darrell Issa, issued a Majority staff report alleging that 

‘‘DOE violated the statutory requirement that projects commence 

construction by September 30th, 2011’’ in approving a loan guarantee for Prologis’s project, Amp, to place solar panels on warehouse roofs in 28 States. 

Now, accusing a federal agency of breaking the law is a very serious accusation, and it shouldn’t be made lightly or without substantial evidence. The Committee has in its possession a report of 

a September 2nd, 2011, site visit by engineers from DOE and Bank 

of America’s independent contractor which appears to refute the accuracy of the Majority’s assertion. Bank of America was the lender 

applicant on this project. At that time, both Bank of America engineers and DOE engineers confirmed that the commencement of 

construction requirement had been met. 

Now, months prior to the issuance of the Majority’s report, DOE 

produced to the Committee a document drafted by Bank of America’s consultant, dated September 20th, 2011, certifying that the 

Prologis project had met the statutory requirement for commencement of construction. In addition, a September 21st, 2011, document issued by the DOE also indicates in writing that both parties 

confirmed the commencement of construction. 

The only evidence that my friends in the Majority have cited for 

concluding that the requirement was not met is an email sent by 

a lawyer for Bank of America months after these events. We don’t 

know what the email said, we do not know if Bank of America said 

what the Majority attributed to it, or if the Majority misunderstood 

what the Bank of America’s attorney wrote, because the Majority 

has not released the email to the public. 

Despite Bank of America’s significant role as the source of both 

the consultant’s report and the email purportedly contradicting it, 

our Chairman has not sent a formal document request to the company, nor did the Chairman invite Bank of America here today to 

explain the Bank’s role in the 1705 program or the discrepancy between the Majority report and the independent consultant’s certification. 

If our Chairman still believes that the DOE violated the law, 

then it is incumbent upon our Committee to invite Bank of America to testify and to help us resolve the apparent contradiction in 

the Majority’s report. 

During previous hearings, some of my colleagues across the aisle 

expressed concern that cronyism was at play in the 1705 program. 

The Majority’s witness today, a scholar from the Mercatus Center, 

points to loans like the one that Goldman Sachs’ subsidiary, 

Cogentrix, received as the worst kind and inferred that it was a 

form of cronyism. 

4 

Now, this Committee has not requested documents from Goldman Sachs or invited Goldman Sachs’ CEO to offer testimony about 

why it believed its project was a good investment for its balance 

sheet or for the American taxpayers. 

Both Bank of America and Goldman Sachs could help this Committee understand the projects and the process that our Chairman 

has condemned. Both are substantial campaign contributors with 

very deep pockets. Who else could shed better light on whether federal loan guarantees were necessary or if politics was inappropriately at play? 

Curiously, the Committee has not inquired with them, and that 

is too bad. It is like we are having a party here and the main 

guests who should be here aren’t present. 

A review of campaign finance records would reveal that there are 

donors to political causes who are just waiting for an opportunity 

to be heard from. Bank of America, for instance, made over 

$550,000 in contributions to my friends in the Republican party’s 

pack and individuals, including several members of this Committee. 

Now, I am not saying this to impugn anyone, because I know the 

members of this Committee and they are all honest people. But we 

have to understand the pall that is cast over the proceedings when 

you have Bank of America and you have Goldman Sachs being excluded from this kind of discussion. 

So I haven’t seen the evidence of the favoritism that the Majority 

has alleged in the federal program supporting energy of renewable 

energy technologies, but I have noticed the absence of several key 

players from this investigation and I think that we need to address 

that. 

Just a month ago Chairman Issa said he would invite his friend, 

former Governor Schwarzenegger to testify at a future hearing. I 

hope that he will do so, and that he will extend similar invitations 

to Governor Brewer of Arizona and former Governor Gibbons of Nevada, who I had the pleasure of serving with in this Congress. 

Today continues our important conversation about the value of 

the DOE 1705 loan guarantee program to America’s future economic stability and energy security. Going forward, I hope that we 

can invite the other essential parties in this program to hear their 

opinions. 

I yield back and I thank the gentleman. 

Mr. JORDAN. I thank the gentleman for his statement. 

I would ask unanimous consent that the gentleman from South 

Carolina, Mr. Mulvaney, be able to sit in on the Committee and 

participate in asking questions. Without objection. 

I would also point out to my good friend from Ohio that we do 

have with us a wholly-owned subsidiary of Goldman Sachs, so 

Goldman Sachs does have a presence in front of this Committee 

today and we will be hearing from Mr. Mancini in just a few minutes. 

Mr. KUCINICH. If my friend would yield briefly. 

Mr. JORDAN. I will yield. 

Mr. KUCINICH. With all due respect to the witness who is appearing here who is part of a wholly-owned subsidiary of Goldman 

Sachs, I think that it would be ever more instructive to have the 

5 

CEO of Goldman Sachs here to explain the role of Goldman Sachs 

in these kind of programs. 

I thank the gentleman, though, for pointing that out. 

Mr. JORDAN. Okay, we want to introduce our panel and get right 

to our witnesses today. 

We have with us Mr. David Crane, the President and CEO of 

NRG Energy; Mr. Walter Rakowich, Co-CEO of Prologis; Mr. Robert Mancini is the CEO of Cogentrix Energy; and we have with us 

Ms. Yehudit Bronicki, who is the CEO and Director of Ormat Technologies; and Dr. de Rugy, who is the Senior Research Fellow at 

the Mercatus Center at George Mason University. 

We want to welcome you all here. 

It is the practice of this Committee just to swear you in, so if you 

would just stand up and raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

[Witnesses respond in the affirmative.] 

Mr. JORDAN. Let the record show that everyone answered in the 

affirmative. 

We will move down the line. You all know how this works; you 

get five minutes, more or less. Keep it close there, if you can. You 

have the light system there in front of you, you can see. 

Mr. Crane, we will start with you and go right down the list. 

Then we will get to questions. 

STATEMENTS OF WITNESSES 

STATEMENT OF DAVID CRANE 

Mr. CRANE. Good morning, Mr. Chairman, Ranking Member 

Kucinich, and distinguished members of the Subcommittee. You 

have already introduced me, so I won’t do that. 

Let me introduce NRG. We are a Fortune 300 company with 

more than 25,000 megawatts of coal, nuclear, gas, wind, and solar 

generation, which is enough to power more than 20 million homes. 

We also own several retail electricity businesses that together serve 

more than 2 million customers in Texas and several northeastern 

States. 

Important to our discussion today is NRG is not a rate-based 

utility. Our shareholders bear 100 percent of our risks of our capital investments and of the success of our operations, which is in 

stark contrast to rate-based utilities, which tend to socialize the 

risk of their capital projects among the ratepayers of their State. 

I ask that my written testimony be included in the record. 

NRG currently owns a majority interest in three solar projects 

that have received loan guarantees under Section 1705, and pictures of these three projects, taken very recently, all appear next 

to me. I am pleased to report to you on the progress of these 

projects through the critical construction phase, because that is 

typically the highest risk phase in the life of any power generation 

asset. 

We are also involved in the ownership of a fourth section 1705 

rooftop solar project, commonly called Project AMP, together with 

our partner, Prologis, but to date there have been no draw-downs 

6 

on the Project Amp loan, so there is no progress for me to report 

on. 

So let me go back to the three projects which are under construction. 

We own a 50 percent interest in the 392 megawatt Ivanpah 

project in San Bernardino County, California, which is the picture 

on your left, my right. Ivanpah utilizes an Israeli-American concentrating solar power technology developed by BrightSource, a California headquartered company. 

Ivanpah, when it is completed in 2014, will be the largest concentrating solar project in the world. All the electricity generated by 

Ivanpah will be sold under a series of long-term power purchase 

agreements to Pacific Gas & Electric, which is an A3 rated investor-owned utility, or to Southern California Edison, which is also 

an A3 rated investor-owned utility. 

Ivanpah, which is located on the California-Nevada border, about 

45 miles south of Las Vegas, is being constructed by Bechtel Corporation, the legendary San Francisco-based construction company 

that oversaw the construction of the Hoover Dam and hundreds of 

American infrastructure projects since. Construction at Ivanpah 

began in October of 2010 and, as of today, the project is on schedule. We expect to be making steam with Unit 1 in November of this 

year, and I am pleased to report that Ivanpah is not only on schedule, but remains under budget, as well. 

Secondly, we own a 100 percent stake in the 250 megawatt California Valley Solar Ranch project near San Luis Obispo, California, 

which utilizes Sunpower’s photovoltaic technology. The CVSR 

Project, as it is known, also benefits from a 25-year offtake agreement with PG&E and is also being constructed by the Bechtel Corporation. The 25 megawatt first phase of this project will be online 

in September, with final completion in late 2013. I am pleased to 

report to you that CVSR is ahead of schedule and under budget, 

and CVSR is this project on the far side. 

Finally, we own a 51 percent stake in the 290 megawatt Agua 

Caliente Solar Project near Yuma, Arizona, which is being built by 

First Solar and utilizing their own solar module technology, with 

the power generated by this facility also sold under long-term contract to Pacific Gas & Electric. Agua Caliente, when complete, will 

be the largest solar photovoltaic project in the world, and I am very 

pleased to report to you that, halfway through the scheduled construction period, Agua Caliente already has achieved the distinction of being the largest solar plant operating in North America, 

delivering almost 200 megawatts of power into the grid. As such, 

Agua Caliente is so far ahead of schedule that we have had to petition the Department of Energy to allow us to complete the project 

sooner than was originally intended. 

In summary, Mr. Chairman, all of us at NRG recognize and respect this Committee’s focus on the taxpayer funds being deployed 

to construct these projects and your intense interest in seeing those 

funds paid back to the Government with interest. I am pleased to 

report to you that all three of these projects are well on track and 

that nothing has occurred which causes me to have particular concern that the taxpayer funds invested in these projects is at risk 

of nonpayment or even of late payment. 

7 

Having said that, there are nearly 5,000 people that work at 

NRG who are focused on construction, support, and management of 

these projects, and we will not rest and will remain ever vigilant 

until this money is in fact repaid. And, you see, the reason for this 

is that all three of these projects are being funded not only by DOE 

loan guarantees and federal financing bank loans, but with a considerable amount of equity capital provided by NRG and our partners in the respective projects. 

In total, NRG itself has committed over $1 billion of its shareholder capital to these three projects, a considerable sum which 

represents about 30 percent of our market capitalization. 

Since our capital is invested in equity, it is lowering the priority 

of repayment than the loans provided by the Federal Government. 

In blunt terms, we don’t get paid unless the Government has been 

repaid. And with over $1 billion committed, you can rest assured 

that we are very highly motivated to making sure that the Government is repaid. 

Thank you, and I look forward to any questions that you might 

have. 

[Prepared statement of Mr. Crane follows:] 

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Mr. JORDAN. Thank you, Mr. Crane. When you said in the New 

York Times that it is filling the desert with panels, we can see that 

from those visuals certainly there. 

Mr. Rakowich, you are now recognized for your five minutes. 

STATEMENT OF WALTER C. RAKOWICH 

Mr. RAKOWICH. Mr. Chairman, Ranking Member Kucinich, and 

members of the Subcommittee, good morning. My name is Walter 

Rakowich and I am the Co-Chief Executive Officer of Prologis. 

Thank you for the opportunity to be here today to talk to you about 

our company and our involvement with the Department of Energy’s 

1705 loan guarantee program. 

For over 20 years, Prologis has been in the business of developing industrial real estate. We offer our customers approximately 

500 million square feet of distribution space for lease in over 20 

countries. About 75 percent of our properties support local communities in the United States. As a result, Prologis is a different sort 

of company from the others that have participated in the loan 

guarantee program. 

Our corporate mission includes a focus on sustainability, which 

we believe provides a triple benefit: first, employee well-being; second, environmental stewardship; and, third, cost-effective facilities 

for our customers. And to that end we have begun to utilize the 

hundreds of millions of square feet of rooftops in our portfolio for 

the installation of photovoltaic systems. These rooftops face the sun 

and are directly adjacent to the electrical grid. Standing alone, they 

generate no additional benefit. With rooftop solar, however, they 

provide a renewable source of power for the communities where our 

buildings are located, while providing an additional revenue stream 

to our shareholders. 

Going back to as early as 2006, we began having conversations 

with different solar panel manufacturers and financing sources 

about the potential for future rooftop solar installations, and since 

that time we have installed 78 megawatts of solar on about 18 million square feet of rooftops. In January 2010, we put out a tender 

seeking a solar EPC finance partner to lease our roofs and respond 

to a potential California utility request for proposal. 

One respondent to our tender was Solyndra, who identified Bank 

of America Merrill Lynch as their financial partner. We ultimately 

selected the Solyndra-Bank of America proposal in February 2010, 

and we jointly responded to the utility RFP. That utility selected 

us in July 2010 to provide them with solar power, a project which 

became known as Project Photon. 

In November 2010, we partnered with Bank of America to apply 

for a DOE loan guarantee to support a much larger, nationallyscaled program, which we call Prologis Amp. While we had completed smaller scale solar rooftop installation projects before, mostly financed by utilities, a larger, nationally-scaled project required 

a different approach. We applied for the loan guarantee to reduce 

the cost of our project financing, which would make our rooftop 

solar project more economical. 

Working with Bank of America as our lender and NRG Energy 

as our equity partner, we sought to develop a multi-year, multiphase project that would generate power for the grid in up to 28 

13 

States. Project Photon, which had been progressing, was anticipated to be the first phase of Project Amp. In July 2011, after receiving a conditional commitment from the DOE, we began construction work on the rooftops of 15 buildings in Southern California, at a cost to Prologis of just over $8 million. 

In September 2011, Solyndra declared bankruptcy. This created 

a considerable challenge, as it occurred when we were in the final 

stages of closing our loan guarantee. After reviewing Solyndra’s circumstances, we determined that there was an insufficient ability 

on Solyndra’s part to provide the required solar modules, services, 

and warranties. As a result, we proactively informed our partners 

and the DOE that we would not use Solyndra technology for Phase 

1. 

