WASHINGTON – Independent U.S. Senate candidate Angus King is defending his former wind energy company against Republicans who say it shouldn’t have benefited from a federal loan guarantee program that critics contend is investing billions of taxpayer dollars on risky projects.
House Republicans say Record Hill in Roxbury, and 26 other alternative energy projects receiving help from the Department of Energy, are at risk of failing.
They point to the high-profile bankruptcy last year of Solyndra, a California solar company that received a $535 million loan guarantee. The company borrowed $528 million, and a company official has said the government is unlikely to recover the money, according to the Wall Street Journal.
But King says taxpayers and consumers already are reaping benefits from the electricity being generated by Record Hill and that the company of which he used to be part owner, Independence Wind, made its first quarterly loan payment, about $1.5 million, last week.
“The project is operating and actually is ahead of its production schedule,” he said. “The (financial) risk now basically is that the wind won’t ever blow again, and that is a pretty low risk.”
The Obama administration granted a $102 million federal loan guarantee to the 22-turbine, 50-megawatt Record Hill project last year. The project’s total cost was about $130 million, with King and other investors putting up the difference.
After declaring his Senate candidacy last month, King transferred his stake in Independence Wind to his business partner, Rob Gardiner, former president of the Maine Public Broadcasting Network.
The move sparked new criticism of King, because the House Committee on Oversight and Government Reform released its report criticizing the loan program – and the Record Hill project, in particular – two days later.
King called it an “amazing coincidence,” but said he had decided to leave the company more than a week earlier, on March 12, before he knew anything about the congressional investigation.
Gardiner said he alone received the committee letter about the investigation on March 16, and he didn’t tell King about it until March 20, the day the report was released and after the transfer of King’s stake was complete. Gardiner also said King’s sale of his stake was in the works before he received the letter about the House GOP investigation.
The report says the DOE didn’t abide by its own rules in issuing many of the loan guarantees.
In the case of Record Hill, the report says, the turbine technology used by the company wasn’t truly innovative – and thus did not meet one of the criteria for obtaining a loan guarantee. The report also said that other investment by the wealthy Yale University Endowment meant that a federal loan guarantee really wasn’t needed.
The report warned that the “dysfunction, negligence and mismanagement” of the DOE program put taxpayers in danger of losing more money if projects such as Record Hill also fail financially.
“The significant losses absorbed by taxpayers as a result of Solyndra’s collapse is just the beginning,” the report said.
But a spokesman for Yale said the federal loan guarantee was needed.
“We don’t believe the project would have gone forward without (it),” said Tom Conroy, a Yale spokesman. “Financing for such projects had dried up.”
House Democrats on the oversight committee say the investigation is politically motivated.
For its part, the Department of Energy says it stands by the “strength of the department’s overall portfolio of clean energy loans” and believes in the innovative value of technology deployed by Record Hill designed to prevent the wind turbines from having to shut down during times of high turbulence.
Regardless of the political storm raging over the Solyndra bankruptcy and the rest of the loan guarantee program, King says the Record Hill project met all of the Department of Energy’s criteria.
“They (House Republicans) took issue with every single loan done under this program,” King said. “I don’t take it as being critical of us. We followed the regulations. And in our case it was an exhaustive process” of about 20 months to persuade DOE to extend the loan guarantee.
DOE gave preliminary approval for the loan guarantee in March 2011 and final approval in August 2011.
In the midst of the approval process, U.S. Rep. Chellie Pingree, D-1st District, wrote a brief letter of support to DOE, as did many lawmakers around the country in support of alternative energy projects in line for federal loan guarantees, saying that project “has received all necessary local and state permits.”
Pingree is married to S. Donald Sussman, majority share owner of The Portland Press Herald/Maine Sunday Telegram.
“The project will create a new source of renewable energy and provide for hundreds of good paying construction jobs,” Pingree wrote, in a letter first reported on last week by the Maine Wire.
King said he didn’t want to go to Washington – if he wins the seat being vacated by GOP Sen. Olympia Snowe of Maine – as a senator tied financially to an energy company.
“I left a substantial investment on the table,” King said, saying his potential personal loss from divesting in Independence Wind was “well into the six figures.”
He wouldn’t have divested if he hadn’t decided to run for Senate, King said.
The House oversight committee’s investigation of the entire loan guarantee program remains ongoing, a spokesman for the GOP part of the committee said.
Independent Wind’s Gardiner says he isn’t worried about what the investigation might turn up.
“The criticisms leveled at Record Hill wind were not worrisome for us at all,” Gardiner said. “The project is up and running and we are paying back the note as planned. There is no taxpayer concern at all.”