Another Obama-backed energy firm nears insolvency. Hey, is there an echo in here?
posted at 3:01 pm on July 5, 2012 by Erika Johnsen
Breaking news: The Obama administration has once again demonstrated a phenomenal knack for trying to pick economic winners and losers, and invariably picking losers. It’s shocking, I know. (Hint: If the government feels the need to “invest” in a venture, because the private sector hasn’t or won’t… right away, wrong.)
This time, it isn’t solar, but rather a Department of Energy-backed geothermal company that’s having trouble keeping its head above water.
A geothermal energy company with a $98.5 million loan guarantee from the Obama administration for an alternative energy project in Nevada — which received hearty endorsements from Energy Secretary Steven Chu and Senate Majority Leader Harry Reid — faces financial problems, and the company’s auditors have questioned whether it can stay in business.
…Nevada Geothermal Power (NGP) has incurred $98 million in net losses over the past several years, has substantial debts and does not generate enough cash from its current operations after debt-service costs, an internal audit said. …
But Rep. Jim Jordan, Ohio Republican and chairman of the House Oversight and Government Reform subcommittee on regulatory affairs, stimulus oversight and government spending, is concerned about NGP’s finances and the timing of the loan guarantee.
“The company was in danger of defaulting on its financial obligation, and the [Department of Energy‘s] assistance served as a de facto bailout,” Mr. Jordan said. “After receiving a taxpayer-backed $98.5 million loan guarantee, the company is still struggling.”
And before you ask, yes, this is the same company that Senate Majority Leader Harry Reid lauded as a job-creator that would help Nevada tap its potential as the “Saudi Arabia” of geothermal energy. But if Nevada were really the Saudi Arabia of geothermal energy, why the heck would the government need to be dishing out loan guarantees to support it? Even with federal support, NGP is on the struggle-bus — and yet again, the taxpayers are the ones who stand to lose. Thanks for nothing, feds.