Now, despite this challenge to the completion of Phase 1, we believed that it would not impede our ability to develop Project Amp 

as a whole over the four-year term of the project. We are continuing, to this day, to pursue power purchase agreements for 

Project Amp, including the use of the sites on which we had already spent millions of dollars. Under the terms of our loan agreement, each future phase of Project Amp will entail a specific power 

purchase agreement, will be funded separately, and must be approved in each instance by Bank of America and the DOE. To date, 

we have not yet sought or received any government loan guarantees under this arrangement. 

Thank you, Mr. Chairman, for the opportunity to speak to this 

Committee about Prologis. We believe that our core assets in the 

industrial real estate area can be effectively utilized to generate 

significant solar energy output and thereby contribute to the goal 

of energy independence. 

I would be pleased to answer any questions that you have. 

Thank you. 

[Prepared statement of Mr. Rakowich follows:] 

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Mr. JORDAN. Thank you, Mr. Rakowich. 

Mr. Mancini, you are up for five minutes. 

STATEMENT OF ROBERT S. MANCINI 

Mr. MANCINI. Mr. Chairman, Ranking Member Kucinich, and 

members of the Subcommittee, good morning. My name is Robert 

Mancini and I am the Chief Executive Officer of Cogentrix. 

Cogentrix is a wholly-owned subsidiary of the Goldman Sachs 

group, and I am also a Managing Director in the Commodities 

Business Unit of that firm. Thank you for the opportunity to appear this morning and speak to you about Cogentrix Energy and 

our Alamosa Solar Generating Plant in Colorado. 

Cogentrix Energy is an independent power producer that has 

been in the business of developing, constructing, owning, and operating power generation facilities since 1983. We currently employ 

more than 200 full-time employees that work at our headquarters 

in Charlotte, North Carolina, as well as our power generating facilities located in Colorado, Virginia, Florida, and California. 

I am here today to speak with you about our Alamosa solar 

project, but Cogentrix is not just in the renewable energy business. 

On the contrary, the majority of Cogentrix’s history has been focused on conventional power projects throughout the United States 

that have included primarily natural gas and coal-fired facilities. 

In total, we have developed power generation facilities across the 

Country with a combined generating capacity of over 5,000 

megawatts of electric power, which is enough to power approximately 2 million homes. Currently, we are particularly focused on 

the continued development of natural gas-fired generation, as we 

believe that natural gas will undoubtedly play an increasing role 

in the U.S. electric generation market. As an example, we are presently working on the development of 100 megawatts of gas-fired 

generation in the San Diego, California area. 

So while projects like Alamosa are important, we believe that 

represents only one part of what we do to address our Country’s 

energy needs. The Alamosa Solar Generating Plant is presently one 

of the largest concentrating photovoltaic electric power generation 

facilities in the world. It is located in Colorado, it began commercial operation on April 1st of this year, and has been designed to 

produce approximately 30 megawatts of solar power under a 20- 

year power purchase agreement with the Public Service Company 

of Colorado. 

The technology deployed in the Alamosa project was developed as 

part of the U.S. space program and had been deployed in that context for several years, but the Alamosa project represents one of its 

first utility scale applications. Importantly, in the process of our development and construction of Alamosa, we sourced more than 80 

percent of the components from within the United States. 

Cogentrix began development of the Alamosa project in 2009 in 

response to a request for a proposal from the Public Service Company of Colorado, and by June of 2010 we had signed a power purchase agreement with them for 20 years. The Alamosa project involved significant expenditures, in this case through approximately 

$140 million of hard costs. An independent power development canVerDate Aug 31 2005 13:41 Jul 10, 2012 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\74874.TXT APRIL
18 

not fund all these costs through its own equity contributions and 

remain competitive and profitable. 

Typically, developers fund a portion of the total project costs 

from their own equity and obtain limited recourse financing from 

third-party lenders for the balance. However, projects such as the 

one developed in the Alamosa project present a special challenge, 

because while the technology of the project is proven in one context, as previously mentioned, it has not been deployed on a commercial scale. 

Lenders generally do not provide cost-effective project financing 

until they know that a technology is commercially viable and, 

therefore, Cogentrix’s willingness to pursue a project based on the 

CPV technology was predicated on the ability to source alternative 

forms of debt financing. After unsuccessful attempts at attracting 

private debt capital, it was only through the 1705 loan program 

that Cogentrix was able to obtain the debt that was cost-effective 

enough to allow us to move forward with the project. 

Now, we at Cogentrix committed approximately $115 million in 

equity and equity guarantees, and we received just under $90 million in debt financing under the DOE loan program. We began this 

process of application with the DOE in February 2010 and signed 

the loan agreement guarantee on September 2nd, 2011. 

To date, we have drawn approximately $71 million against the 

$90 million federal loan that was approved. The project reached 

commercial operation on time, we expect it will be completed under 

budget and the final loan amount will be about $86.5 million. At 

present, the project is generating energy in compliance with the requirements of our power purchase agreement and we are projecting 

that the project revenues will be more than enough to repay the 

DOE loan in a timely manner. 

Mr. Chairman, Cogentrix has a long history of developing and 

operating power plants employing a variety of traditional and renewable energy technologies. We are proud of the success that we 

have achieved thus far on the Alamosa project and we look forward 

to continuing to advance both the renewable and conventional energy portions of our business. 

I welcome any questions the Committee may have. Thank you 

very much. 

[Prepared statement of Mr. Mancini follows:] 

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Mr. JORDAN. Mr. Mancini, thank you. 

Ms. Bronicki. 

STATEMENT OF DITA BRONICKI 

Ms. BRONICKI. Mr. Chairman, Ranking Member Kucinich, and 

members of the Subcommittee, my name is Dita Bronicki and I am 

the Chief Executive Officer of Ormat Technologies, Inc., a New 

York Stock Exchange listed company. 

Ormat, which has been headquartered in Nevada since 1984, is 

the only vertically-integrated company primarily engaged in the 

geothermal power business. We design, develop, own, and operate 

power plants around the world, using our state-of-the-art technology. 

Ormat was founded in 1965 and we have more than four decades 

of experience in the development of environmentally-sound power. 

We currently own and operate power plants totaling 586 

megawatts around the world, with 470 megawatts in the western 

United States. We employ over 1,000 people worldwide, with more 

than 500 employees domestically. 

I appreciate the opportunity to testify here today about our business and the Department of Energy’s 1705 loan guarantee program. 

Ormat participated not only in the current Department of Energy 

loan guarantee program, but also with its predecessor program almost 30 years ago. In the 1980s, Ormat obtained a $50 million loan 

guarantee for our Ormesa geothermal project. At that time, the 

DOE loan guarantee program was a needed catalyst to encourage 

commercial lenders to participate in such new projects, and additional geothermal plants totaling hundred so megawatts of capacity 

followed. That project paved the way for the growth of the geothermal industry in the United States and helped the financial 

community on the path to accepting the viability of geothermal energy projects. 

In July 2010, John Hancock Life Insurance Company submitted 

an application to the DOE to participate in the current 1705 loan 

guarantee program along with our subsidiary. The proposed 

project, known as OFC 2, involved a portfolio of three different geothermal power facilities in the State of Nevada: Tuscarora, 

McGinness, and Jersey Valley. All three facilities would provide 

power pursuant to a 20-year power purchase agreement with Nevada Power Company, using our proprietary technology. 

That technology has been installed and used in multiple geothermal power plants and our electricity generating systems 

around the world. The project was designed to proceed in two 

stages, which, upon completion, would generate a combined total of 

up to 120 megawatts of clean power. We were offered a conditional 

commitment from the DOE for our partial guarantee just under a 

year later, in June 2011. 

We believe that this project is a strong fit with the objectives of 

the 1705 program. Economic conditions at the time of our application made it difficult to secure commercial debt to develop these 

three facilities. The DOE loan guarantee enabled us to deploy more 

plants and create more jobs than we would have been able to 

achieve without it. The two phase portfolio approach also mitigated 

24 

the risk of the investment, as its overall success did not hinge entirely on the success of one facility. 

A total of up to $350 million in debt financing has been approved 

by our financial partner, John Hancock. Our first draw on the 

guaranteed funds occurred in October 2011, of approximately $151 

million, which is only a portion of the total budget for the projects. 

Indeed, as of the second quarter of 2010, before our application was 

submitted to the DOE, the project had been funded by Ormat in 

the amount of $117 million. In short, we have dedicated substantial 

equity to the project and are committed to its success. I am pleased 

to report that the Tuscarora facility has already reached commercial operation and we expect the McGinness facility to reach that 

milestone very soon. 

Mr. Chairman, Ormat has been in the business of developing 

geothermal power for close to 30 years. Our deep experience enabled us to propose a solid commercial renewable energy power 

project to the Department of Energy. 

Thank you for the opportunity to speak here today. I welcome 

any questions that the Committee may have. 

[Prepared statement of Ms. Bronicki follows:] 

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Mr. JORDAN. Thank you, Ms. Bronicki. 

Doctor, you are recognized. 

STATEMENT OF VERONIQUE DE RUGY 

Ms. DE RUGY. Chairman Jordan, Ranking Member Kucinich, 

members of this Committee, it is an honor to appear before you 

today to talk about the Department of Energy loan guarantee program. My name is Veronique de Rugy. I am a Senior Research Fellow at the Mercatus Center at George Mason University, where I 

study tax and budget issues. 

Advocates for renewable energy are right to be outraged by the 

large amount of subsidies going to fossil fuels. Yet, they are wrong 

to think that the answer is more subsidies for a form of energy that 

they approve of. 

The Department of Energy’s 1705 loan guarantee program is a 

cornerstone of the Department of Energy and the U.S. energy policy. The policy is often justified on two grounds: first, advocates 

argue that the renewable energy companies do not have access to 

sufficient credit to support new projects; second, the Department of 

Energy argues that by investing in green technology it would create up to 5 million green jobs. So how do these claims stand up to 

scrutiny? 

Looking at the flow of the 1705 loan program we find, first, that 

nearly 19 percent of 1705 loans went to subsidize projects that 

were backed by large companies such as NRG Energy or even the 

financial giant Goldman Sachs. In practice, it is hard to argue that 

these companies would have had a hard time having access to capital to fund projects that would have been viable. 

Second, according to the Department of Energy’s data, under 1705, $16 billion in loans were guaranteed and 2,388 permanent 

green jobs were created. That means that for every $6.7 million in 

taxpayer exposure one job was created. These numbers dismiss this 

loan program as an effective job program. 

But while the data speaks for itself, the real problem with the 

1705 loan program lies below these numbers. It even goes beyond 

the recent waste of $538 million of taxpayers’ money following the 

failure of Solyndra. Solyndra is a symptom of more fundamental 

problems that make loan guarantee programs, in general, and 

DOE’s loan guarantee program, in particular, a bad deal for taxpayers. 

Such programs suffer from three main problems: First, every 

loan guarantee program transfers the risk from lenders to taxpayers, creating a moral hazard problem. Because the loan amount 

is guaranteed, banks have less incentive to evaluate applicants 

thoroughly or apply proper oversight. The same is true for the company that borrows the money. Also, these programs privatize gains 

and socialize losses. In other words, taxpayers bear the risk of the 

project, but the companies and the bank that receive the guarantee 

get all the upside. 

Second, every loan guarantee gives lenders an incentive to shift 

resources to government-supported projects and away from unsupported ones, regardless of the merit of the project. This has a cascading effect. For instance, once the government subsidizes a company, that company becomes a relatively safe asset in the eyes of 

29 

other investors. However, safety in the market often signals low return on investment and it is likely to scare away venture capitalists, and that means lower rates of innovation. 

But it gets worse. The data shows that non-venture capitalist 

private investors tend to congregate towards the safety provided by 

the government-guaranteed projects and that too takes resources 

away from unsubsidized projects towards subsidized projects, and 

these unsubsidized projects may have actually a better probability 

of surviving and a better business plan absent the subsidy. And 

make no mistake, this actually can hurt green energy production, 

as this tradeoff can actually take place within the green energy industry. 

Third, at their worst, every loan guarantee introduces political 

incentives into business decisions, creating the condition for businesses to seek financial rewards by pleasing political interests 

rather than customers. It is called crony capitalism. It is a bipartisan problem and it entails real economic costs. Whatever the intentions that motivates the program, the evidence is clear it is just 

not working. The 1705 loan program does expose taxpayers to 

Solyndra-like waste. But of more concern are the systematic distortions it introduces into the market and the unintended consequences those may have. 

Thank you. 

[Prepared statement of Ms. de Rugy follows:] 

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41 

Mr. JORDAN. Thank you, doctor. We appreciate that fine testimony. 

I want to yield first to the gentleman from Pennsylvania, Mr. 

Kelly, for five minutes of questioning. 

Mr. KELLY. And I thank the Chairman. 

I thank you all for being here and I know that sometimes this 

seems like an exercise in futility because there are other things you 

would like to be doing. But our job is to protect the taxpayers. 

Being a small business person, I have actually navigated trying to 

borrow money. 

Mr. Crane, you were talking about the money that you were able 

to borrow through the 1705. This is a loan that is made. What is 

the interest rate on the loan? 

Mr. CRANE. I don’t know what the interest rate is, but it is very 

low by standards. It is set by the Federal Government, so I 

think—— 

Mr. KELLY. Well, but wait a minute. You have an idea. 

Mr. CRANE. Well, I think it is like the Fed fund rate plus 50 

basis points or something. It is very low. 

Mr. KELLY. But for the average American, what would that 

mean? If he went to the bank and borrowed this money, what interest rate would he be paying? 

Mr. CRANE. What would the average American be paying? 

Mr. KELLY. No. In average terms that an average American 

would understand. Because I understand you guys make really 

good investments, and I understand that you are entitled to make 

a return on your investment, but, you know what, not at the expense of the taxpayers. The truth of the matter is these are loans 

with probably almost zero percent, right? 

Mr. CRANE. I think they are very low interest rates, but the Government sets that loan. 

Mr. KELLY. No, I understand that, but that is why you go after 

it. 

Mr. CRANE. Well, we went after it and also just because of the 

size of the loan. 

Mr. KELLY. No, I understand all that. 

