We have another energy company that received $43 million, in a taxpayer funded loan, the same program that also backed Solyndra whichhas now also failed. On Sunday Beacon Power Corporation filed for Chapetr 11, in U.S. Bankruptcy Court in Delaware. This company developed energy storage systems based on what are known as “flywheels,” had received the federal guarantee for a 20-megawatt energy storage plant in Stephentown, N.Y., back in August 2010.
This loan was supposed to cover the lion’s share of the $69 million project, one of several that Beacon was developing across the country. So the company’s CEO said in a statement to the court that all those projects are “capital intensive,” and the firm is struggling to attract the additional investment needed to keep everything running. The fact that the company faced being de-listed from the NASDAQ didn’t help, he said.
“At present, the revenues generated from the operation … are not sufficient to fully support those business operations, and the debtors currently operate at a loss,” CEO F. William Capp said in the court statement. “In addition, the current economic and political climate, the financing terms mandated by DOE and Beacon’s recent de-listing notice from NASDAQ have together severely restricted Beacon’s access to additional investments through the equity markets.”
The company based in Massachusetts also received $29 million in grants from the Energy Department and the state of Pennsylvania through separate programs for a plant in Hazle Township, Pa. The bankfruptcy filing comes as congress, investigates deeper into the billions of dollars in federal loan guarantees that were committed to alternative energy companies, including Solyndra. The Obama administration has also opened an inquiry. So, the heat is on the Administration, so to try and save face, they investigate also?
Rep. Morgan Griffith, R-Va., who sits on the House Energy and Commerce oversight subcommittee probing the program, said,
“We’re very, very concerned about this and many other loans that have been made by the Department of Energy over the last several years,” he told Fox News on Monday. Griffith said plenty of companies in the U.S. would make “good prospects” for federal help, but the committee investigation is trying to find out whether the government was “just trying to get the money out the door.”
This is another example of wasted taxpayer dollars by the Adminitration in search of green jobs.
“As with Solyndra, the head of Beacon Power appears to have been a supporter of President Obama’s,” Sessions said in a statement.
“Increasingly, we are moving away from our capitalist heritage and towards a system where most Americans play by the rules while some are able to rig the game in their favor. The real divide is not split along income lines, but between the politically-connected and those—whether businesses or individuals—who just want the freedom to earn a living.”
Yet Energy Department spokesman said the agreement with Beacon included “many protections for the taxpayer” and that the government is the only “senior, secured lender” in the project. Secretary (Steven) Chu said that protecting taxpayer money remainds a top priority. Under the terms of the loan guarantee agreement, Stephentown Regulation Services, LLC currently has cash reserves and proceeds from the plant that it was required to hold as collateral on the loan.
Court filings state that the company owes the government $39.1 million under the loan – though it had authority to borrow up to $43 million, but the company never borrowed the full amount. The loan for the project was supposed to create 14 permanent jobs, and 20 construction jobs.
Capp emphasized in the court filing that the company has a number of positive factors going for it. After investing $200 million on “research and development” and racking up nearly three dozen patents, Capp said the company’s “long-term prospects are strong.”
Energy Department spokesman Dan Leistikow also cited the FERC decision in touting the Beacon loan guarantee on an Energy Department blog Monday. He said the decision could help the company generate more revenue. Flywheels like those developed by Beacon are charged by using to spin them faster and ‘discharged’ by using flywheels to spin a turbine and generate electricity.
The punchline:
Campaign finance records show top Beacon officials contributing to Democratic candidates. Capp apparently was an Obama supporter, giving at least $500 to the Obama campaign in 2008. He also donated to Rep. Niki Tsongas, D-Mass.
Beacon employee Matthew Polimeno has donated $750 since 2008 to Tsongas’ campaign and another $250 to the failed campaign of Massachusetts Democratic Senate candidate Martha Coakley. CFO James Spiezio also donated $250 to the Coakley campaign in 2009.
