Energy chief would be ‘very surprised’ if loan program lost $3 billion

Energy Secretary Steven Chu said Thursday he is confident the federal government will lose less money on the Energy Department’s loan program than a recent analysis predicted.

The analysis, which was mandated by the White House in the aftermath of the Solyndra collapse, estimated that the federal government could lose up to $3 billion from the loan program.

“I would be very surprised if we lost that,” Chu told reporters Thursday after testifying before the Senate Energy and Natural Resources Committee on his department’s budget blueprint.

Chu said the Energy Department has put in place a series of procedures to anticipate problems with loan recipients.

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“If it looks as though there’s a rapidly changing ecosystem or if a company doesn’t meet a milestone, we’re going to have to ... trade off whether we’re going to continue to disperse money or whether we’re going to say, ‘I’m sorry, it doesn’t look like the likelihood of payback is going to be there,’ ” Chu said.

The Energy Department has set up what Chu called a “risk committee” to assess the stability of loan recipients.

The White House-mandated analysis — which was conducted by Herb Allison, the former Treasury Department official who oversaw the Troubled Asset Relief Program — estimated a lower taxpayer risk from the loan program than previous estimates by Congress and the Energy Department.

Congress had set aside $10 billion to make up for potential losses from the loan program, and the Energy Department has previously estimated the program's risk to be a little more than $5 billion.

The White House tapped Allison to review the loan program amid a furor over the Energy Department’s $535 million loan guarantee to Solyndra. The California-based solar panel maker filed for bankruptcy and laid off 1,100 workers last year, about two years after receiving the loan guarantee.

Republicans pounced on the bankruptcy, arguing that the Energy Department didn’t adequately vet loan recipients and raising broader questions about the Obama administration’s renewable energy investments.

While the analysis did not review the Solyndra loan, it recommended a series of improvements aimed at ensuring better oversight of the loan program.

The Energy Department’s loan program was established in a 2005 energy law and expanded in the 2009 stimulus. It is intended to back energy projects that might not otherwise attract private financing, a goal that carries inherent risk, according to the administration.