Mr. CRANE. These projects—— 

Mr. KELLY. You understand—no, listen. Let me tell you, because 

I watch everybody rolling their eyes and Ms. de Rugy was testifying about, oh, here we go again, poor taxpayers. Truth of the 

matter is you can’t borrow this money in the open market for the 

price the Government is charging you. That is the fact of the matter, okay? Let’s just get beyond it. 

Let me ask you something, because I watched you all sitting 

there. I have also had to go out and borrow money. When you borrow money, there is something basically out there called the Five 

Cs; it is character, capacity, capital, collateral, and conditions. You 

guys have pretty good character, you guys have pretty good capacity, capital, collateral. You have everything. You have Goldman 

Sachs. You even have Warren Buffet owning 49 percent of one of 

the companies. So you have pretty good guys that you want to lend 

the money to, the Government wants to lend the money to. The 

other thing is there is no return for the American taxpayer. It is 

42 

an absolutely ridiculous thing; it is free money. It is actually free 

money that goes out to these companies. 

Now, I don’t blame you for going after it, don’t misunderstand 

me. Don’t misunderstand me. Anybody in business would love to 

have that opportunity. So when you see that out there, it is like, 

are you kidding me? Are you kidding me, I can borrow this money 

at this rate? I could do it myself, but I can get it for almost nothing; that is what I am going after. I am going after that brass ring 

or that gold ring. 

You don’t need to capitalize to do this program; you could have 

capitalized it yourself. The truth of the matter is the money was 

so cheap you had to go after it. That is not a condemnation; that 

is a smart business move. Not a good business move for the American taxpayer, but a good business move for those of us in business 

who can borrow money at a very low rate. 

Now, I am trying to imagine this feeding frenzy when this money 

was put out there. Who came after this money? And the numbers 

of people that came after this money, I think it is, what, $15 billion 

that was put out there? I think that is what the number is. So my 

question then comes down to what did the American taxpayer invest in? We have a slide that shows credit ratings. Can we put the 

slide up? Don’t we have access to that? 

[Slide.] 

Mr. KELLY. This is incredible because, you know, when you are 

in school, an A is a really good score, a B is a pretty good score. 

I mean, I lived in Bs. Cs my parents weren’t too happy about, but 

Bs were good. But the truth of the matter is a B is a high risk, 

it is a junk rate. 

Now, American taxpayers, we risked some of your money, but we 

risked it because, you know, what, we had to take that gamble. So 

when I look at this, I look at the credit ratings. So we are telling 

people we made good investments for you and there is a good ROI 

on this, but the truth of the matter is most of the money went to 

junk grade opportunities. 

Now, that brings me down to, so, how do you navigate that territory? How do you get me the guys that win the money? So it has 

to be a process. And I was looking at some GAO numbers. There 

were 460 applications to the program. I think 25 got the money. 

About 7 percent of the people that applied got the money, and my 

question is what did those people do to get that money. 

Ms. Bronicki, who is Paul Thompson? 

Ms. BRONICKI. Paul Thompson is working in our Business Development Department. 

Mr. KELLY. Okay. So who does he work for? 

Ms. BRONICKI. Who is he working for? 

Mr. KELLY. Yes. 

Ms. BRONICKI. In the company? 

Mr. KELLY. Yes. He is a lobbyist for your firm, right? 

Ms. BRONICKI. I don’t—— 

Mr. KELLY. Okay, well, he is a lobbyist for your firm. Let me ask 

you this. Before Thompson worked for you, who did he work for? 

Ms. BRONICKI. Who did he work before he worked for us? 

Mr. KELLY. Yes. 

Ms. BRONICKI. I don’t know if—— 

43 

Mr. KELLY. That was Harry Reid. 

Ms. BRONICKI. I don’t know—— 

Mr. KELLY. I want you to see something. This may refresh your 

memory. 

There is a little thing I wanted to show that we can maybe put 

up. 

This will help you remember this. 

[Video played.] 

Mr. KELLY. You go through this and here is my point. Here is 

my point. There is a way to navigate these waters. When only 7 

percent of the applicants actually get the prize, you have to wonder, as an average American sitting in my home, sitting in my 

business, how did these guys get there and all the rest didn’t? And 

we find out that almost every single one of these is tied in in some 

way to the Administration. So there is a way to navigate the waters. There is a way to be successful, and the idea is you better be 

tied in to somebody who is influential. 

Now, Mr. Thompson right now is busy, and I know that Harry 

Reid visits Ormat facilities. I visit a lot of facilities throughout 

Western Pennsylvania too, because I want to know what is going 

on. But I have to tell you the American people are starting to wonder, billions and billions of dollars invested by a government that 

picks winners and losers, and a lot of it based on highly suspect 

ways of how do you get there. 

So I wish I had more time. This is an interesting subject and I 

know the people don’t want to hear about this, but at the end of 

the day people want to know where their money went and how did 

it get there. This is a difficult, difficult map to navigate, and you 

know that and I know that. But free money is free money. This 

feeding frenzy had to be phenomenal. 

And when you guys got that information, it would be wow, man, 

let’s get our share. It is just amazing to me who got their share 

and how they got their share, and it is the old story: if you are not 

at the table, you are probably on the menu. And I will tell you 

what, somebody got to the table in a hurry and got a bigger share 

of the pie than other people. And who funded it all? Hardworking 

American taxpayers. And they deserve to know how that worked 

out and how that happened. 

Mr. JORDAN. I thank the gentleman. We will come for a second 

round; the gentleman can get more time. 

Mr. KELLY. I hope so. 

Mr. JORDAN. Yield now to the Ranking Member, my good friend 

from Ohio, Mr. Kucinich. 

Mr. KUCINICH. First of all, I want to say that I want to associate 

myself with the concerns that my friend, Mr. Kelly, has expressed. 

But bottom line, we are talking about power and money, how people get to the table, and I don’t think it has anything to do with 

Democrat or Republican. For example, Mr. Thompson, who we are 

talking about, if I am correct, just to show his bipartisan nature, 

he was able to be appointed as involved in the transition for then 

Governor Gibbons for natural resources issues. 

So the fact of the matter is we can go, and I have gone into who 

has contributed to whom. People are contributing to Democrats and 

Republicans alike; it is part of the problem with this process. The 

44 

men and women who sit on these committees are good people; the 

people who serve in Congress are good people. The system is rotten; it is up for sale, and the unfortunate assumption or the assumption that occurs about this unfortunate nexus between money 

and power is inarguable. The only question is what about these 

programs. 

Mr. JORDAN. Would the gentleman yield for one second? 

Mr. KUCINICH. Of course. 

Mr. JORDAN. I would just point out that I think that was the 

point that the doctor made, that this is not—— 

Mr. KUCINICH. I don’t disagree with the point. 

Mr. JORDAN.—a one party problem; this is a problem when you 

have government handing out, as Mr. Kelly—— 

Mr. KUCINICH. Look, the issue of moral hazard is there. I agree 

with that. 

Now, also, just to make the point, there are some of my friends 

from the other side of the aisle who signed a letter, actually an urgent letter, to Secretary Salazar of Interior, saying, look, let’s get 

these solar programs moving. 

With unanimous consent, I would like to put that in the record. 

So there is bipartisan support for the programs, but there is a 

partisan debate over who got what and why. 

Now, we also, another little item that I would like to clarify here, 

that I want to ask unanimous consent, Goldman Sachs, we know 

we have a wholly-owned subsidiary of Goldman Sachs testifying, 

but Goldman Sachs’ involvement goes well beyond this subsidiary. 

In fact, Goldman Sachs stands behind several of the loan guarantees granted by DOE, which don’t involve the subsidiary here 

today, and I want to insert into the record this article from the 

New York Times which states that Goldman Sachs was also involved in the Desert Sunlight Solar Farm, getting a guarantee of 

$1.46 billion. Without objection? 

Mr. JORDAN. Without objection, so ordered. 

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Mr. KUCINICH. So several very large companies participated in 

projects that received DOE loan guarantees and, unfortunately, the 

Committee’s investigation is not asked many of them about their 

involvement. 

Now, Mr. Mancini, it is my understanding that your company, 

Cogentrix, is a wholly-owned subsidiary of Goldman Sachs Group. 

Given that fact, what was Goldman Sachs’ involvement in 

Cogentrix’s 1705 project in Alamosa, Colorado? 

Mr. MANCINI. Congressman Kucinich, to answer that question, I 

think you have to understand how we structured this project. We 

structured this project at Cogentrix like we would any other project 

financing for the construction of a power project. 

Mr. KUCINICH. What was the involvement? 

Mr. MANCINI. So the involvement of Goldman Sachs really was 

derivative to the whole process. If I could just explain. 

First, we, at the Cogentrix level, the operating level, we would 

have to go out and secure and negotiate a power purchase agreement with a offtaker, a utility in this case, for the purchase of the 

power. The next thing we would do would be to select an equipment provider and a construction manager, and then, and only 

then would we go out and try to find the financing package that 

would make this project viable. 

Mr. KUCINICH. So what was Goldman Sachs’ involvement? 

Mr. MANCINI. So Goldman Sachs provided equity capital to 

Cogentrix to make $116 million of commitments to this project. We 

are, in fact, the project leading financier, not the Government. 

Mr. KUCINICH. Mr. Mancini, thank you. 

Mr. Rakowich, it is my understanding your company is mainly 

comprised of warehousing operations throughout the world and 

that Project Amp deals with placing solar panels on your roofs. I 

understand the Bank of America played a very significant part in 

putting this deal together. What is Bank of America’s involvement 

in this project? 

Mr. RAKOWICH. Congressman, Bank of America would be the 

lender to the extent that, if we roll out the solar on these roofs, 

Bank of America was—— 

Mr. KUCINICH. To what extent, sir? 

Mr. RAKOWICH. Well, to the extent of roughly 80 percent of the 

project cost. 

Mr. KUCINICH. And how much is that? 

Mr. RAKOWICH. It is hard to say. The maximum amount of the 

program is $2.6 billion. 

Mr. KUCINICH. Thank you. 

Mr. Mancini and Mr. Rakowich, your companies have both been 

the subject of document requests from this Committee and, of 

course, you were both requested to testify here. Thank you for 

being here. 

Now, to your knowledge, Mr. Mancini, was your parent company, 

Goldman Sachs, ever given a document request or an invitation to 

testify, to your knowledge? Do you have any idea? 

Mr. MANCINI. To my personal knowledge, I do not know. 

Mr. KUCINICH. Okay. 

52 

And how about you, Mr. Rakowich, to your knowledge, was the 

primary deal-maker and financier behind your project, Bank of 

America, ever sent document requests, do you know? 

Mr. RAKOWICH. Not to my knowledge. Well, document requests? 

I don’t know. 

Mr. KUCINICH. Okay. 

So, Mr. Chairman, I just want to say that I think that this Committee could be ever more effective in its work if we were to have 

Goldman Sachs and Bank of America here to answer questions 

about their involvement, since they stand behind it. I mean, in the 

scheme of things, these are small companies, in the scheme of 

things. 

In terms of Goldman Sachs and Bank of America, they are the 

highest level. And I think if we were able to bring them forward, 

the kind of questions that Mr. Kelly has raised, it would be an opportunity for us to really go deep and find out what is happening, 

and also to go into the interplay of the politics and the contributions. 

Mr. JORDAN. I appreciate that from the Ranking Member. 

We now yield to the gentleman from South Carolina, Mr. 

Mulvaney. 

Mr. MULVANEY. Thank you, Mr. Chairman. I thank the Chairman and the Ranking Member for the courtesy of allowing me to 

participate today. 

I want to talk about something different for a few minutes and 

then follow up on some of the things that Mr. Kelly and Mr. 

Kucinich were raising. I want to deal first with the issue that Ms. 

de Rugy mentioned, which was the true impact, the true stimulative impact of these programs. 

As I sat and I listened to you folks testify, one of the things that 

became readily apparent and I want to press on a little bit is 

whether or not these projects would have been done anyway. 

Mr. Rakowich, you said you started this in 2006, you started 

doing this program and, in fact, had put some of these photovoltaic 

systems on your roofs before the loan program started, is that 

right? 

Mr. RAKOWICH. Congressman, that is true. Those programs prior 

to this were almost entirely financed by the utilities that we, in essence—they financed that program at that point in time. 

Mr. MULVANEY. And in the program that you testified on regarding the program in California, I understand that that has not actually led to any installation of photovoltaic operations on your rooftops, is that correct? 

Mr. RAKOWICH. That is correct. 

Mr. MULVANEY. So the 1705 program in your particular circumstance actually hasn’t generated any stimulative effect, has it? 

Mr. RAKOWICH. Well, Congressman, if you don’t mind, let me just 

give you a little bit of context to that, because—— 

Mr. MULVANEY. Sure. 

Mr. RAKOWICH.—the program itself is a four-year program designed to start on September 30th of 2011. So if you look at—— 

Mr. MULVANEY. In fact, you had to start by—and I am sorry to 

interrupt, but—— 

Mr. RAKOWICH. That is correct. 

53 

Mr. MULVANEY.—the program required you to start September 

30th of 2011. 

Mr. RAKOWICH. Correct. And we had started construction at that 

point in time. But the overall program, Amp program, was largely 

to be done in years three and four of a four-year program, so it 

would be, if you will, rolled out over time. 

Mr. MULVANEY. And I understand that, and, again, I am not 

being critical of the program. I understand the difficulties of having 

a supplier go bankrupt and the impact that can have on the delay 

of the system. But the truth of the matter, Mr. Chairman, is that 

this was a program that was supposed to create jobs right away, 

and it looks like it hasn’t created a single job in your particular circumstance. 

Mr. Crane, I understand there are 5,000 folks that work for your 

company, NRG, and I think that the report that I read said that 

the total amount of loan guarantees that you all and your partners 

have on those three projects are roughly $5.2 billion. I congratulate 

you on employing 5,000 people, but I harken back to Ms. de Rugy’s 

comment about the ratio of jobs to the amount that is involved in 

the equation. I am a simple country lawyer, but I can handle the 

math. I do 5,000 into 5 billion and I get $1 million a job. Am I 

doing the math right on that one? 

