[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





 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
                                _____

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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   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    DENNIS J. KUCINICH, Ohio, Ranking 
    Chairwoman                           Minority Member
CONNIE MACK, Florida                 JIM COOPER, Tennessee
RAUL R. LABRADOR, Idaho              JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          BRUCE L. BRALEY, Iowa
FRANK C. GUINTA, New Hampshire
MIKE KELLY, Pennsylvania











                            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

 
 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.
    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.
    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.
    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 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 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.
    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:]





    
    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, 
nationally-scaled 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, 
multi-phase project that would generate power for the grid in 
up to 28 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:]





    
    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 cannot 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:]





    
    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 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:]





    
    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 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:]





    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 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----
    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 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.
    [The information follows:]





    
    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.
    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.
    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?
    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 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?
    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?
    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.''
    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 
agreement, 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 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.
    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.
    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----
    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.
    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 hear amongst the panelists today, or at 
least the members, is a reflection 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. The statement that you made that, in blunt terms, we 
don't get repaid 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 ground-
mounted 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 
documents 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 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 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.
    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 question, 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 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 
arrangement, 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.
    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 
Department 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 paraphrase, 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.
    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 relationship 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 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 million 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 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 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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