>> good evening, distinguished members. you introduced me so i don't do that. fortune 300 company with more than 25,000 mega watts of coal, nuclear wind and gas solar generation enough to power more than 20 million homes. we also own several retail electricity businesses that serve more than two million customers in texas and several north eastern states. important to our discussion is nrg is not a rate-based utility. our shareholders bear 100% of the risks and of the success of our operations which is in stark contrast to rate-based utilities that oeshlize the risk of their capital projects among the rate payers of the state. i asked that my testimony be included in the record. nrg owns an interest in three projects that received loan guarantees under section 1705 and pictures of the three

projects taken recently all appear next to me. i am pleased to report to you on the progress through the critical construction phase because that's typically the highest risk phase in the life of any power generation asset. we are involved in the ownership of a fourth section 1705 called project m with the partner, but to date there have been no drawdowns on the loans so there is no progress for me to report on. let me go back to the three that are under construction. we own a 50% interest in the 392 mega watt project in san bernardino county, california. that's the picture on the left. ivan paul when it's completed in 2014 will be the largest concentrated solar project in the world.

this is an a-3 rated or to southern california edison, an investment on the utility. construction at ivan paul continued in october of 2010 and the project is on schedule. we expect to be making steam and i am pleased to report they are not only on schedule, but under budget as well. secondly we own 100% stake in the california valley ranch that utilized sun power technology.

the cvsr project benefits from the 25-year off take and also being constructed by the bektle corporation. the first phase will be online in september with final completion in late 2013. i am pleased to report that they are ahead of schedule and under budget. this is the project on the far side. finally we own a 51% stake in the 290 mega watt agua calienta project near yuma, arizona and utilizing their own solar module technology with the power generated by the facility also sold under long-term contract with pacific gas and electric. when complete it will be the largest project in the world. i am very pleased to hospital toy that halfway through the president they have achieved the distinction of being the largest plant delivering almost 200 mega watts of power in the grid. as such, they are so far ahead

of schedule, we had to petition the department to allow us to complete it sooner than was intended. in summary, all of us recognize and suspect this committee's focus on the taxpayer funds being deployed to construct the projects in your interest in seeing the funds paid back to the government with interest. i am pleased to hospital that all three are well on track and nothing has occurred that causes me to have particular concern that the taxpayer funds invested is at risk of nonpayment or of late payment. having said that, there 5,000 people that work here who are focused on the construction support management of these project and we will not rest and remain vigilant until the money is repaid. you see the reason for this is that all three projects are being funded not only by doe loan guarantees and the bank loans, but with the considerable amount of capital provided by

nrg and the partners in the helpive projects. they committed over $1 billion to these three projects. a considerable sum that represents about 30% of the market capitalization. since or capital is invested in equity, it is lower in the priority of repayment than the loans provided by the federal government. we don't get paid unless the government has been repaid. with over a billion committed, you can rest assures we are highly motivated to making sure that the government is repaid. thank you and i look forward to questions that you might have. >> thank you and you said in the "new york times" that it is filling the desert with panels, we can see that from the visuals there.

>> good morning. my name is walter rakowich and i am the cochief executive officer. i am glad to talk about our company and our involvement with the 1705 loan guarantee program. for over 20 years, we have been in the business of developing industrial real estate. we offer distribution space for he's in over 20 countries. over 75% supports local communities in the united states. as a result we are a different sort of company from the others that participated in the loan guarantee program. our corporate mission includes a focus on sustainability. we believe it provides a triple benefit. environmental stewardship and cost-effective facilities for our customers.

to that end we have begun to utilize the roof tops in our portfolio for the installation of the systems. these face the sun and are adjacent to the grid. they generate no additional benefit. they provide a renewable source of power for the communities where the buildings are locationed while providing an additional revenue stream to the shareholders. going become to 2006, we begin having conversations with different manufactures and financing sources about the potential for future roof top solar installations. since that time, we installed 78 mega watts of solar on about 18 million square feet of roof tops. in january of 2010, we put out a tender seeking solar finance partner to lease the roofs and

respond to a potential california utility request for proposal. one responded to our tender was solyndra who identified bank of america and merrill lynch as their financial partner. we selected them in 2010 and jointly responded to the utility. that utility selected us in july of 2010 to provide them with solar power, a project that became known as project to ton. we applied to support a nationally scaled program which we called prolodgis amp. we completed smaller scale roof top insulation projects before, mostly financed by utilities, a larger nationally scaled project required a different approach. we applied for the loan guarantee to reduce the cost of our project financing that makes

our roof top project more economical. working with bank of america as our lender and nrg energy as the equity partner, we sought to develop a multiyear, multiphase project that would generate power in up to 28 states. project to ton that was progressing was anticipating to be the first phase. in july of 2011, after receiving a conditional commitment from the doe, we began work on the roof tops of 15 buildings in southern california at a cost of just over eight million. in september of 2011, solyndra declared bankruptcy. this created a considerable challenge as it considered in the final stages of closing our loan guarantee. after reviewing the circumstances, we determined that there was an insufficient ability on solyndra's part to provide the required solar