Mr. CRANE. Well, first of all, I should clarify. Maybe it was a 

flight of rhetoric. That is 5,000 people that work at NRG, full-time 

employees. The three projects that you are talking about, and 

maybe you will like this number more, is roughly employ 4,000 

people directly. 

Mr. MULVANEY. I can assure you I don’t like that number more 

because that means more money per job. 

Mr. CRANE. But the indirect impact is obviously a multiple event, 

but as the CEO of a company, counting jobs is something that public policymakers like to do. 

Mr. MULVANEY. It is what we have to do. Let me ask you the 

same question I asked Mr. Rakowich, which is would these projects 

have gone on but for the 1705 program? 

Mr. CRANE. Congressman, the three projects that we are involved 

in absolutely would not have happened without the 1705 project, 

particularly—well, let me put it there is absolutely no way the 

Ivanpah project would have happened. The Agua Caliente project, 

without the federal loan, maybe one in five chance. The First 

Solar—I said CVSR one in five. First Solar, maybe 40 percent 

chance. 

The amount of money, Congressman, the private sector did not, 

contrary to what Ms. de Rugy said, the private sector project finance market was not large enough to do projects of this size. Most 

of the banks involved in project finance are actually European 

banks, and they have not been in the best condition over the last 

few years. 

Mr. MULVANEY. Let’s talk about the CVSR project. And I am 

hoping there is a second round of questions, because this will take 

a little bit of time. You said it is a one chance in four of it going 

on. When did you all start the analysis and start planning for this 

particular project? 

54 

Mr. CRANE. Congressman, one of the things also, I am sorry, but 

all of the three projects that we are involved in, NRG was not the 

initial proponent of the project. We bought into the projects well 

after the projects were started, so I actually can’t answer the question on when the project—— 

Mr. MULVANEY. When did you buy the project? 

Mr. CRANE. On CVSR? 

Mr. MULVANEY. Yes, sir. 

Mr. CRANE. We signed the purchase agreement in November of 

2010. 

Mr. MULVANEY. And how far along was the project at that time? 

Mr. CRANE. Well, the project was in the development phase. They 

had most of the permits and they had a letter of intent with the 

Government in terms of the 1705 financing, which is projects of 

this size, we weren’t going to get involved unless you had that letter of intent because we knew the private sector could not provide 

that size of loan. 

Mr. MULVANEY. I understand, and although I have never done 

business in California, something for which I am grateful, my understanding is it is not a quick process to get a development permit 

and a letter of intent for a project of this size in the State of California. Would that be a reasonable statement to make? 

Mr. CRANE. Well, I mean, your generalization that California is 

a difficult place to permit every type of power plant is a true generalization. I would agree with that. A solar photovoltaic plant that 

doesn’t use water has less issues and has no air emissions, has less 

issues than traditional power plants, but it has land use issues. 

But we weren’t responsible for the permitting. 

Mr. MULVANEY. No, I am not suggesting that you are. I am suggesting that somebody thought this project was going to go forward 

before the stimulus program was enacted in 1705. 

Mr. CRANE. Well, yes. Sunpower started the development of it. 

I am sure they had reason. I don’t know how they initially felt. I 

would guess that they started development before the financial crisis, where it was not inconceivable that the private sector would 

have come up with a billion dollar loan. But, believe me, after the 

financial crisis there was no way the private sector was coming up 

with a billion dollar loan. 

Mr. MULVANEY. Thank you, Mr. Chairman. I hope there is a second round. 

Mr. JORDAN. Yes, we will have a second round. 

Mr. Rakowich, I just want to be clear. Have there been any solar 

panels put on these rooftops in the Amp project? 

Mr. RAKOWICH. No, Mr. Chairman. As of right now, there is no 

solars—— 

Mr. JORDAN. So what have you done? Because Mr. Crane, in the 

first testimony we heard today, he said you haven’t drawn down 

any of the dollars, so what has happened with this project? I understand it is a three-or four-year phase thing. 

Mr. RAKOWICH. Right. 

Mr. JORDAN. But you haven’t drawn down any of the money, but 

you are still approved, you are still going ahead, and yet you 

haven’t built anything, you haven’t done any construction, actually 

55 

put panels on the rooftops like you are supposed to do to get the 

loan guarantee from the Department of Energy. 

Mr. RAKOWICH. Right, Mr. Chairman. And, again, I would, first 

of all, let me just say that is almost by design. I mean, the first 

couple, 15 to 18 months, we did not project to do too much construction. 

Mr. JORDAN. And how much money did you get, again, from the 

Department of Energy? What is the loan amount? 

Mr. RAKOWICH. The total commitment is, I believe, $1.4 billion. 

Mr. JORDAN. So you have 1.4 just waiting there. You can use it 

whenever you want. God bless America. It is just right there, ready 

for when you think you need it. 

Mr. RAKOWICH. Well—— 

Mr. JORDAN. That is a pretty good deal. Mr. Kelly’s point, it is 

a pretty good deal. 

Mr. RAKOWICH. With all due respect, I think—let me just explain 

the way the project works. First of all, we go out and we identify 

utilities that are looking to sign power purchase agreements. 

Mr. JORDAN. Let me just ask you have you done any construction 

at any part of Phase 1? Have you done anything, any construction 

at all in the Phase 1 part of the program? 

Mr. RAKOWICH. Yes. We prepared the 15 roofs in Southern California for solar in the future. 

Mr. JORDAN. You prepared them but no panels have been put up. 

Mr. RAKOWICH. No panels have been put up on those roofs. 

Mr. JORDAN. Have you returned to Fitch for a follow-up rating 

yet? 

Mr. RAKOWICH. We don’t have a project at this point in time to 

be rated. 

Mr. JORDAN. Okay. Have you purchased any solar panels? 

Mr. RAKOWICH. We have not purchased any solar panels. 

Mr. JORDAN. So you haven’t even purchased any. You don’t even 

have any waiting, let alone put them up. 

Mr. RAKOWICH. We have not purchased any. 

Mr. JORDAN. I would like to enter for the record, and we can give 

you a copy of this email from our staff to a lawyer from Bank of 

America, where we just asked them some questions regarding the 

Project AMP, this project, four different questions: Have PPAs been 

signed yet? Has Prologis purchased solar panels? Has Project AMP 

returned to Fitch for a follow-up rating yet? Has Project AMP 

begun construction in any locations that are part of Phase 1? 

And their representative says no to every one of them. And yet 

you still get to keep the money, it is still sitting there? This is 

amazing. And this was back in March, and obviously you were supposed to be moving on this by September 30th. So we will give you 

a copy of this, but, without objection, I would like to enter this into 

the record. 

Mr. JORDAN. Mr. Crane, you have three projects, three loan guarantees that you guys have gotten? 

Mr. CRANE. Yes. 

Mr. JORDAN. And how much was the money, again? 

Mr. CRANE. How much is the—— 

Mr. JORDAN. Total. 

Mr. CRANE. The total amount of the loans? 

56 

Mr. JORDAN. Yes. 

Mr. CRANE. For those three projects? It is about $4 billion. 

Mr. JORDAN. And you received those solely on the merits of the 

project? This is to Dr. de Rugy’s point, there was nothing based on 

friends in high places and political connections, all based on the 

merits of the project? 

Mr. CRANE. I believe so. 

Mr. JORDAN. Have you been to the White House ever to discuss 

this issue and talk about how important these loan guarantees 

were? 

Mr. CRANE. To discuss loan guarantees? 

Mr. JORDAN. Well, let me ask you first have you been to the 

White House? 

Mr. CRANE. Yes, I have been to the white House many times. 

Mr. JORDAN. Many times? How many is many times? 

Mr. CRANE. Between the Bush White House and the Obama 

White House, I would say 14, 15 times. 

Mr. JORDAN. Since the 1705 program has been in place, how 

many times have you been to the White House? 

Mr. CRANE. I don’t—— 

Mr. JORDAN. This Administration, how many times have you 

been to the White House? 

Mr. CRANE. I would say six or seven times. 

Mr. JORDAN. Six or seven times. Who did you talk with when you 

were at the White House? 

Mr. CRANE. Well, I was a part of a large group, once meeting 

with President Obama—— 

Mr. JORDAN. Did you talk about this loan guarantee program 

when you met with President Obama in that meeting? 

Mr. CRANE. No, we talked about climate change. 

Mr. JORDAN. Okay. And who else have you talked with at the 

White House? 

Mr. CRANE. Vice President Biden. I spoke with him about the 

clean energy standard. But mainly I spoke with Carol Browner or 

once with Valerie Jarrett, and that was all about the nuclear loan 

guarantee program. 

Mr. JORDAN. Okay. And you guys are also involved with the 

BrightSource project as well, correct? 

Mr. CRANE. That is the Ivanpah project. 

Mr. JORDAN. Ivanpah project, right. And are you familiar with— 

if we can put the email up, too. Are you familiar with this email? 

This was brought up in our last hearing when Mr. Woolard was 

here with BrightSource, the email from Mr. Woolard to Mr. Silva 

at the Department of Energy asking him to edit and proofread a 

letter that BrightSource was going to send from Mr. Bryson to Bill 

Daley, White House chief of staff. Are you familiar with this email? 

Mr. CRANE. No. 

Mr. JORDAN. Did you have any part? Did you know about this? 

Were you involved in any way with this email being sent to the Department of Energy? 

Mr. CRANE. I don’t think I am copied on it. 

Mr. JORDAN. Pardon? 

Mr. CRANE. No, I have nothing to do with this. 

Mr. JORDAN. Nothing to do at all? Didn’t know about it? 

57 

Mr. CRANE. No. 

Mr. JORDAN. Okay. In those seven visits you had to the White 

House, did you talk to anyone there about this project, the Ivanpah 

project? 

Mr. CRANE. No, never. I never spoke with anyone at the White 

House about this project or any other renewable loan guarantee, 

only about the nuclear loan guarantee. 

Mr. JORDAN. Okay, so you have been to the White House, you 

talked a lot about energy issues in general. Do you think it is 

maybe out of the ordinary or not customary to have a company 

send an email to the Department of Energy, asking those folks at 

the Department of Energy, who are going to be responsible for determining whether you get the loan or not, do you think it is unusual for them to ask the Department of Energy to edit a letter 

that their chairman of the board was going to send to the White 

House chief of staff? Do you think that is unusual? 

Mr. CRANE. Well, I don’t know. It is nothing that I have ever 

done, but whether it is unusual or not, I don’t know what common 

practice is. 

Mr. JORDAN. You have been to the White House six times to talk 

about energy projects and you don’t know what common practice—— 

Mr. CRANE. Well, I don’t know that—— 

Mr. JORDAN. Do you think it is uncommon to get that specific 

and ask the person who is supposed to say yay or nay on a loan 

project, that we would like you to edit this letter that our chairman 

is going to send to the White House chief of staff? 

Mr. CRANE. I don’t think that I, personally, have ever sent an 

email or a letter to the White House, so I don’t have a lot of experience in this area. 

Mr. JORDAN. Okay. Well, maybe you didn’t have to send one; you 

were going to there all the time; you get to talk to him in person. 

I thank the gentleman. 

We will now go to our second round of questioning and would 

yield to the Ranking Member for five minutes. 

Mr. KUCINICH. Thank you very much, Mr. Chairman. 

Although members of Congress from both parties have supported 

1705 loan guarantees for projects in their districts, it now appears 

that some of my friends in the Majority have had a change of 

heart. In a report published in March, the Majority argued that 

DOE ‘‘amassed an excessively risky loan portfolio.’’ Now, there are 

experts who do disagree with the Majority’s assessment. Recognizing the inherent risk in emerging green technology loans, Congress authorized a setaside of $2.47 billion for potential losses in 

the DOE 1705 loan guarantee program. 

According to several analysts, even after accounting for the collapse of Solyndra and Beacon Power, the actual default rate on the 

DOE loan guarantee program ended up being a fraction of what 

the Government actually budgeted for the losses. Bloomberg Government also came to a different conclusion than the Majority. 

Bloomberg’s recent report, Beyond Solyndra: An Analysis of DOE’s 

Loan Guarantee Program, concluded that the 1705 DOE loan portfolio is ‘‘composed of predominantly low-risk projects.’’ 

58 

Now, Ms. Bronicki, do you agree with the Majority that Ormat 

Technologies’ project is excessively risky or it is a lower risk 

project? Why? 

Ms. BRONICKI. The three projects that received the DOE loan 

guarantee are very low-risk projects from a technology point of 

view. They are similar to many megawatts that have built utilizing 

the same technology. It was all about expanding geothermal, and 

not innovation. 

Mr. KUCINICH. Right. I understand. But the risk was low, is that 

what you are saying? 

Ms. BRONICKI. Very low. 

Mr. KUCINICH. As I understand it, one reason why the portfolio 

can be considered low risk is because most of the projects that received 1705 loan guarantees are for power generation, and DOE required these companies to have long-term agreements in place with 

nearby utilities to purchase the power once it was built. This 

means that the projects have a guaranteed income stream, which 

greatly limits any risk of default. 

Now, Mr. Mancini, can you explain the difference between the 

power generation projects like the Cogentrix loan guarantee and 

project finance deals? And do you already have agreements in place 

to sell power to major utilities once the projects are completed? 

Mr. MANCINI. We do, in the case of Alamosa, have a long-term 

power purchase agreement with the Public Service Company of 

Colorado to purchase the power. That is one of the requirements 

of the DOE loan. 

Mr. KUCINICH. You couldn’t do it if you didn’t have some kind of 

an agreement in place, right? 

Mr. MANCINI. We couldn’t do it with the DOE—— 

Mr. KUCINICH. It doesn’t work financially. 

Mr. MANCINI. It would be very difficult, very difficult. 

Mr. KUCINICH. Because otherwise you would be stuck with a 

white elephant. 

Mr. MANCINI. There are very few of those projects that have actually succeeded without long-term contracts. 

Mr. KUCINICH. Now, Herb Allison, independent consultant commissioned by the White House to review DOE’s loan program office, 

found the DOE support of public-private partnerships between 

power generators and utilities in States like California ensure that 

loan guarantee recipients have a steady and predictable funding 

source. 

