Crony Capitalism Alive and Well in Sen. Harry Reid's Nevada

The Department of Energy strikes again. It looks like another pie in the sky “renewable” energy boondoggle is about to go bust. Nevada Geothermal secured $79 million in loan guarantees along with an additional $66 million in federal government grants. But that’s not enough to pay the bills:

But even before it applied for the Obama administration incentives, problems at the plant cropped up. Company executives have variously predicted the plant could generate as much as 45 megawatts, after accounting for energy needed to power it.

Yet when the plant started up in October 2009, only 27 megawatts of net power were initially generated from the hot water pumped from the earth. That was not enough for the company to honor its commitment to the electric utility company, or to pay back a $91 million loan — carrying 14 percent interest — that it has with a Washington-based investment firm.

Through modifications at the Blue Mountain site in Nevada — drilling new wells to produce more steam — the company has been able to get the net power output up to a steady 35 megawatts. But, as the annual report released last week reiterated, that was still not enough production to cover the company’s loans and operating costs.

The Obama administration knew about these problems and still offered to underwrite a second guaranteed loan to Nevada Geothermal:

Obama administration officials knew about most of these difficulties before the Energy Department agreed in September 2010 to partly guarantee a second major loan to Nevada Geothermal, worth $98.5 million.

Nevada Geothermal executives, meanwhile, are working to renegotiate their $91 million, high-interest loan to avoid a default, which could come as soon as December. They have teamed up with Ormat to drill at a new Nevada site, and hope perhaps to do future drilling at the Blue Mountain site to increase the energy output there.

Who is Ormat? And how are these companies getting huge amounts of taxpayer monies?

During the tour, Mr. Reid had a chance to see electric generation equipment installed by a company called Ormat Technology, which is a Nevada Geothermal partner. Ormat’s lobbyist in Washington, Kai Anderson, and one of the company’s top executives, Paul Thomsen, are former aides to Mr. Reid.

Just last month, again with Mr. Reid’s support, Ormat secured its own Energy Department loan guarantee, worth $350 million, to help support three other Nevada geothermal projects that are expected to produce 113 megawatts of power.

Mr. Reid has received some support from the industry, in the form of at least $43,000 worth of campaign contributions from the geothermal industry since 2009, according to an analysis of federal campaign finance records.

Of course! It’s the biggest whore in the state of Nevada: Senator Harry Reid. And the two top company executives are former aides. Who would’ve thunk it? How dare we call this crony capitalism?


Source: http://www.nytimes.com/2011/10/03/business/a-us-backed-geothermal-plant-in-nevada-struggles.html?pagewanted=all