In a misleading segment painting a skewed picture of the Department of Energy's clean tech investments, CBS News' new morning show purported to reveal 11 “New Solyndras” -- companies CBS said “are having trouble” or “have filed for bankruptcy” after receiving federal assistance. But CBS only identified 7 companies and included some that did not actually get federal funds.
CBS Fails In Attempt To Identify “New Solyndras”
CBS Provides Faulty List Of “New Solyndras.” From the January 13 edition of CBS News' This Morning, which debuted this week:
CHARLIE ROSE, CO-HOST: A CBS News investigation has found a pattern of the government pouring your tax dollars into clean energy. Investigative correspondent Sharyl Attkisson is here with the story that you will only see on CBS This Morning.
SHARYL ATTKISSON, CORRESPONDENT: We counted 12 clean energy companies that are having trouble after collectively being approved for more than $6.5 billion in federal assistance. Five have filed for bankruptcy: the junk bond-rated Beacon, Evergreen Solar, Spectra Watt, AES subsidiary Eastern Energy, and Solyndra. Others are also struggling with potential problems. [CBS News, This Morning, 1/13/12]
In addition to Solyndra, CBS named 7 not 11 companies during the report: Beacon Power, Evergreen Solar, Spectra Watt, AES, Nevada Geothermal, SunPower, and First Solar. CBS then misrepresented the facts about most of these companies. Throughout the segment, the on-screen text stated “New Solyndras: Taxpayer Money To 11 Troubled Companies.”
Right-Wing Media Repeated The Flawed CBS Report. [Fox Nation, 1/13/12] [Human Events, 1/13/12] [Hot Air, 1/13/12] [Newsbusters, 1/13/12] *UPDATED (1/17): [Fox News, On The Record, 1/13/12][Big Government, 1/16/12][Townhall, 1/13/12][The New American, 1/15/12]
CBS Report Filled With Errors And Misleading Omissions
AES Coal Power Subsidiary Went Bankrupt -- Not The Project Funded By DOE. The Associated Press reported on January 3 that AES Eastern Energy, a subsidiary of the huge global power company AES Corporation filed for Chapter 11 bankruptcy protection. AP noted:
AES Corp., based in Arlington, Va., said the bankruptcy wouldn't impact its bottom line in 2011 and didn't revise its profit estimates for the year. It will report its fourth-quarter and full-year financial results in February.
AES Eastern Energy operates four coal-fired power plants that were acquired from New York State Electric & Gas in 1999. Its business has struggled with low profit margins because of the high cost of coal and a decline in power prices. [Associated Press, 1/3/12]
- Loan Guarantee Went To A Separate Subsidiary Of AES For An Energy Storage System. The $17.1 million loan guarantee from the Department of Energy went to AES Energy Storage LLC, a subsidiary of AES Corp, to “support the construction of a 20 megawatt (MW) energy storage system using advanced lithium-ion batteries” in Johnson City, New York. [Department of Energy, 12/23/10]
NRG Energy -- Not SunPower -- Is Responsible For The Loan. CBS reported that “Sunpower landed a $1.2 billion loan guarantee last fall ... On its last financial statement, SunPower owed more than it was worth.” In fact, NRG Energy, Inc. bought the project, the California Valley Solar Ranch, shortly before the DOE loan guarantee was finalized. The Contra Costa Times reported that NRG is responsible for paying back the loan:
Industry analysts say San Jose-based SunPower is struggling but nowhere near bankruptcy, and they describe the loan guarantee as low-risk for taxpayers. More significantly, Carlsbad-based NRG Energy, not SunPower, is on the hook to repay the loan, according to company representatives. NRG bought the project before the federal backing came through, although SunPower will design and build the solar farm in San Luis Obispo County. [Contra Costa Times, 10/18/11]
- Risk To Taxpayers Is Low Because The Solar Project Already Has A Buyer. The Contra Costa Times article further noted that “Pacific, Gas and Electric Co. signed a long-term fixed-price contract to buy the power” from the project. The article quoted independent energy analyst Daniel Ries, who stated: “The risk to taxpayers is very low ... This loan guarantee is for a specific project using known technology that has a cash flow to pay off the debt.” [Contra Costa Times, 10/18/11]
First Solar Also Sold DOE-Backed Projects To Other Companies. CBS stated that “First Solar was the biggest S&P 500 loser in 2011, and its CEO was cut loose, even as taxpayers were forced to back a whopping $3 billion in company loans.” In fact, First Solar sold those three projects “to NRG Energy, Exelon and NextEra Energy Resources and project partner GE Energy Financial Services,” according to Electric Utility Week, which also stated that “The sale of the projects that recently received over $3 billion in loan guarantees from DOE means the utilities are on the hook to repay the loans.” [Electric Utility Week, 10/24/11, via Nexis]
- The Projects Are Low Risk. As Dow Jones reported, “All those facilities have power purchase agreements with California utilities, which are required to use renewable power generation for one-third of the electricity they sell by 2020, as part of the state's 2006 plan to combat climate change.” [Dow Jones Newswires, 12/7/11]
Evergreen Solar Received No Federal Money. Massachusetts-based Evergreen Solar filed for bankruptcy in August 2011. But Evergreen Solar did not receive a loan guarantee from the Department of Energy. Evergreen did receive $43 million in assistance from the Massachusetts government, but according to the New York Times, the company received no federal money. [Media Matters, 1/15/11]