Now, Mr. Crane, do you agree with this assessment? 

Mr. CRANE. [Remarks made off microphone.] 

Mr. KUCINICH. Mr. Rakowich, the Majority has documented that 

Prologis’s Project AMP has yet to start generating solar energy. 

While that fact is disappointing, can you tell us how much taxpayers money has been drawn down by the project so far? 

Mr. RAKOWICH. Zero, Congressman. 

Mr. KUCINICH. How has the project—what was that answer? 

Mr. RAKOWICH. None. 

Mr. KUCINICH. None. Okay. How was the Project AMP loan guarantee designed to mitigate the risk of taxpayer losses? 

Mr. RAKOWICH. I would say three things: one, we are not going 

to move forward unless we have a long-term power purchase agreeVerDate Aug 31 2005 13:41 Jul 10, 2012 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 C:\DOCS\74874.TXT APRIL
59 

ment, which is generally a 20-year agreement, 15-to 20-year agreement with a utility, okay? Number one. 

The second thing is that we are putting up the equity, or us and 

our financial partners are putting all of the equity. As well, the 

lender has 20 percent at risk that is not guaranteed. So nearly 40 

percent of the project is at risk before the Government puts up the 

guarantee. So we are not going to put up any—— 

Mr. KUCINICH. The question here is the performance, and I think 

that it is clear that this program is performing better than expected in financial terms. One of Congress’s main goals in creating 

the 1705 loan guarantee program was to spur technological advances in renewable energy technology. 

Now, Ms. Bronicki, do you believe your project funded by the 

1705 program financing is spurring technological advances? 

Ms. BRONICKI. Sorry? 

Mr. KUCINICH. Are you spurring technological advances with the 

program that has been financed by 1705? 

Ms. BRONICKI. What does it mean, spurring technological advances? 

Mr. KUCINICH. Are you creating technological advances? 

Ms. BRONICKI. Not in this program. We are an innovative company with other programs, but this is a proven technology, no experimenting. 

Mr. KUCINICH. Mr. Crane? 

Mr. CRANE. Yes. 

Mr. KUCINICH. Mr. Mancini? 

Mr. CRANE. Particularly the solar Ivanpah project is a huge technological advance. 

Mr. KUCINICH. Mr. Mancini? 

Mr. MANCINI. As I explained in my opening remarks, the technology used in this project was used in the space program, but 

never deployed in a commercial scale, utility scale project. This 

gave it the opportunity to do that, and I am happy to report that 

it is operating successfully. 

Mr. KUCINICH. Okay. 

I just want to say, Mr. Chairman, that when we have an isolated 

look at what the program has actually done, we have some testimony here that suggests that it could be working within the context in which it was designed. Now, on the other hand, there are 

legitimate questions that are raised by Dr. de Rugy about the risk 

involved. Just in this case it looks like it might be working. But 

I think that we still need to have some caution here. 

I ask unanimous consent. Moments ago, Mr. Chairman, you 

made public the email your staff cited to allege that DOE had violated the law. I have three documents which I would respectfully 

suggest would refute that: an engineering assessment by the Bank 

of America’s independent consultant, two official DOE documents. 

All of these documents certify commencement of construction and 

refute the allegations that have been made, and I ask that these 

be submitted in the record, and I appreciate your consideration. 

Mr. JORDAN. Without objection. 

Mr. JORDAN. Mr. Crane, I want to put back up this email again 

because I am just flabbergasted that we actually have an email 

where the CEO of BrightSource, relative to the Ivanpah project, is 

60 

asking the Department of Energy to proofread a letter that their 

chairman of the board, now Commerce secretary, plans to send to 

the White House chief of staff. 

A couple of the highlighted things there: send me any comments 

or suggestions to ways you think we can improve this message, so 

definitely asking for edits from the Department of Energy. Contained in the draft letter is the statement, Dear Bill, referring to 

the White House chief, we need a commitment from the White 

House to quarterback loan closure between OMB and the Department of Energy by March 18th. Later on in the draft letter that 

they are asking for edits and review of they said we need guidance 

and support from the White House. 

So this takes place in March of 2011. The loan guarantee is ultimately approved, I believe, on April 11th, 2011. Those seven visits 

you had to the White House, were any of them during this time 

frame, the spring of 2011? 

Mr. CRANE. I would think that probably there were some. 

Mr. JORDAN. Some prior to the April 11th, 2011, approval of the 

loan guarantee? 

Mr. CRANE. Yes, I would think there would actually have been 

more before than after. 

Mr. JORDAN. More before than after. And this project is a big 

project; you had the big picture up there. This is one big deal to 

your company and, of course, BrightSource. 

Mr. CRANE. Well, Mr. Chairman, you have to understand two 

things. One is this project, at that basis, I mean, we were involved, 

but it was still basically BrightSource’s project, number one. Number two, this may seem like a big deal to you, but my focus was 

entirely on our nuclear project in Texas. 

Mr. JORDAN. Okay. 

Mr. CRANE. Which was a much bigger project than this, five 

times larger than this project. 

Mr. JORDAN. Well, BrightSource got billions of dollars. It is not 

a big deal to you at all, then? This project wasn’t that big a deal? 

Mr. CRANE. If it didn’t happen, we had not invested— 

BrightSource was the developer of this project—— 

Mr. JORDAN. But you obviously got an interest; you are a partner 

with BrightSource in this project, correct? You have pictures of it 

right here. 

Mr. CRANE. Well, now we are. 

Mr. JORDAN. Yes. 

Mr. CRANE. Now we have hundreds of millions of dollars invested. But as of March or April of 2011, we had nothing. 

Mr. JORDAN. So it is important now, but it wasn’t important 

then? That is what you are saying. 

Mr. CRANE. Well, it was important to the people who had developed the project, which is BrightSource. We had an opportunity to 

invest in the project. 

Mr. JORDAN. It was important enough to BrightSource, your 

partner, to have the Department of Energy check over their homework in a letter they were going to send to the White House chief 

of staff is pretty important, but not important to you? 

Mr. CRANE. At that time, if we had not had an opportunity to 

invest in that project, it would not have mattered. 

61 

Mr. JORDAN. Okay. So in any of those meetings, just to be clear 

and just for the record, in any of those seven meetings you had 

with the White House, some of them taking place in the spring of 

2011, you did not bring up the Ivanpah project and this issue at 

all in your visit with the White House? 

Mr. CRANE. Absolutely, unequivocally not. 

Mr. JORDAN. Okay. You didn’t know about the email, you didn’t 

know about the draft letter, and you didn’t bring it up in any of 

your visits to the White House. 

Mr. CRANE. That is right. 

Mr. JORDAN. Okay. Let me just bring up another point here, if 

I could. Could we get the second email up? Just because I want to 

see this. And I want to let the doctor comment on this one. 

[Slide.] 

Mr. JORDAN. So this is now an email from Prologis, Mr. Drew 

Torbin, to Kimberly Heimert at the Department of Energy, and 

this is going the other way. Now, this gets right to the point of 

when you get so close and you have to grease the skids of government to get approval. 

But it says, we have made adjustments to the memos which we 

believe are necessary to accurately reflect the situation. We are 

talking about an internal memorandum. So here we now have outside folks—oh, this was just entered into the record by Mr. 

Kucinich, okay, the same thing. Glad we are thinking the same 

here, Mr. Kucinich. 

But now we have it going the other way around, where we have 

the Department of Energy having someone in the private sector 

edit and draft internal documents that are communicated within 

the Department of Energy. I mean, if the American taxpayers can 

just see what is going on in this program, and I believe it was your 

third point, Doctor, in your testimony you talked about this is what 

happens when cronyism gets to this level and this much money is 

at stake. 

Ms. DE RUGY. Yes. When a lot of money is at stake for a company, whether it is direct cash or loan guarantees, which would basically give them, as Mr. Kelly said, lower rates than they would 

get on the open market, it actually shifts a lot of the incentive for 

the company itself to expand a lot of energy, rather than to please 

the Government or actually to meet the standards expected by the 

Government. But I believe the reverse is true; there is huge economic literature, Public Choice Economics is all about the way the 

reverse is true too, where governments design programs in order 

to feed some companies and some industries. So, yes, it goes both 

ways. 

Mr. JORDAN. I just find it amazing that on one hand we have a 

company saying, hey, edit this letter for us that our chairman is 

going to send to the White House chief of staff, and then we also 

have, now, the Department of Energy saying, hey, private sector, 

edit this internal memo we are going to send to folks in the Department of Energy. Unbelievable. In my time in public office, I have 

never seen those kind of communications going on in a loan guarantee program or, for that matter, any program. 

I appreciate that. 

I yield now to the gentleman from Pennsylvania, Mr. Kelly. 

62 

Mr. KELLY. Thank you, Chairman. And I know this can be uncomfortable. Listen, I don’t fault you for taking advantage of a government that continues in this dependence, co-dependent type of a 

model, and it is sometimes hard to walk away from it once it is 

there. You say, it is just so easy, why wouldn’t we do it? 

But it does come down to what is the return on the investment 

for the people whose money is actually at risk, and I think that is 

where the disconnect comes, because people think, oh, it came from 

the government, it didn’t hurt anybody. But then you say, well, 

where did the government get the money, and you find out it is 

people who actually pay taxes. And then you find out who is paying 

taxes and you find out, well, not everybody pays taxes; some of us 

do, some of us don’t. 

But for those that do, a lot of people still carry a little lunch 

bucket, and by the time they get done paying their school taxes, 

they get done paying their municipal taxes, they get done paying 

their State taxes, they get done paying their federal taxes, there 

is just no money left for them to take care of their kids and to plan 

their future, and I think that is where the disconnect comes because we actually start to believe this is free money. It is not free 

money; this is taxpayer money. 

Mr. Rakowich, how much money did Cogentrix get? 

Mr. RAKOWICH. I am sorry, I am not with Cogentrix. 

Mr. KELLY. I am sorry, I thought you were. I thought you were. 

All right, Mr. Mancini. 

Mr. MANCINI. The federal loan guarantee amount was $90 million. 

Mr. KELLY. Ninety million dollars. Do you know how many permanent jobs that created? 

Mr. MANCINI. We created, directly, approximately 10 permanent 

jobs—— 

Mr. KELLY. Ten permanent jobs. So let me ask you—— 

Mr. MANCINI. But then there were also—— 

Mr. KELLY. Not you, but you sitting at your kitchen table, and 

I would tell you, you know what, we just made a $90.6 million investment, and this is all about jobs. This whole initiative was about 

creating jobs. And here is the good news: 10 people got jobs. Is 

there any reason why the American people no longer have faith in 

what is going on in Washington, D.C.? 

The disconnect is so great here, it is so foreign to people who live 

in this area that this money actually comes out of working people’s 

pockets. It is free. It is not free. This drives me absolutely nuts. 

Can you imagine going to a bank and saying I want to borrow $90 

million, and here is the upside, I can hire 10 people with that? 

They would say, hey, you know what? It is good to see you. Please 

leave. I don’t get this. 

And I am going to tell you, Ms. Bronicki, because obviously you 

don’t know a lot of what is going on, this gentleman, Mr. Thompson, before he worked for you, he worked for Mr. Reid. Kai Anderson of Cassidy & Associates is an outside lobbyist for your firm. 

Did you know that? 

Ms. BRONICKI. Yes. 

Mr. KELLY. Okay. Do you know who he worked for? 

Ms. BRONICKI. He worked—— 

63 

Mr. KELLY. He was Harry Reid’s deputy chief of staff until 2005. 

Okay, so Mr. Thompson worked for Harry Reid, Mr. Anderson 

worked for Harry Reid. Yoram Bronicki, is that your husband, 

maybe, or who would that be? 

Ms. BRONICKI. My son. 

Mr. KELLY. That is your son. And he was a donor to Senator 

Reid’s reelection campaign. And there is nothing wrong with this, 

believe me, there is nothing wrong. Here is the point, though. Here 

is my point. This is not to embarrass you. When we follow this 

Judas goat of taking money from the government, there are strings 

attached to all this money we take and there are repercussions, 

and it gets to the point where people start to wonder. 

As I said earlier, this feeding frenzy to come after this money. 

How in the world did 25 of you get to the table and the others were 

left out in the cold? Because then you start to look, well, how did 

they get there? Well, geez, the guys worked for Harry Reid and the 

other guy worked for Harry Reid, and all of a sudden Harry Reid 

gets involved in it and all of a sudden the money starts to flow. 

So people start to wonder how did it get gamed? Again, this is the 

tough part of you sitting there. The American people have a right 

to know how did this happen. 

Ms. BRONICKI. If I may? 

Mr. KELLY. Absolutely. 

Ms. BRONICKI. I sincerely believe that our project is one of the 

most fit projects for the program. It was well advanced, it was 

shovel-ready. Actual construction has started when we submitted 

the application. The financial markets were not available to provide financing for such projects in 2009, and this certainly accelerated the construction. 

Mr. KELLY. I have no question about that. Listen, because I am 

going to run out of time. I understand that. It was a good project 

for your company. You are also geothermal people; you build the 

geothermal plants. So, yes, it was a good project for you. 

But let me ask you, Mr. Crane, BrightSource, Agua Caliente, 

California Valley Solar Ranch, Project Amp, where do they sell the 

power that they generate? 

Mr. CRANE. They all sell to California, mainly to Pacific Gas & 

Electric. 

Mr. KELLY. PG&E. So why is that market so strong in California? 

Mr. CRANE. It is strong because California has a 33 percent renewable portfolio standard. 

Mr. KELLY. Which means what? 

Mr. CRANE. Which means that by a certain year, I think it is 

2020, 33 percent of the power—— 

Mr. KELLY. By government mandate. 

Mr. CRANE. Yes. 

Mr. KELLY. Okay. So the government says you must buy this renewable energy. 

Mr. CRANE. Well, it is the State government. 

Mr. KELLY. No, okay. So the market was created by a government mandate. 

Mr. CRANE. Which I think then was endorsed by the people. 