module services and warranties. we proactively informed our partners and the doe that we would not use the technology for phase one. now, despite this challenge to the completion of phase one, we believe it would not impede our ability to develop project amp. as a whole over the four-year term. we are continuing to pursue power purchase agreements for project amp including the use of the sites on which we had spent millions of dollars. under the terms of the loan agreement, each future phase will entail a specific agreement and will be funded separately and must be approved in each instance by bank of america and the deo. to date, we have not yet sought or received any loan guarantees under this arrangement. thank you for the opportunity to

speak about prologis. we can be effectively utilized to generate significant solar energy output and contribute to the goal of energy independence. i would be pleased to answer any questions that you have. thank you. >> thank you, sir. mr. man sini. >> mr. chairman, ranking member kucinich and subcommittee, i am robert mancini and i am the ceo. we are a wholly owned subsidiary and i am managing director of the kmodits business unit of the firm. thank you for the opportunity to appear this morning and speak to you about the energy and the solar generating plant in colorado. we are awe power producer in the business of developing, owning and operating power generation facility since 1983.

we currently employ 200 full time employees in charlotte, north carolina as well as the generating facilities in colorado, virginia, florida, and california. and i am here to speak with you and it's not just in the renewable energy. it's focused on the projects throughout the united states that have included primarily natural gas and cold-fired facilities. in total, we developed power generation facilities with a combined generating kpft of over 5,000 mega watts of electric power, enough to power approximately two million homes. we are particularly focused on the continued development of natural gas fired generation as we believe the natural gas will undoubtedly play a role in the market.

when projects are important, the solar generating plants is one of the largest electric power generation facilities in the world. they have solar power under a 20-year power purchase agreement with the service company of colorado. the technology deployed in the project was developed as part of the u.s. space program and was deployed for several years. but the project represents one of the first utility scale applications. importantly in the process of our development and construction we source more than 80% of the components from within the united states. they began development of the project in 2009 in response to a

request for a proposal from the service company of colorado and june of 2010 we signed a power purchase agreement with them for 20 years. the alamosa project involved significant expenditures and approximately $140 million of hard costs. an independent power development cannot fund the costs through its own equity contributions and remain competitive and profitable. typically developers fund a portion of the cost from their own equity and obtain limited from third party lenders for the license. the one developed in the alamosa project present a special challenge. while the technology is proven in one context as previously mentioned, they have not been deployed on a scale. they do not provide project financing until they know that a technology is commercially viable. therefore the willingness to

pursue was predicated on the ability to source alternative forms of debt financing. after unsuccessful attempts at attracting private debt capital was only through the loan program that they were able to obtain the debt that was cost-effective enough to allow us to move forward with the project. we committed approximately $115 million in equity and guarantees. we received for just under $90 million under the loan program. we began this process of application for the doe in february of 2010 and signed the guarantee on september 2nd, 2011. to date we have drawn $71 million against the federal loan that was approved. the project reached the operation on time and we expected it would be completed under budget and the final loan amount would be about $865 million. they are generating energy and

compliance with the power purchase agreement and we are projecting that the revenues will be more than enough to repay the loan in a timely manner. mr. chairman, we have a long history of owning and operating power plants for renewable technologies. we are proud of the success we achieved thus far. we look forward to advancing our business. i look forward to any questions you may have. >> ranking member kucinich and members of the subcommittee. i'm the chief expectative officer. they have been headquartered in nevada since 1984 and

[inaudible] . they have power plants around the world oozing the state-of-the-art technology. they were founded in 1965 and have more than four decades of experience for environmentally sound power plants totalling 586 mega watts around the world whose 470 mega watts in the united states, western united states. we employ over 1,000 people worldwide and more than 500 employees domestically. i appreciate the opportunity to testify here today about our business and the department of energy 1705 program. they participated not only in the current department of loan guarantee program, but also with the program almost 30 years ago. in the 1980s, they obtained the loan guarantee for the project.

at that time the deal was in need for the commercial lenders to participate in new projects. in addition, totalling hundreds of mega watts of capacity followed. that project paved the way for the growth of the industry in the united states and held the financial community on the path to accepting the viability of geothermal energy projects. in july 2010, john hancock submitted an application to participate in the current loan girl an tee program along with the subsidiary. prot posed project known as ofc two involved power facilities in the state of nevada. all three facilities will provide power to a 20-year nevada power company using the

proprietary technology. the technology has been installed and used in multiple power plants and our electricity-generating system around the world. prot ject was designed to proceed in two stages. each upon completion would generate a combined total of 220 mega watts of complete power. we had the commission for a partial guarantee just under a year later in june 2011. we believe this is a strong fit with the objectives of the 1705 program. economic condition at the time of the application made it difficult to secure commercial data to develop the facilities. the guarantee enabled us to deploy and create more than we have been able to achieve without it. the two reports were committed in the investments as the