Spectra Watt Did Not Receive A Loan Guarantee, But A Small Grant. In 2009, SpectraWatt was selected to receive a $500,000 grant from the U. S. Department of Energy's (DOE) National Renewable Energy Laboratory (NREL) PV Technology Pre-Incubator program, not a loan guarantee like Solyndra. SpectraWatt later filed for bankruptcy. [Spectra Watt, 6/17/09]
Boston Globe: Beacon Power Selling Plant To “Quickly Pay Off” DOE Loan Guarantee. In an article titled, “As federal funds dry up, Beacon Power still has reason for hope,” The Boston Globe reported:
Beacon, which filed for bankruptcy protection last month, recently agreed to sell a first-of-its-kind energy storage plant in Stephentown, N.Y., to quickly pay off a $39.1 million loan balance it owes the US Department of Energy. The sale will leave Beacon Power with its technology and manufacturing capabilities, analysts said, but also with a question that many alternative energy firms may face as deep federal budget cuts loom as early as next year. Can the company attract enough private capital to stay afloat? [Boston Globe, 11/27/11]
Default Rate For Loan Guarantee Program Is Much Less Than What Government Budgeted For Losses. Bloomberg reported that the government “planned for defaults of as much as 12.85 percent” for the loan guarantee program, and that as of now, the default rate “is less than 3.6 percent. CBS did not mention this fact. [Bloomberg News, 11/10/11]
Most Of The Loans Guarantees Have Almost No Risk Of Default. To date CBS has not covered a Bloomberg Government analysis of the Department of Energy's 1705 loan guarantee program, which found that 87 percent of the value of all the 1705 loan guarantees (18 of the 28 projects) went to power generation projects, as opposed to manufacturing projects like Solyndra's factory. The flawed CBS report mentioned several of these projects among the purported “New Solyndras.” The DOE required generation projects to secure a buyer before receiving a loan guarantee -- ensuring stable revenue and significantly reducing the risk of the investment. In fact, Shayle Kann, a solar power market expert at GTM Research, has said that these projects have almost no risk of default. [Media Matters, 12/6/11]
CBS Featured Pundit Misrepresenting Steven Chu's Background, Role. CBS apparently only interviewed conservative economist Peter Morici for the report. Morici said: “Tasking a Nobel prize mathematician to make investments for the U.S. government is like asking the manager of the New York Yankees to be the general in charge of America's troops in Afghanistan. It's that absurd.” [CBS, This Morning, 1/13/12]
- Chu Won The Nobel Prize For Physics, Not Math. Chu won the Nobel Prize in Physics and was “the Director of the Department of Energy's Lawrence Berkeley National Lab, where he led the lab in pursuit of alternative and renewable energy technologies.” [Department of Energy, accessed 1/13/12]
- Actual Head Of The Loan Guarantee Office Was Former Venture Capitalist. Politico reported that Jonathan Silver, who was the head of the DOE loan programs office, was previously “was a managing director of Core Capital Partners, a early-stage investor in alternative energy technology, advanced manufacturing, telecommunications and software, which he co-founded in 1999.” [Politico, 10/6/11]
CBS Forwards Claim That Solyndra Loan Was “Politically Motivated”
CBS Advances Claim That Solyndra “Was A Politically Motivated Investment.” In her report, Attkisson stated that Solyndra “received a half billion in tax dollars and became a political lightning rod, Republicans claiming it was a politically motivated investment.” [CBS News, This Morning, 1/13/12]
The Hill: “GOP Probe ... Has Not Uncovered Evidence” That The Loan “Showed Political Favoritism.” The Hill reported:
But the GOP probe -- which has uncovered about 185,000 pages of documents -- has not uncovered evidence that the decision to issue the loan guarantee or the early 2011 decision to restructure its terms showed political favoritism. [The Hill, 1/13/12]
NYT: “No Evidence Has Emerged That Political Favoritism Played A Role” In Solyndra Loan. The New York Times reported:
While no evidence has emerged that political favoritism played a role in what administration officials assert were merit-based decisions, Solyndra drew plenty of high-level attention. [New York Times, 9/23/11, via Grist]
Politico: Solyndra Had “Close Ties To Both Political Parties.” Politico reported:
In fact, Solyndra's top brass, its board and its paid lobbyists bring close ties to both political parties.
President and CEO Brian Harrison is a registered Republican. Billionaire George Kaiser, an Obama campaign bundler, was one of the venture capitalists who poured private funding into the clean technology startup.
And another venture capital firm, Madrone Capital Partners, which is tied to the GOP-leaning Walton family, was one of 10 firms that helped Solyndra raise about $144 million in November 2008.
In Washington, Victoria Sanville, one of the company's two in-house lobbyists, had previously worked for four House Republicans: Sam Graves of Missouri, Peter Roskam of Illinois, John Sweeney of New York and George Gekas of Pennsylvania.
When it comes to campaign contributions, Solyndra officials gave much more to Democrats while still giving money to some Republicans, according to a POLITICO analysis of donation data compiled by OpenSecrets.org. [Politico, 9/14/11]
Bush Admin. Chose Solyndra As A Finalist For A Loan Guarantee. The Department of Energy's Loan Guarantee Program was created by the Energy Policy Act of 2005 and expanded by the American Recovery and Reinvestment Act of 2009. At a congressional hearing, Jonathan Silver, then-Executive Director of Department of Energy's Loan Programs Office, testified that the Bush administration selected Solyndra as one of 16 out of 143 submissions to move forward in the process. [Media Matters, 9/19/11]