64 

Mr. KELLY. No, no, I understand that, how it was created. It 

didn’t happen in the free market, it was created by a government 

mandate that said you will supply it at this level. So the market 

wasn’t created by a market demand, it was created by a government saying this is what you are going to do; you are going to do 

it with renewables, okay? 

Mr. CRANE. That is correct. 

Mr. KELLY. That is why, listen, 1703, that is why we were hot 

in nuclear back then, because 1703 did address nuclear. 1705 

doesn’t. I understand that. I understand you go to where the money 

is; it is the old Jerry McGuire, show me the money. I get it. 

But when it comes down to a government that creates the market through a mandate, that is not the same thing because you 

know what, at the end of the day, no matter how much you subsidize it, if it is not market-ready, no matter what amount of 

money you subsidize it with, it is not going to float. And if it is 

marketable, you don’t have to subsidize it a penny. 

So we create these markets and then we create a business opportunity. I do not fault you for taking advantage of a government 

that mandated something on people that they didn’t want on their 

own. We forced it down their throat. They didn’t just go out and 

buy it because they wanted to. So we create a market and then we 

say, okay, now we are going to create the funding for you folks to 

go after it. I get it. I get it. 

But at the end of the day every single penny came out of taxpayers’ pockets, it did not come out of the government; it was funneled through the government. Any government spending is flat 

out taxes; that is all it is. That is all it is. And we have lost connection. We have disconnected ourselves with the source, the revenue 

source; it is hardworking American taxpayers. 

I yield back my time, Mr. Chairman. 

Listen, I appreciate your patience with us, but I have to tell you, 

where I come from, these people are struggling. They are out of 

work and they are trying to figure out—some of them are working 

two and three jobs. Mom is working jobs and everything else, and 

they are trying to figure out what the heck are you people doing 

with the money we send you. It just doesn’t make sense to the average American. 

Mr. JORDAN. I thank the gentleman. 

Yield now to the gentleman from South Carolina, Mr. Mulvaney. 

Mr. MULVANEY. Thank you, Mr. Chairman. Again, I appreciate 

the courtesy extended to me to participate today. 

Mr. Crane, I want to talk to you about the statement towards the 

end of your both written and oral testimony, which I think is important, where you mention that NRG has actually invested a billion dollars of your own equity in the three projects that we have 

discussed previously. I think the notes I had said that $400 million 

of that, for example, were in the California Valley Solar Ranch, the 

CVSR program, and I think that is important. 

You went on to say that, in blunt terms, we don’t get repaid unless the Government has been repaid. I think you hit on an important issue there because I think a lot of the frustration that you 

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flection of what folks back home are hearing, which is why are 

these folks getting paid when the taxpayer is still on the hook? 

That is what they saw with Fannie Mae; that is what they saw 

with Freddie Mac; they saw it to a certain extent with Solyndra. 

They see the owners and sometimes the officers of these companies 

making money, when the taxpayers are still ultimately on the 

hook. So I want to talk about this for just a second. Are you telling us, sir, that on the $400 million in equity, there 

is no preferential payments, no return on that equity until the debt 

has been repaid? 

Mr. CRANE. Congressman, what I am saying is that in the waterfall of payments, the debt service happens before there is any return to equity. I don’t know the month-on-month, year-on-year, but 

debt has a higher priority of repayment than equity. 

Mr. MULVANEY. It does. You know, you said the debt service is 

above the equity on the waterfall. What about the repayment of the 

principal of the loan? 

Mr. CRANE. Well, debt service is interest plus principal. 

Mr. MULVANEY. Okay. You all collect fees and management consulting fees, I would assume, for the management of the project, 

correct? 

Mr. CRANE. Well, yes. Operating fees for a solar photovoltaic 

project are pretty small because there is no moving parts. Yes, operating fees for any project go above debt service because you have 

to keep the project operating during the income. 

Mr. MULVANEY. And I have no difficulty with that. Is there any 

debt? Have the owners of the company extended any debt to the 

CVSR program? 

Mr. CRANE. No. 

Mr. MULVANEY. Okay, so it is just equity. You don’t have any 

subordinated or unsubordinated debt in the project? 

Mr. CRANE. No, not at all. We don’t ever put debt to any type 

of project. 

Mr. MULVANEY. All right. 

Mr. CRANE. We are not debt providers. 

Mr. MULVANEY. What are the repayment terms? How long will it take to repay the $1.2 billion Government guaranteed loan? 

Mr. CRANE. You know, Congressman, I am sorry, I should know, 

but I don’t know what the term of the repayment is on the projects. 

I would say the debt is tied to the length of the power purchase 

agreement, and these are 20-and 25-year power purchase agreements, so—— 

Mr. MULVANEY. That would make sense, and, again, I don’t know 

the specific terms of this, but the ones I have seen before, they 

would be tied to that agreement. You have a guaranteed flow of 

funds coming in because you have the agreement to sell the electricity to the—— 

Mr. CRANE. That is right. 

Mr. MULVANEY.—providers in California and your debt would be 

very close, the loan terms would be very close to that. 

Mr. CRANE. Usually, the debt ends a little bit before the power 

purchase agreement. 

Mr. MULVANEY. Exactly. So here is what I am struggling with. 

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paid unless the Government gets repaid. The taxpayer is going to, 

in theory, be on the hook for something for the next 20 to 25 years. 

Mr. CRANE. Yes. 

Mr. MULVANEY. But you made a statement to Wall Street analysts in August saying that your company was going to get all of 

your capital back in two to five years. 

Mr. CRANE. Do you want me to explain that? 

Mr. MULVANEY. And that is what I am asking you, yes. 

Mr. CRANE. That statement, which was later taken out of context 

by the New York Times, had to do with a solar project called 

Blythe, which has no Department of Energy loan guarantee. 

Mr. MULVANEY. Okay, so it is your testimony here again today 

that there will be no return on equity and no return of equity on 

the CVSR program until after the Government guaranteed loans 

are repaid in full? 

Mr. CRANE. Again, I would have to see the profile, but I am not 

saying exactly that, because no project, if you say to equity, we are 

not going to give you a dollar back for 20 years, there is never 

going to be equity in a project. What I am saying is that the debt 

service under the terms of the loan will be serviced before any 

money can come out, as we call it in the business, out of the waterfall to equity. So debt gets repaid before equity. 

Mr. MULVANEY. Sure. And I understand that. I understand how 

debt and equity work. But when you tell me the debt is going to 

get serviced before there is a return on equity doesn’t necessarily 

mean the same thing as the debt is going to be repaid in full before 

there is a return on equity. 

Mr. CRANE. Yes, that is probably correct. 

Mr. MULVANEY. So I guess you will get repaid, at least something 

on that equity, before the taxpayer is completely off the hook. 

Mr. CRANE. I am sure we will get some income, yes, before the 

debt is fully off the books. 

Mr. MULVANEY. Thank you, Mr. Chairman. 

Thank you, Mr. Crane. Thank you to all the panelists. 

Mr. JORDAN. Mr. Crane, were you taken out of context in some 

of these other quotes in the New York Times piece, like I have 

never seen anything that I have had to do in my 20 years in the 

power industry that involved less risk than these projects? Was 

that I context or out of context? 

Mr. CRANE. No, that is in context. I do believe that in the context 

of when—— 

Mr. JORDAN. You intend to do as much of this business as you 

can get your hands on? 

Mr. CRANE. Yes. And keep in mind, Mr. Chairman, that we are 

talking about a company that is trying to build a nuclear power 

plant. I would absolutely say that a solar photovoltaic groundmounted in the California desert is about the least risky project 

that you can do in the power industry. 

Mr. JORDAN. Okay. 

Mr. CRANE. So, no, that was not taken out of context. 

Mr. JORDAN. Okay. Just wanted to be clear which were in context, which were out. 

Mr. Rakowich, to your knowledge, before you got the loan guarantee, conditional or final, did the DOE share any internal docuVerDate Aug 31 2005 13:41 Jul 10, 2012 Jkt 000000 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 C:\DOCS\74874.TXT APRIL
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ments with you or your company or representatives of your company? 

Mr. RAKOWICH. I am not sure I follow. What types of documents 

would you be referring to? 

Mr. JORDAN. Any documents. I put up the one email where you 

guys got to edit a Drew Torbin—does Drew Torbin work for you? 

Mr. RAKOWICH. Yes, he does. Works for our company. 

Mr. JORDAN. I understand. And does Jonathan Plow work for 

your company? 

Mr. RAKOWICH. No, Jonathan Plow does not work for our company. I believe he works for Bank of America. 

Mr. JORDAN. Okay. But Drew Torbin does. 

Mr. RAKOWICH. Yes. 

Mr. JORDAN. Okay. So you got to edit an internal memo, but I 

want to know did they share any other internal documents with 

you. 

Mr. RAKOWICH. I don’t know. I was not involved in the negotiations. 

Mr. JORDAN. Okay. 

Mr. RAKOWICH. I would say that we were completely transparent 

with the DOE as to the situation that was evolving at that point 

in time as it relates to Solyndra, and, needless to say, we wanted 

certain documents; in the final loan document, we wanted the DOE 

to acknowledge that, so there was back and forth that took place 

as it relates to that particular email, and that is not unusual. 

Mr. JORDAN. You don’t think it is unusual? 

Mr. RAKOWICH. I don’t. 

Mr. JORDAN. That someone from your company gets to edit an internal memo, what is going to be distributed to Department of Energy employees? 

Mr. RAKOWICH. I don’t think it is unusual—— 

Mr. JORDAN. People who are paid by the taxpayers? 

Mr. RAKOWICH. Mr. Chairman, I don’t think it is unusual given 

the back and forth that needed to take place before the loan document was signed, that there would be back and forth conversation, 

editing and the like that needed to take place between the parties. 

Mr. JORDAN. But you did not participate in any of that back and 

forth? 

Mr. RAKOWICH. I did not, no. 

Mr. JORDAN. As the CEO, you didn’t participate? 

Mr. RAKOWICH. I was not even aware of it at the time. 

Mr. JORDAN. Okay. Okay, well, let me just show another email, 

because we have another one that just astounds me. This is from 

Mr. Peter O’Rourke at the Department of Energy to Jonathan 

Plow, who works for Bank of America, Drew Torbin, who works for 

you all, right? Okay? It says please do not send beyond two of you. 

This is very important. Feel free to use the concepts that we articulate in your own words if you don’t already have this in your 

message, and that refers to Project Amp Department of Energy developed document that they are going to send to you with all kinds 

of information that you guys can use in your presentation. 

I mean, let’s think about the way I think the American citizen 

would see this. This is like the teacher telling two of the students, 

not the whole class, two of the students, hey, here is what is going 

68 

to be on the test, we are going to give it to you, don’t—in fact, they 

say that, don’t send beyond the two of you—don’t tell anyone else 

we are giving you the answers to the exam; and you say that is 

fine, that is the normal course of business back and forth? And you 

didn’t have any knowledge of it as the CEO of the company? 

Mr. RAKOWICH. Mr. Chairman, I think as it relates to what was 

sent, which was the presentation of—— 

Mr. JORDAN. Mr. Crane, did you get that kind of treatment? Did 

you get internal documents from the Department of Energy telling 

you, hey, here is the answer to the exam? If you say things this 

way, you are more likely to get billions of dollars of taxpayer 

money and a guaranteed loan? Did you get that privilege? 

Mr. CRANE. Well, I can guarantee that I have never seen a Department of Energy internal memorandum—— 

Mr. JORDAN. So you didn’t get it. 

Mr. CRANE.—and I don’t think—— 

Mr. JORDAN. Mr. Mancini, did you guys get that kind of special 

treatment? 

Mr. MANCINI. Not that I am aware of. 

Mr. JORDAN. You don’t know of anyone that got any internal documents from—— 

Mr. MANCINI. Not that I am aware of. 

Mr. JORDAN. Okay. Ms. Bronicki? 

Ms. BRONICKI. I am not aware of any. 

Mr. JORDAN. Okay. 

Doctor, does this seem kind of unusual to you, or this is par for 

the course when you head down this road, I assume, right? This 

is what happens when you decide you are going to have this kind 

of cronyism in government? 

Ms. DE RUGY. I am not entirely surprised. I mean, I don’t know 

this particular case, but—— 

Mr. JORDAN. Mr. Rakowich, did you think it is a little unusual? 

Torbin is the one who worked for you, maybe just a great job and 

Torbin, they just said he is a really nice guy, he has been working 

hard, we are going to tell him the answers to the exam? 

Mr. RAKOWICH. Chairman, I don’t think that sending a presentation as to what Project Amp is about, I mean, that is our project, 

so sending the presentation I don’t see as being unusual, no. 

Mr. JORDAN. Feel free to use the concepts that we articulate in 

your own words. So this is certainly intellectual property developed 

at the Department of Energy that they are sending out, hey, you 

might want to use this language when you send it back to us, higher chance of approval. That is the implication I draw from that 

statement. Is that not what you conclude? 

Mr. RAKOWICH. I don’t know, I hadn’t seen it until you put it up. 

Mr. JORDAN. But, again, we have to take this whole thing, this 

is why we have had several hearings on this. You take this all in 

context. Mr. Kelly’s point, 26 companies got taxpayer money, were 

in this loan guarantee; 22 of them had credit ratings of BB minus, 

junk status; most of the companies who got money, a significant 

number at least is probably more accurate, but a significant number had strong connections to the Obama Administration, either 

during the campaign. In the BrightSource case the chairman of the 

69 

board became Commerce secretary shortly after they get the loan 

approved. I mean, it is amazing. 

So we see all this and now we have emails going back and forth 

saying, hey, say it this way; hey, edit this letter that we want to 

send. So when you put it in the big picture, no wonder the taxpayer 

is saying what the heck is going on with our government. This is 

not the way it is supposed to work. I mean, it is just so frustrating 

to look at this is what is going on at the Department of Energy, 

where they are picking the winners and losers. As Mr. Kelly pointed out, hundreds of companies applied; 26, 26 got the $15 billion. 

Such a deal. Such a deal. 

And you think this is, in your words just a little bit ago, you 

think this is customary and the way it is supposed to work? 

Mr. RAKOWICH. What I said, Mr. Chairman—— 

Mr. JORDAN. You said this is the course of doing business. 