overall success did not hinge entirely on the success of one facility. up to 350 million in debt partners was approved by john hancock. it occurred in october of 2011 with approximately $151 million which is only a portion of the total budget for the projects. indeed, as of the second quarter of 2010 before application was submitted to the doe, the project was funded in the amount of $117 million. in short, we have dedicated substantial equity and are committed to its success. i am pleased to report that the facility has the commercial operation and we expect them to reach that milestone very soon. mr. chairman, we have been in the business of developing thermal power for close to 30

years. our deep experience enabled us to propose the solid commercial power project to the department of energy. thank you for the opportunity to speak here today. i welcome any questions that you may have. >> thank you. doctor? you are recognized. >> chairman jordan, ranking member kucinich and the committee, it's an honor to appear to talk about the department of energy loan guarantee program. i am a senior research fellow at the center at george mason university where i studied tax and budget issues. advocate for renewable energy are right to be outraged lie by the large amount of subsidies going to fossil fuels. yet they are wrong to think that the answer is more subsidies for a form of energy that they approve of. the department of energy's 1705 loan guarantee program is a

current cornerstone of the department of energy and the u.s. energy policy. the policy is often justified on two grounds. first, advocates argue that the renewable energy company dos not have access to sufficient credit to support new projects. second, the department of energy argues that by investing in green technology it would create up to 5 million green jobs. how do these claims stand up to scrutiny? looking at the flow of 1705, loan program we find first that nearly 19% of a 1705 loans went to subsidized projects that were backed by large companies such as nrg energy or even the financial giant, goldman sax. in practice, it is hard to argue

that these companies would have a hard time having access to capital to fund projects that would have been viable. success, according to the department of energy's data, under 1705, $16 billion in loans were guaranteed and 2,388 permanent green jobs were created. for every taxpayer exposure, job was created. these dismiss the job program. while the data speaks for itself, the real problem with the 1705 program lies below these numbers. it even goes beyond the recent waste of $538 million of taxpayer money following the failure of solyndra.

solyndra is a symptom of more fundamental programs that make loan guarantee problems in general and the loan guarantee program in particular at that deal for taxpayers. such programs suffers from three main problems. first, every loan guarantee programs from risks to lenders to taxpayers creating a moral hazard program. they are guaranteed and banks have less incentive to apply proper oversight. the same is true for the company that borrows the money. also the programs privatize gains and socialized losses. in other words, taxpayers bear the risk of the project, but the companies and the bank that receive the guarantee get all the upside. second, every loan guarantee

gives lenders an incentive to shift to government-supported project and away from unsupported ones. regardless of the merit of the project. the government subsidizes a company that becomes a relatively safe asset of the eyes of other investors. safety in the market often signals lower return on investment and it is likely to scare away venture capitalists and that means lower rate of innovation. it gets worse. the data shows non-venture capitalist private investors tend to congregate towards the safety provided by the government guarantee project. that too takes resources away from unsubsidized projects towards subsidized projects.

these unsubsidized projects may have a better probability of surviving and a better business plan absent the subsidy. make no mistake. this can hurt green energy production as this can take place within the green energy industry. it has incentive into business condition creating financial rewards by pleasing political interest rather than customers. it is crony capitalism and a bipartisan problem. it entails real economic cost. whatever the intentions that motivates the program, the evidence is clear. it's just not working. the 1705 program exposes taxpayers to solyndra-like

waste, but more concerned are the systematic distortions it introduce and it is unintended consequences those may have. thank you. >> thank you all for being here and this seems like an exercise in futility. there other things you would like to be doing. our job is to protect the taxpayers and being a small business person, i have tried to borrow money. you were talking about the money you were able to borrow. through the 1705. this is a loan made and what's the interest rate in the loan. >> i don't know what the interest rate is, but it's low by standards. it's set by the federal government. >> but wait a minute. you have an idea. >> it's like the fed plus 50 basis points. >> it's very low. >> for the average american, what would that mean? what would he be paying? >> what are would the average

american be paying? >> in average terms, the average american would understand. i understand you make good investments and you are entitled to the return, but not at the expense of the taxpayers. the truth of the matter is, these are loans that are almost 0%%. the government sets that loan. >> that's why you go after it. >> we're went after it and because of the size of the loan. >> i understand all of that. do i understand. let me tell you. i watch everyone rolling their eyes about it and testifying. here we go again. poor taxpayers. you can't borrow this money for the price that the government is charges. that's a fact of the matter. let's go beyond that. let me ask you something. i want you all sitting there. i had to go out and borrow money. when you borrow money, there is something called the five seasons. you guys have good capacity of

capacity and collateral and goldman sacks and even warren buffett. you have pretty good guys to lend the money to. the only thing is, there is no return for the american taxpayer. this is free money. i don't blame you for going after them. anybody in business would love that opportunity. i can borrow money at this rate? i can get it for almost nothing. i'm going after that ring or gold ring. you didn't need to capitalize it and capitalize it yourself. the truth is the money was so cheap, huh to go after it. that's a smart business move. not a good move for the american taxpayer, but a move for those of us in business that borrows money at a low rate. i'm trying to imagine this feeding frenzy when