An Acid Test on Energy Subsidies, Will Congress Make the Smart Move?
Today the House will be voting on the “No More Solyndras Act,” which, if it becomes law, will protect taxpayers by prohibiting any new loan guarantees from Title XVII of the Energy Policy Act of 2005.
Heritage Action has continually called for an end to futile and wasteful energy subsidies, recognizing that what is best for consumers and taxpayers alike is to allow the market to decide which companies will succeed.
The “No More Solyndras Act” is a good place to start in the process of reforming our nation’s market-distorting energy policy. Heritage’s Nick Loris has outlined the additional steps that are necessary to ensure energy policy continues to improve:
“Ensure that recipients pay the full cost of the subsidy as determined by an independent, private financial risk assessor. Currently, loan recipients are responsible for paying the subsidy costs—a determination of the long-term liability to the federal government of the loan guarantee… Instead of relying on government entities to determine the loan guarantee costs, a condition of future loan guarantees should be that the actual subsidy cost be determined by an outside, private financial risk assessor. This will protect the taxpayer by providing the best, independent information to determine the actual risk of providing the loan guarantee and ensure that the loan guarantee recipient is actually paying the subsidy cost as required by law.”
“Require recipients to privately refinance within five years of project completion. The most compelling argument for loan guarantees is that political and regulatory unpredictability have made competitive private financing difficult to secure. Since government is a primary source of this unpredictability, it is only fair, one might argue, that government offset the costs associated with high risk.
Completing the project should eliminate that risk. Thus, rather than a long-term financing option, the loan guarantee program should be viewed as a bridge program that helps to protect investors against project failure during the most vulnerable stage: licensing and construction. Upon completion, loan recipients should privatize liability by privately refinancing without the support of additional taxpayer backing.”
Today we will see just how perceptive Congress is to the burdens taxpayers and consumers have borne as a result bad energy policy in America. Will Congress side with Americans on this one, or will they continue to enable the administration’s awful policies and careless decisions? Here’s hoping they understand taxpayers don’t want their precious tax dollars funneled to more reckless energy projects.