Mr. RAKOWICH.—with all due respect, what I said was sending 

a presentation on our exact project that we are working on back 

and forth doesn’t seem unusual to me, no. 

Mr. JORDAN. Doesn’t seem unusual that the Department of Energy tells you this is how you need to say it, here are the answers 

to the test, this is the way you need to do it. This is not unusual? 

Mr. RAKOWICH. I couldn’t read the email, I don’t know exactly—— 

Mr. JORDAN. Well, I will read it to you: Please do not send beyond two of you. This is very important. Feel free to use the concepts that we articulate in your own words. So feel free to plagiarize. That is what it says. 

Mr. RAKOWICH. Right. It is a presentation that is about our 

project, so going back and forth on a presentation that ultimately 

we will use or somebody will use in the future just doesn’t—I don’t 

understand the context of why this was sent, but I can tell you that 

the presentation—— 

Mr. JORDAN. Did you personally have any communication with 

the Department of Energy? 

Mr. RAKOWICH. I did not. 

Mr. JORDAN. You didn’t talk to Mr. O’Rourke, Mr. Silva, or any 

of these folks at the Department of Energy? You didn’t talk to Director Chu? 

Mr. RAKOWICH. No, sir. 

Mr. JORDAN. Secretary Chu, I should say. 

Mr. RAKOWICH. No, sir, I did not. 

Mr. JORDAN. Did you make any trips to the White House? 

Mr. RAKOWICH. No, sir, I did not. 

Mr. JORDAN. Okay. Did you talk to anyone in the Administration? 

Mr. RAKOWICH. No, sir, I did not. 

Mr. JORDAN. Did you talk to Bill Daley about this when he was 

White House chief of staff? 

Mr. RAKOWICH. No, sir. 

Mr. JORDAN. Mr. Biden? 

Mr. RAKOWICH. No, sir. 

Mr. JORDAN. Wow. Okay, you got a little different treatment 

than Mr. Crane, but understand. 

70 

All right, with that, I will yield to the Ranking Member from 

Ohio. 

Mr. KUCINICH. Thank you very much, Mr. Chairman. I want to 

go back to the email that you just discussed. Here again it goes 

right to the Bank of America, because the only party to this email 

that has not provided public testimony regarding its involvement 

in the loan program is Bank of America. Now, the impact and import of this particular memo, which you have cited as a matter of 

concern, we really don’t understand it until we get Bank of America’s perspective. 

So I would just like to ask my friend if there is a way that you 

and I can work together to see if Bank of America and, for that 

matter, Goldman Sachs, who is on another program, if the guys at 

the top, that they be invited to come in to explain their point of 

view about this. Could we see if we could work together? Would 

you consider this? 

Mr. JORDAN. I will definitely consider that. I appreciate the 

Ranking Member bringing it up. I think, in light of what we have 

uncovered here today, that that is something we need to think 

about. 

Mr. KUCINICH. I want to also say that in listening to this discussion and my friend, Mr. Kelly, has a way of continuing to hammer 

home about the benefits that are going to some at the exclusion of 

others, and that is a valid question, always is in this town. 

As you were talking, one of the things that occurred to me about 

this particular model in this discussion we are having, just to kind 

of let’s look at it from a different level, this is all about centralization of power, literally. We could have a different model, we could 

be decentralizing power, we could be investing in decentralization 

of power, get more people involved in manufacturing, let’s say, 

microtechnologies, for example. 

But when you have a centralized government and a centralization of power on business part, you put those two things together, 

there is a different philosophy at work here, and that is something 

that I just wanted to—that is not the subject of this hearing, but 

I just wanted to put that out there as an ongoing concern that I 

have, because inevitably people’s utility rates under one model are 

likely to be higher than they are under another model. 

Now, I just want to say that when Congress created this 1705 

program, which is the subject of this hearing, as I mentioned earlier, it appropriated $2.47 billion to pay credit subsidy costs for the 

energy projects, and this program because a partnership between 

the Government and the private sector, and this Committee held 

a hearing where we learned that the 1705 loan guarantee portfolio’s low-risk projects were likely to achieve a degree of success 

within this particular model. 

Now, there are some who feel, well, the 1705 portfolio is a bunch 

of companies on the verge of bankruptcy. That doesn’t appear to be 

the case. It appears to be a collection of projects with solid private 

and public sector backing, and I would like to hear from our witnesses on why they believe their respective projects will benefit 

their bottom line, the environment, but, most importantly, and it 

is the question that Mr. Kelly keeps raising and it is a valid quesVerDate Aug 31 2005 13:41 Jul 10, 2012 Jkt 000000 PO 00000 Frm 00074 Fmt 6633 Sfmt 6633 C:\DOCS\74874.TXT APRIL
71 

tion, how do the taxpayers benefit? I want you to tell me that too; 

I am interest. 

So let’s go, Mr. Mancini, your company, Cogentrix, was able to 

build this solar project in Southern Colorado. It is my understanding you obtained about a $90 million loan guarantee from 

DOE, that you have successfully built the project, clean energy is 

being sold to a major Colorado public utility. Tell me how this is 

a win-win for your company, the environment, the taxpayers. Tell 

the Committee. 

Mr. MANCINI. Ranking Member Kucinich, just a point of information before I answer the question. I just want to clarify that I am 

a managing director of Goldman Sachs. I have been with the company almost 20 years, and if there are any questions that you 

would like to present to Goldman Sachs, I would be happy here to 

answer those questions. So that would be unusual to draw attention to myself, but I think, for the record, I need to clarify what 

my role is. I am not the CEO, obviously, of Goldman Sachs, but I 

would be happy to answer any questions I can. 

To answer your question, with respect to the project that we 

funded together with the Government, what we did is advanced the 

technology and took it from I would call it a context in which it was 

being applied in the space program and put it in a different context 

to prove that that technology could be applied on a utility scale, 

commercial scale project to produce green power for the citizens of 

Colorado or citizens anywhere in the Country. So one of the benefits was to prove the hypothesis that this particular type of technology could in fact be deployed commercially. 

Mr. KUCINICH. Okay, I just want to thank you and I just want 

to respond to your calling to our attention that you are a managing 

director, and that is in commodities? 

Mr. MANCINI. Correct. I am a managing director in the Commodities Business Unit. 

Mr. KUCINICH. Okay. We want to talk to the person who runs 

Goldman Sachs. You don’t run the whole company. 

Mr. MANCINI. I do not, but one comment that I do think is very 

important to make is that in respect of the DOE loan program, 

there was no political favor. 

Mr. KUCINICH. Oh, you know what? Thank you for saying that. 

You have just said that for the record. 

Thank you, Mr. Chairman. 

Mr. JORDAN. Mr. Mancini, let me ask you this. If the gentleman 

just for one second. If the 1705 program had not been in place, 

would Goldman Sachs have funded, would you have put capital at 

risk in the Cogentrix project? 

Mr. MANCINI. If the 1705 program had not been available—— 

Mr. JORDAN. Just be clear. You are a wholly-owned subsidiary of 

Goldman Sachs. I know it is hypothetical, but if that money wasn’t 

there that you could get from the Government, from the taxpayer, 

would this have been a worthy project? Would Goldman say, you 

know what, we believe in this; this is a wholly-owned subsidiary; 

we are going to put up the cash? Would you guys have done it? 

Mr. MANCINI. Just remember, Mr. Chairman, our first stop was 

to no less than 10 commercial banks to see if we could get the 

72 

funding, including Goldman Sachs from the debt perspective, and 

we were not—— 

Mr. JORDAN. So the answer is no? 

Mr. MANCINI. Beg your pardon? 

Mr. JORDAN. So the answer is no, you would not have done it? 

Mr. MANCINI. We would not have done the project. The cost of 

capital would have been too expensive. 

Mr. JORDAN. Okay. I mean, again, I think that sort of proves our 

point. This is not where private venture capital would go, but it is 

okay to put the taxpayer money at risk. Is Goldman a major investor in Amanex Company? Are you guys an investor in that company as well? 

Mr. MANCINI. My understanding is we own 3 percent of Amanex 

and do not have any board seat. 

Mr. JORDAN. And what about Xcel Energy, do you have a direct 

financial interest in that company or an indirect interest in that 

company? 

Mr. MANCINI. We do not. There are funds that are managed by 

Goldman Sachs Asset Management, which is much like Fidelity or 

Vanguard, that puts together a portfolio of securities for investors 

in the mutual fund for which we earn a fee that is based not on 

the returns of any particular company within that portfolio, but 

just based on the raw dollar amounts that are vested across—— 

Mr. JORDAN. But would it be fair to say an indirect relationship 

in that there is a fund you manage which does have a direct relationship with Xcel Energy? 

Mr. MANCINI. I would say it is very tenuous, frankly. 

Mr. JORDAN. Okay, but there is some interest there. 

Mr. MANCINI. Not by Goldman Sachs. 

Mr. JORDAN. All right, I just want to ask this. The loan arrange- ment, the $90 million you got in the loan agreement from the Department of Energy, did that also in that agreement include the 

fact that Cogentrix needed to buy electricity—or Xcel would buy 

electricity from Cogentrix and that Amanex would be the solar 

panel provider to Cogentrix? 

Mr. MANCINI. Well, Xcel owns or controls the Public Service of 

Colorado. The Public Service of Colorado sells that electricity at no 

profit to its customers; there is no markup to their electricity because it is regulated in a specific way in respect of this project that 

does not allow them to pass through any additional costs or markup other than the cost of the power. 

Mr. JORDAN. But the question was the agreement, the loan 

agreement between the Department of Energy and Cogentrix included the details that a part of that agreement was that Xcel Energy and Cogentrix have a relationship and Amanex is the solar 

panel provider to Cogentrix, correct? 

Mr. MANCINI. The relationship between Cogentrix is with Public 

Service of Colorado. It has a power purchase agreement and Xcel 

is a parent company, but we don’t have any relationship directly 

with Xcel. 

Mr. JORDAN. Okay, but certainly with Amanex. 

Mr. MANCINI. Amanex is the panel provider. 

Mr. JORDAN. And that is in the agreement. 

Mr. MANCINI. Correct. 

73 

Mr. JORDAN. And Goldman has, and you have a direct financial 

interest in Amanex. 

Mr. MANCINI. Sure. Had nothing to do, though, with the selection 

of Amanex. Public Service of Colorado required us to use a certain 

type of technology; Amanex was one of four companies that were 

the leading manufacturers. 

Mr. JORDAN. Oh, yes, you had to use them. 

Mr. MANCINI. Our engineers then evaluated all four of those companies and based on the technology and the evaluation of the technology and the cost—— 

Mr. JORDAN. Do you have a financial interest in the others? 

Wait, wait. I just want to be clear. 

Mr. MANCINI. No, not to my knowledge. 

Mr. JORDAN. Oh, so it did work out that there were four possibilities, based on what you just said, and, oh, by the way, the one that 

was selected is the one that Goldman has a financial interest in. 

Mr. MANCINI. Only because it provided the best technology at the 

lowest cost, which was very important to PSCo. 

Mr. JORDAN. But certainly benefits Goldman. 

Mr. MANCINI. How it benefits Goldman is almost inconsequential, quite honestly. Because it has a 3 percent interest doesn’t 

mean—— 

Mr. JORDAN. So it is inconsequential that the company that was 

chosen of the four possibilities is the only one that Goldman has 

a financial interest in? That is inconsequential? 

Mr. MANCINI. That ignores the fact—— 

Mr. JORDAN. I don’t know—— 

Mr. MANCINI. Here is the fact, Mr. Chairman, that PSCo—— 

Mr. JORDAN. Particularly when—you have to go back to the first 

point. Particularly when Cogentrix is a wholly-owned subsidiary of 

Goldman Sachs. 

Mr. MANCINI. That ignores—— 

Mr. JORDAN. Just so you can see the chart, you have the Depart- ment of Energy giving $90 million taxpayer dollars to Cogentrix, 

and the part of the deal says, oh, by the way, the solar panels, four 

companies you can choose from and the agreement says you are 

one that Goldman has a financial interest in, Amanex. 

That is a pretty good deal for Goldman all the way around, isn’t 

it? Particularly when you said that we wouldn’t finance this, banks 

wouldn’t do it, but we can put the taxpayers on the hook for it, and 

we are going to make a lot of money. Based on what Mr. Crane had 

to said earlier, you put panels in the desert, this is a great deal 

for everybody. God bless America. This is wonderful. Except the 

ratepayers and the taxpayers. 

Mr. MANCINI. With all due respect, Mr. Chairman, the process 

that we went through in order to select a panel manufacturer was 

blessed by the independent engineers of DOE. It was also required—— 

Mr. JORDAN. Whoa, whoa, whoa. You just said the independent 

folks at DOE? If there is one thing we have proven here today, if 

there is one thing that is completely clear, it is not independent. 

We have emails going back and forth, edit this for us, this is a letter we are going to send to the White House chief of staff; hey, here 

are the answers to the exam, you guys get them; you can paraVerDate Aug 31 2005 13:41 Jul 10, 2012 Jkt 000000 PO 00000 Frm 00077 Fmt 6633 Sfmt 6633 C:\DOCS\74874.TXT APRIL
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phrase, you can plagiarize; send it back to us. If there is one thing 

we have proven, it is not independent. 

Mr. MANCINI. The engineers that are advising DOE are not our 

engineers, meaning they are advising someone other than us. So 

they had to make an independent judgment, that was not our judgment, that in fact they agreed that Amanex was the better technology at the lowest cost to ratepayers. 

Now, PSCo, at the end of the day, also had to bless Amanex as 

the supplier, and they did so as the lowest cost provider. So to suggest that there was some sort of—— 

Mr. JORDAN. Well, let me ask you this. So you would have preferred that—well, it is certainly a benefit that Amanex was the one 

selected by the so-called independent engineers? 

Mr. MANCINI. Could you say that again? 

Mr. JORDAN. It is certainly better for Goldman that Amanex was 

selected by the independent engineers? 

