NEI Official Faults DOE's Handling of Federal Loan Guarantee Program

February 5, 2009

Nucleonics Week

A Nuclear Energy Institute official said February 3 that
DOE has done such a poor job of running a program to providefederal loan guarantees to clean-energy projects that it
may be time to move the program to another agency that is
better equipped to handle the job.
Derrick Freeman, senior director for government affairs
at NEI, said in an interview that DOE is taking far too long
to issue the billions of dollars in federal loan guarantees that
Congress authorized in major energy bills in 2005 and 2007.
DOEs inability to move the program, to get the program
going full steam ahead is of great concern for a lot of
folks, Freeman said. Democrats and Republicans [alike] are
saying, What the heck is going on at DOE?
Freeman said DOE was not designed to deal with the
types of issues associated with the loan guarantee program,
which include assessing applicants creditworthiness and
judging the economic viability of high-risk energy projects
that commercial banks are often reluctant to finance.
Theres a question about whether an agency that is not
equipped and has never taken on such a large task is adequately
able to hold the program, said Freeman, who added that
the program could be moved to another federal agency.
Congress created the loan guarantee program in the
Energy Policy Act of 2005 as a way of supporting financing
for advanced energy projects including wind farms,
nuclear power plants and advanced coal plants that eliminate
or sequester carbon dioxide emissions that are blamed
for global climate change.
DOE has made three rounds of solicitations since fiscal
2007 but has not yet awarded a loan guarantee.
Dan Leistikow, DOEs public affairs director, acknowledged
that the department has not moved as quickly as it
would like on the loan guarantee program. But new Energy
Secretary Steven Chu is committed to speeding up the
process, Leistikow said.
Fixing the program is a top priority for Secretary Chu
so that we can get moving with investments that will build
a new energy economy, put Americans back to work and
address the climate crisis, Leistikow said.
Several senior lawmakers have questioned DOEs handling
of the program in recent years, including Senator Jeff
Bingaman of New Mexico, the Democratic chairman of the
Senate Energy and Natural Resources Committee. At Chus
confirmation hearing last month, Bingaman said theres
been a lot of frustration here in our committee and more
generally, I think, about the length of time its taken to
implement some of what we have previously enacted
regarding the loan guarantee program.
We still have no loan guarantees that have been made
under the program, Bingaman said. I guess my question to
you is whether you are confident that the department will
be able to implement all of the new responsibilities that are
contemplated in this economic recovery bill for the department,
and do so in a rapid and responsible way.
Chu said he shared Bingamans concern and that he
would work to improve the loan guarantee program.
NEIs Freeman said he backs a bill that Bingaman introduced
last year that would create an independent, quasi-government
corporation to issue loan guarantees for advanced
nuclear projects.
Bingamans spokesman, Bill Wicker, said February 3 that
the energy committee will hold a hearing soon to examine
the delays with DOEs loan guarantee program. Freeman said
he hoped the committee would re-examine Bingamans bill
in the forthcoming hearing.
Samuel Bodman, who was energy secretary under former
President George W. Bush, acknowledged at the end of his
term in office that he struggled to hire the types of financial
experts who were needed to run the program. But Bodman
said DOE ultimately put a good team in place.
DOEs loan guarantee program could receive tens of billions
of additional dollars under the massive economic
recovery package that is winding its way through Congress
(see story, page 1).Dipka Bhambhani, Washington