An Oregon newspaper’s investigation into the state’s support for a massive wind project is scratching at old wounds about the federal Energy Department’s loan-guarantee program.
A series of stories by Oregonian reporter Ted Sickinger has raised questions about the state energy department’s decision to offer tax credits to Caithness Corp.’s Shepherds Flat wind project. But his latest article also cites past divisions within the White House about federal support for the project, which the U.S. Energy Department awarded a partial loan guarantee of $1.3 billion in 2010.
“The Obama administration pushed hard on incentives for Shepherds Flat,” wrote Sickinger, whose story cites documents that the House Oversight and Government Reform Committee obtained during its investigation of DOE’s most infamous loan guarantee recipient – the now-bankrupt solar manufacturer Solyndra.
Of course, Shepherds Flat has some notable differences from Solyndra, which went belly up after receiving its $535 million loan guarantee. For one thing, Caithness still exists, and Shepherds Flat – one of the world’s largest wind projects – is actually generating electricity.
The federal DOE isn’t the main target of The Oregonian’s stories, which largely have raised questions about the state’s decisions to award a total of $30 million in tax credits to the 845-megawatt wind project. Sickinger’s stories argue that Shepherds Flat received three separate state tax credits when it qualified for only one.
“For Shepherds Flat wind farm, the $30 million in tax credits that received final approval from Oregon Department of Energy last month were frosting on a multilayered cake of federal, state and local subsidies,” Sickinger wrote for a story posted online Sunday. “Its developers gorged themselves on hundreds of millions of dollars from taxpayers, and government officials were well aware it was over-subsidized.”
Caithness Corp. didn’t respond to a request for comment from POLITICO about The Oregonian’s stories.
Both Sunday’s story and a February Oregonian article cite an October 2010 memo to President Barack Obama from then-economic adviser Larry Summers, then-energy adviser Carol Browner and Vice President Joe Biden’s then-chief of staff, Ron Klain, seeming to express reservations that the state and federal governments would end up providing “significant subsidies” to Shepherds Flat while the project’s sponsor would “provide little skin in the game.”
The memo also says the project could raise issues of “double dipping” with the project slated to receive a variety of state and federal tax breaks, a Treasury grant, a loan guarantee and premium payments for the generated electricity. The trio added that “this project would likely move without the loan guarantee,” citing favorable market conditions for private financing of wind projects.
The memo doesn’t explicitly argue against aiding Shepherds Flat but says the federal loan guarantee “illustrates some of the economic and public policy issues raised by OMB and Treasury” regarding DOE’s program.
Solyndra’s failure provoked more than 18 months of investigations by House Republicans as well as a durable campaign talking point for Mitt Romney, who accused Obama of supporting “losers” with taxpayers’ money. Republicans weren’t able to prove allegations that DOE had set out to reward Obama’s campaign donors, although they did uncover emails showing that some administration officials had expressed doubts about the solar company’s future.
In contrast, federal officials didn’t seem to have much doubt that the Shepherds Flat project would progress. Still, The Oregonian cited an email from Jim McCrea, a credit adviser in DOE’s loan program office, suggesting heavy interest from the White House to make a decision on Shepherds Flat. “Pressure is on real heavy on SF due to interest from VP,” McCrea wrote to a contractor in September 2010.
Sickinger’s article Sunday acknowledged that the Shepherds Flat project has its merits but says it’s “dubious” to link them to the state’s decision to award the $30 million in tax credits.
“There’s little doubt that Shepherds Flat adds luster to Oregon’s green ambitions,” The Oregonian’s story says. “Though its renewable energy credits flow to California, it generates lots of clean power. Politicians can point to property taxes and community service fees for rural counties, big lease payments for handful of landowners, and 45 permanent jobs.”
On the other hand, the newspaper says, “The project was up and running before Oregon made its final decision.”
|Wind Watch relies entirely
on User Funding