Bloomberg News

BrightSource Warned of Embarrassment to Obama in Loan Delay

June 06, 2012

BrightSource Energy Inc. (BRSE:US) warned Energy Department officials in March 2011 that delays in approving a $1.6 billion U.S. loan guarantee would embarrass the White House and force the solar-energy company to close.

In a 19-page PowerPoint presentation reviewed by Bloomberg News, BrightSource described its cash position at the time as “precarious” and said the Ivanpah solar project in California being built with Department of Energy aid was in danger of collapse. The company won the guarantee a month later.

The 2011 appeal was part of a lobbying push by BrightSource that included hiring as a lobbyist the former chief of staff for Senator Joe Biden, now the vice president, and visits to the White House by executives.

“Due to the criticality of situation, BrightSource now holding weekly board meetings to discuss cash position and status of DOE loan,” according to the presentation the company said was shown to the department.

The California project’s end would threaten the company’s existence and embarrass an administration that had sought to showcase its backing of clean-energy projects as a way to create jobs, the company said.

The Wall Street Journal reported on the lobbying effort in today’s edition.

‘Exhaustive Analysis’

The Energy Department in April 2011 approved the guarantee for BrightSource’s Ivanpah project, the largest made by the department in the $16 billion clean-energy program financed in the 2009 economic stimulus.

Eric Schultz, a White House spokesman, said in an e-mail that BrightSource won its award on the merits of its application.

The award followed an “exhaustive legal, technical and financial analysis by career officials at the Department of Energy as well as reviews by outside experts,” Jen Stutsman, a department spokesman, said in an e-mail.

Republicans in Congress started several investigations into the loan program following the collapse of solar-panel maker Solyndra LLC in September. The Fremont, California-based company had received a $535 million loan guarantee from the Energy Department, two years before it filed for bankruptcy protection.

The House Oversight and Government Reform Committee has focused on awards to other companies, including BrightSource, highlighting what Republicans have said was a cozy relationship between executives and investors and the White House.

Anybody Contacted

“To be perfectly clear, we did urge the government to make a decision on our loan guarantee application,” the company said in a blog post on its website today in response to the Journal story. “We spoke to anybody who would listen about this great project.”

John Bryson, a former chairman of BrightSource, took over in October as head of Obama’s Commerce Department.

By March 2011, the government had spent four years reviewing the project, BrightSource said. Google Inc. (GOOG:US) and NRG Energy Inc. (NRG:US) have committed to investing $468 million in the project, giving them a majority stake, BrightSource said.

The project will produce electricity to light 140,000 homes, the company said. It has contracts lined up with utilities to purchase the power for up to 25 years.

A federal review of the loan program found that the risks to taxpayers were less than Congress or the Energy Department anticipated.

Jobs Added

Projects such as Ivanpah with contracts to sell power to utilities were judged safer bets than manufacturers like Solyndra, according to review.

Stutsman said the project has been a success, putting about 1,700 people to work at the site and with suppliers in 17 states.

BrightSource also hired Bernard Toon, a chief of staff to Democrat Biden during the 1990s when he was in the U.S. Senate, as its lobbyist.

White House visitor logs show Toon visited Alan Hoffman, Vice President Biden’s deputy chief of staff, on March 9, 2011, three days after Toon registered to lobby for the company.

BrightSource paid Toon’s firm $40,000 to lobby for the project, part of a total $530,000 it has spent to influence policy in Washington since 2010, federal records show.

The company said it hired Toon because he had previously lobbied for BrightSource contractor Bechtel Corp. and was familiar with the Ivanpah project. Toon said he couldn’t talk about the work he’s done on behalf of his clients.

No Role

The vice president’s office said today it had no role in the Ivanpah decision, and didn’t follow up after the meeting by contacting the Energy Department on the company’s behalf.

After the department referred a list of pending announcements on solar energy, Biden’s office responded with a note about interest in events set for mid-April and asked whether BrightSource’s announcement could be postponed until then.

The award was announced in April.

While BrightSource says Ivanpah is one-third complete, in March 2011 a collapse was considered possible, the company warned.

Given the loan program’s high profile -- President Barack Obama mentioned it in a weekly address in 2010 -- failure of the Ivanpah project will be a “major embarrassment” and White House policy goals will be “frustrated,” the company said.

Tortoise Relocation

Further delay would cause schedules to slip in part because the company would lose a window in which it was allowed to relocate tortoises from the construction area, according to the briefing to the Energy Department.

The department will be “known as responsible for a very high-profile failure,” the company said.

Previously released e-mails from BrightSource show that the company asked the executive director of the loan program to review a letter that urged the White House to act on the loan. The letter was to be sent to William Daley, the White House chief of staff.

Jonathan Silver, who has since left the department, urged the company to tone down the letter, in a response sent from his personal e-mail account.

“The ongoing work does not speak to a lack of urgency; it speaks to a need to ensure that there is limited risk to taxpayer exposure,” Silver wrote, according to the e-mail, which has been reviewed by Bloomberg.

BrightSource Chief Executive Officer John Woolard told lawmakers at a May 16 House Oversight and Government Reform Committee hearing that the company didn’t send the letter, deciding “that it was not appropriate” to write Daley.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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