Mr. MANCINI. To suggest that we would put $116 million of our 

equity capital into a project because a 3 percent interest—— 

Mr. JORDAN. I am not suggesting that. What I am suggesting is 

the deal is pretty good. And you have to go back to the first point: 

you are a wholly-owned subsidiary of Goldman Sachs. As you just 

told Mr. Kucinich, you sit on the board of Goldman; you are one 

of the managing directors. 

Mr. KUCINICH. Would the gentleman yield? 

Mr. JORDAN. I would be happy to yield. 

Mr. KUCINICH. I just want to associate myself with your line of 

questioning. Thank you. 

Mr. MANCINI. What you are suggesting is that Goldman Sachs and Cogentrix would put $116 million of its equity at risk in order 

to benefit itself in some way indirectly through a 3 percent interest 

in a company that—— 

Mr. JORDAN. I am not suggesting that. I am just suggesting that 

there is this close-knit relationship up and down the line, and there 

is this cozy relationship between the Department and folks who are 

getting a loan. That is what I am suggesting. I am not saying it 

is a bad thing you did this or bad that it worked out this way; I 

am just pointing out this is what is involved here, and this is why 

we are having the hearings, and this is why the American taxpayers are saying this is not what we are supposed to be doing. 

This is not the way the system is supposed to work. 

Mr. MANCINI. Mr. Chairman, this depiction is incorrect, I am 

sorry. To suggest that we have an interest in Xcel Energy that 

somehow is benefitting Goldman Sachs is just not correct. 

Mr. JORDAN. I think the focus of my questioning, though, once 

you pointed that out to me, my focus on my questioning wasn’t on 

Xcel. I accept that point. I am not coming down the lefthand side; 

I am coming down the right-hand side. 

Mr. MANCINI. If we are making a decision—— 

Mr. JORDAN. I will concede that. 

Mr. MANCINI. If we are making a decision to put as much as $116 million at risk for a tenuous and minimal return that might, 

might occur to a company in which we own 3 percent, that would 

be completely irrational on the part of Goldman Sachs, Cogentrix, 

and all of its constituencies, including its shareholders. 

75 

Mr. JORDAN. My point is it at least raises some concern, in light 

of what we have seen with the way the Department of Energy dealt 

with Prologis, the sharing of emails, the sharing of information; in 

light of the fact that Mr. Crane has been to the White House seven 

different times; in light of the fact that we got letters being drafted 

that are going to go to the White House chief of staff from the 

chairman of the board of BrightSource. 

I mean, at some point you have to say where does this all end? 

What really took place in here? No wonder a whole bunch of these 

companies didn’t get a chance, because the ones that did were so 

close with the Government, we see why the projects got approved. 

Mr. MANCINI. Mr. Chairman, I understand why you have raised 

some of the questions you have raised about other people on the 

panel. I understand that. I don’t come to any conclusions myself 

with respect to any of those, but I can only tell you that with respect to the one loan that we applied for, received, it had nothing 

to do with any relationships with anyone in the Administration, 

the White House; it was done on its merits—— 

Mr. JORDAN. How much money—what is the dollar amount of the 

interest you have in Amanex, do you know? 

Mr. MANCINI. It is less than $10 million, I believe. 

Mr. JORDAN. Okay. I mean, that is still real money. 

Mr. MANCINI. Yes, but in relation to—I guess my point is in rela- tionship to $116 million that we are putting on the line for this 

project—— 

Mr. JORDAN. Nine percent. 

Mr. MANCINI. Sorry? 

Mr. JORDAN. Ten million out of 116 is still pretty significant. 

Mr. MANCINI. I think, frankly, it would be completely imprudent for us to risk $116 million to protect $10. So with all due respect—— 

Mr. JORDAN. I am not arguing with that fact. All I am saying is 

if one of the four is the one you happen to have an interest in, all 

the better. You will concede that, right? 

Mr. MANCINI. If it happens by coincidence to be the case, sure. 

Mr. JORDAN. No, no, it is not by coincidence. 

Mr. MANCINI. It is completely by coincidence. 

Mr. JORDAN. No, you just told me the expert said it was the right 

thing to do. 

Mr. MANCINI. Well, all I am saying is that we had people, not 

only our own engineers who were evaluating the technology and 

the cost, but the engineers that were advising the DOE and Public 

Service of Colorado itself all had to bless the same thing. 

Mr. JORDAN. Okay. I thank the gentleman. 

We yield now for our final round of questioning to the gentleman 

from Pennsylvania. 

Mr. KELLY. Is that a general sigh of relief from the panel? 

You know what, I know this is uncomfortable for you. Mr. 

Mancini, I understand when you said we would never risk $116 

million on such an imprudent project, and I get that. 

Mr. MANCINI. I said we wouldn’t risk $116 million to protect $10 

million. 

Mr. KELLY. Okay. All right. How about the American taxpayers 

putting $15 billion at risk? Was that being prudent? Because I am 

76 

going to shift very quickly because there is an old adage out there 

where I come from: it is not what you know, it is who you know. 

And obviously there is another part to that, it is who knows you. 

So you may know a lot and you may know some people, but the 

real defining answer to this is when that phone call goes to somebody that says I need help or I need you to weigh in on this, some 

people say tell him I am not in, tell him I am on another call. If 

it is somebody that you know, you say put the call through. I am 

just saying that for these 25 companies that were able to get 

through this feeding frenzy and cut through all these different 

navigations, somebody obviously appreciated the fact and knew 

who was on the other end of the phone. 

So having said that, Ms. de Rugy, because we really lost sight 

of what this is about. This whole program, if I understood it correctly—and I don’t fault any of these people for taking advantage 

of a program that was out there that gave them money at very low 

rates. Why would you pay it back ahead of time? I mean, my gosh, 

that would be stupid. You don’t pay back loans you don’t owe a lot 

on; you pay back the ones where the heaviest weight are. I mean, 

everybody gets that. The ones you owe the most on your credit 

cards, some of those ones at 18 percent, you want to make sure you 

lower that principal in a hurry; you want to pay it all back and get 

it off your plate. But when you don’t owe anything, when there is 

no big number on it, I understand why they don’t do it. 

But at the end of the day, at the end of the day, we were led 

to believe that if we invested all this money there was going to be 

a return on this investment, and the return on this investment 

that we were going to give people who were sitting at home, unable 

to find a job, a job; and this great opportunity that was out there 

was going to create these jobs. What was the number of jobs that 

were supposed to be created? 

Ms. DE RUGY. Well, originally, I think the claim made by the Department of Energy was that investing in green technology through 

this loan would bring 5 million. 

Mr. KELLY. Five million jobs. Do we know exactly what the number is? 

Ms. DE RUGY. Well, when I looked yesterday—— 

Mr. KELLY. I mean, not the game numbers; not when you took 

a guy who was driving a bus that was powered—— 

Ms. DE RUGY. No, sir. I mean, according to the Department of 

Energy, permanent jobs through the 1705, it comes down to 2,388 

jobs. 

Mr. KELLY. So we invested—what was the total amount we invested? 

Ms. DE RUGY. Sixteen, roughly $16 billion. 

Mr. KELLY. Sixteen billion. 

Ms. DE RUGY. Yes. 

Mr. KELLY. That is with a B, billion. 

Ms. DE RUGY. Yes. So it is an exposure for taxpayers of 6.7 million. But really this number is relatively meaningless. I mean, 

think about it this way: this is the taxpayers’ exposure per job, but 

the reality is if the company defaults, right, there are no jobs created, this is what we saw with Solyndra where, in fact, $538 milVerDate Aug 31 2005 13:41 Jul 10, 2012 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 C:\DOCS\74874.TXT APRIL
77 

lion will have to be repaid by taxpayers in one way or another, and 

in the end there were zero jobs created. 

Mr. KELLY. So they get whipsawed; they get it in both ends. 

Ms. DE RUGY. Yes. 

Mr. KELLY. So I am just trying to understand because, to me, 

this is not a Democrat or Republican situation; this is where we 

took American taxpayer money and we put it down on the green. 

Not the red or the black, but the green. And we spun the wheel 

and we said, you know what, I bet we are going to win in this and 

I bet we are going to create 5 million jobs. So we put all that 

money, said put it on the green because I know we are going to 

win, and at the end of the ay what did the American taxpayers 

win? 

Ms. DE RUGY. I think it comes down to the ability of the Government to create jobs, and it can’t. I mean, it can, obviously, pay for 

some jobs, but to create sustainable jobs that will sustain themselves when the Government money is gone, the Government can’t 

do this. 

Mr. KELLY. Sustainable jobs only come from the private sector. 

That is just the way it works. 

Ms. DE RUGY. Exactly. The private sector is the one that can actually sustain jobs and create economic growth, for that matter, 

and the private sector has been also pretty good at even leading 

the way on green energy. 

Mr. KELLY. Sure. Well, and you know why. But this has been the 

most irresponsible waste of taxpayer money that I have seen in my 

lifetime, and I have been around for a little bit now. But to me it 

is just incredible that we can sit back and say mission accomplished. This is ridiculous what we have done to the American taxpayer, and then continue to ask them keep funding this, by the 

way, because I am sure somewhere there is a pot of gold at the end 

of the rainbow. 

Ms. DE RUGY. If I may add something. I mean, I don’t know 

whether it is the most irresponsible thing; I think the Government 

does a lot of very irresponsible things. 

Mr. KELLY. Well, this is the one we are talking about today. 

Ms. DE RUGY. Certainly. But, more importantly, there is something I don’t quite understand, which is how we can reconcile the 

idea that these projects are low risks and at the same time these 

projects could not have found funding for themselves. If they are 

actually low-risk, if one of the conditions for the company to get 

money is to actually have secured a source, a customer, a secured 

customer for the next 20 years, I mean, it seems like a pretty safe 

bet, and why wouldn’t a private company go ahead and fund this 

project? 

Moreover, I find it surprising that while some of the companies 

involved have had a hard time maybe finding funding in capital 

while the recession was going on and while European banks were 

in trouble, it does seem that it is also the same time where everyone in America is hurting, and it seems somewhat irresponsible to 

be asking taxpayers then to jump in to take that risk. 

Mr. KELLY. Well, you can actually do that when it is not your 

own money that is being risked. It is a very easy bet to make when 

78 

it is not your money. When it is your money, it is a much more 

difficult risk to take. 

Ms. DE RUGY. I do not understand. If it is really low-risk, which 

I am willing to—— 

Mr. KELLY. Well, you make a good point. It is hard to understand, and the reason it is hard to understand is because it doesn’t 

make sense. It is not common sense to the average guy who goes 

out there and average girl that goes out there every day that has 

to pay their own bills out of their own pocket. When they have 

their own skin in the game, when their nose is the one that is getting bloodied, they know the difference. 

And whenever you can take money from somewhere other than 

out of your checkbook or out of your pocket and go ahead and put 

at risk, that is an easy roll of the dice. When it is your own money 

that you took so long to earn and it is hard to pay back, then it 

is a much tougher bet to make. We have just made a very, very 

easy bet using taxpayer dollars. 

Chairman, I appreciate the opportunity to be here and I really 

appreciate you all being here. Listen, I don’t discredit you for doing 

what you did, okay? It makes sense. It makes sense. It makes 

sense to you. Unfortunately, it doesn’t make sense to the taxpayers 

whose money was what was wagered, okay? Just as long as we 

clear the air on that. 

And I know it is difficult to sit here and listen to us, but I have 

to tell you I don’t represent me; I represent 705,687 people in Western Pennsylvania, and they are not all Republicans. And they tell 

me all the time you think you have a low approval rating, you 

ought to try and work with ours. It is very difficult. So I have to 

tell you people have lost confidence, and the reason they have lost 

confidence is because we have shown them time and time again we 

will risk their money any time we have a chance. So thank you for 

being here. 

Mr. Chairman, thank you very much. 

Mr. JORDAN. I thank the gentleman. I want to thank our Ranking Member; mostly thank our witnesses. 

Do you want to say anything? 

Mr. KUCINICH. Just briefly. 

You know, within the closed system of the legislation that created 1705, you can make the argument, well the program within 

that system and the way it was designed that it has been successful. But I think that this Committee has asked the right questions 

in raising the question about who the winners and losers are here. 

And when I heard the gentlelady from Mercatus speak about the 

fact that you have so many businesses out there, they are not getting access to capital. I mean, I know and members of this Committee know that the Federal Reserve famously was giving money 

to big banks and the big banks weren’t turning around and loaning 

it to people. People in my district, who had great credit ratings, 

who had been in business for 30 years or more, Mr. Chairman, and 

people who were stalwarts in their business communities, their 

credit dried up. 

So we cannot be unmindful of the fact that we are designing systems here which do pick winners and losers. And I will go again 

to my friend Mr. Kelly; that has to be something we have to pay 

79 

attention to. And when we get to some of the largest companies in 

America who have been able to get advantages that smaller companies couldn’t, those are really important questions that are raised. 

With all due respect to the gentlemen who probably know more 

about putting finance deals together for energy than anybody, 

these are questions this Committee has to raise because there are 

a lot of people out there asking, hey, why not me? How come I 

didn’t get in on this? How come they did, I didn’t? What is the connection? 

And in this time in Washington, when there is such suspicion on 

both sides of the aisle about where the money is coming from, why 

it is going there, why somebody gets a contract, why somebody 

doesn’t get a contract, notwithstanding Mr. Mancini’s comments 

about, well, there is no influence that was used here, listen, Goldman Sachs is synonymous with influence over the Government, 

and that is what we all feel here. So it is not like some big moment 

when you say, well, there was no influence. I heard giggles up 

here, with no insult to you. 

That is how we seem to figure this out. And you don’t have to 

be Matt Taibi, who has studied Goldman Sachs pretty carefully, to 

understand that Goldman Sachs has a reputation around here of 

being able to have massive influence. So you are going to have forgive the members of this Committee for raising that question back 

at you. 

So have a lovely day. Thank you. 

Mr. JORDAN. I thank the gentleman. I want to thank our witnesses. I know it is not always the best experience, but you all did 

a great job. We appreciate you taking the time to be here and the 

work you are doing, and we will adjourn the Committee. 

[Whereupon, at 12:13 p.m., the subcommittee was adjourned.] 

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