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The Government Accountability Office released a new report today, finding that the Department of Energy’s (DOE) Loan Guarantee Program is inadequately planned and executed. GAO raised concerns that DOE did not have objective performance goals, and thus the Loan Guarantee Program is “not well positioned to evaluate progress.” Additionally, GAO finds that there is little evidence of a consistent or systematic mechanism for awarding applicants.

This report is confirmation that DOE is severely lacking in justification for putting billions of taxpayer dollars on the hook. Issuing these loan guarantees is effectively taking a stab in the dark with little idea of what the target will be. Yet, DOE has managed to finalize and issue a $535 million loan guarantee and is already pending nine other conditional commitments–some reaching into the billions. Taxpayers should be very concerned about potentially footing the bill when these loan guarantee applicants fail or default. To throw billions of taxpayer dollars at applicants without having a clear goal in mind is fiscally irresponsible.

The GAO also found that some projects and technologies, especially nuclear, were treated more favorably than others for no discernable reason. For example, nuclear projects that are applying for a loan guarantee that are not selected to undergo a due diligence process are allowed to remain in the queue to apply for loans while other technologies are removed from the queue when they aren’t selected. If these other technologies want to reapply (and get back in the queue), they would likely be required to spend hundreds of thousands of dollars to repeat some of the application process while nuclear projects get to remain in line and avoid those extra expenses. Nuclear generation projects were given information on how their application was ranking against other applicants before they submitted 75% of the application fees and the second part of the application. This allowed nuclear generation projects to withdraw instead of losing their money, while other technologies were not provided with this same opportunity. In another instance, not only did the DOE allow a front-end nuclear facility applicant extra time to meet technical and financial requirements required while other technologies were rejected when they failed to meet similar criteria, but the DOE “has not provided analysis or documentation explaining why additional time was appropriate for one project but not others.” With the loan guarantee program already creating significant taxpayer risks, the DOE does not need to create anymore by failing to follow their own rules and giving nuclear projects special treatment.

For more information, please contact Autumn Hanna at (202) 546-8500 x112 or autumn [at] taxpayer.net.