conventional power throughout the united states that have included natural gas and fire facilities. in total, we have developed power generation facilities across the country with a combined generating capacity of over 5,000 megawatts of electric power which is enough to power approximately 2 million homes. >> as an example, we're presently working on a hundred megawatts in the california area. so we believe that rep sents only one part of what we do. it's presently one of the largest power generation facility ins the world. it's located in colorado. it began commercial operation on april 1st of this year. has been designed to produce 30

megawats of solar power under a 20-year power purchase agreement with the public service agreement of colorado. in the process of our development and construction, we sourced more than 80% of the kpoents from within the united states. cogentrics began development in 2009 in response to a question from the proposal of june of 2010 we had signed a power purchase agreement with them for 20 years. the project involves significant expenditures. >> and independent development

cannot fiegts all of these costs and remain profitable. however, projects such as the one developed in the alomosa project present a special challenge. while it's proven in one context, as previously mentioned, has not been deployed on a commercial scale. there have, conentrics willingness was predicated on the ability to alternative forms of debt financing. after unsuccessful attempts at attracting private debt capital, it was only through the 17050

loan program under the d e d.o.e. loan program. wo we began this process in february, 2010 and signed in january, 2011. the project reached commercial operation on time. we expected it to be completed under bujt and the final loan amount will be about $86.5 million. at present, the projekt is generating energy requirements of power purchase agreement and we're projecting that the project revenues will be more than enough to repay the d.o.e. loan in a timely manner. mr. chairman, cogentrics has a long history of renewable technologies. we're proud of the success that we've achieved thus far and we look forward to continuing to advance both the renewable and energy portions of our business.

i welcome any questions the committee may have. thau thank you very much. >> mr. mancini, thank you. >> mr. chairman and members of the sub committee. i'm the chief exec tiff officer in the new york stock exchange listed company. we've been headquartered in nevada since 1994 and is the only company primarily engaged in this business. we've owned and operated power plants around the world. y ormat kurntly owns and operates power plants totally 886 megawats around the world with 470 megawatts in the united states.

we employ over a thousand people worldwide with more than 500 employees do mesically. i appreciate the opportunity to testify here today about our business and the department of energy 1705 loan guarantee program. ormat participated not only in the current department of energy loan program, but also with business programs almost 30 years ago. in the 19d 80s, ormat had a $50 million kbarn tee program. at that time, it was in need to commercial lenders to participate in such new projekts. in addition to geothermal mandates with capacities followed. that project paved the way for the growth of the geothermal inkus ri in the united states and helped the financial community on the path to accepting the viability of

geothermal energy projects. in july, 2010, john handcock life insurance policy in the current 1705 loan guarantee program. the proposed projekt involved the portfolio of three different geothermal facilities. >> alsz, facilities would provide power using the proprietary technology. that has been used in geothermal power plants in our system around the world. a combined total of cleaned power. we welcome the d.o.e. for our partial guarantee just you

should a year later in june 2011. we believe that this project is a strong fit with the objectives of the 1705 program. economic condition at the time of our application made it difficult to secure commercial data to develop these fa silties. the d.o.e. loan guarantee enabled us to declare more plants and create more jobs than we would have been able to achieve without it. the two-phase report submitted with the investment as its overall success did not change entirely on the success of one facility. a total of up to $350 million in debt financing has been approved to our financial partner, john handcock. our first loan occurred in october, 2011, of 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 d.o.e., the project had been funded by ormat. we are committed to its success. i'm pleased to report that the facility has already reached commercial operation and we expect them again to reach that milestone very soon. mr. chairman, ormut had been in the business of developing geothermal power for close to 30 years. our deep experience enabled us to propose a solid commercial energy power project to the department of energy. thank you for the opportunity to speak here today. i welcome any questions that the committee may have. >> thank you, mr. bernanke. doctor, you're recognized? >> chairman jordan, member of this committee, its's an honor to appear before you today to

talk about the department of energy loan guarantee program. i'm a senior research fellow at george mason university where i study tax and budget issues. advocate for renewable energy are right to be out raged by the large amount of subsidies going to fossil fuels. yet, they're wrong to think that the answer is more subsidies for form of energy that they approve of. the department of energy's 1705 loan guarantee program is a corner stone of the department of energy and the u.s. energy dpt. two dwrounds. first, advocates that the energy companies do not have access to sufficient credit to support new projects. second, the dpt of energy argues that by investing in green

technology, it would create up to 5 million green jobs. so how do these claim 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 company such as energy or even the financial giant, goldman sachs. in practice, it is hard to argue that these companies would have had a hard time having access to capital to fund project that would have been viable. second, according to the department of energy's data, under 1705, $16 billion in loans were guaranteed and 2,000

permanent green jobs were created. that means that for every 86 pn86$.7 million in tax exposure, one job was created. these numbers dismiss as an effective job program. but while the data speaks for itself, the real problem with the 1705 loan program lies below these numbers. it even goes beyond their recent ways of $538 million of taxpayers' money following the failure of solyndra. solyndra is a symptom of more fundamental problems that make loan guarantee programs in general and the low guarantee program in particular a bad deal for taxpayers. such programs suffer from three main problems. first, every loan guarantee program transfers the risk from lenders to taxpayers creating a moral hazard problem.

banks have less incentive to apply proper oversight. the same is true for the company that borrows the money. the companies and the bank that we see the guarantee get all the upsides. second, every loan guarantee gives lenders an incentive to shift resources to government-supported project and away from unsupported ones. regardless of the merit. that company becomes a relatively save asset in the eyes of other investors.

however, safety in the market is likely to scare away venture capitalists and that means lower rate of innovation. but it gets worse. the data shows nonventure capitalists, private investors, tend to congregate towards the safety provided. and that, too, takes resources away from unsubsidized projects. and these may have actually a better probability of surviving and a better business plan absent the subsidy. and make no mistake, this can actually hurt and take place within the green energy industry.

third, every incentive into business condition to seek financial rewards by pleasing political interest rather than customers. it is called crony capitalism and it ene entails real economic cost. for whatever the intentions that motivates the program, the evidence is clear. it's just not working. the 1705 loan program does expose taxpayers to solyndra-like waste. but more concern are the systematic distortions it introduces to the market and the unintended consequences those may have. thank you. >> thank you, doctor. i want to yield field to the gentleman from pennsylvania, mr. kelgly. >> i thank you all for being here. and i know sometimes this seems like an exercise of utility but our job is to prekt the

taxpayers. mr. crane, you were talking about the money that you were able to borrow through the 1705. what eegs the interest rate on the loan? >> i don't know what the interest rate is, but it's very low. it's set by the federal government. >> but i mean, for the average american, what would that mean? if you went to the bank and borrowed this money, what interest rate would he be paying? the of raj american wouldn't understand. i understand you guys make really good invest nts. and i understand you're sbielt ld to a great return. but not at the expense to the taxpayers. these are loans that are almost at 0%. >> but the government sets that loan. >> i understand that. but that's bhie you went after it.

>> i watch everybody rolling their eyes. oh, here we go again. poor taxpayers. truth of the mather is, you can't borrow this money in the open market for the price that the government is charging it. that's a fact of the matter. let me ask you something because i want you all sitting there. when you borrow money, it's capacity, character, you've got everything. you've got goldman sachs and warren buffet. so you have pretty good guys. this is free money. it eegs absolutely free money. now rksz i don't blame you for going after it. don't misunderstand me. anybody in business would love to have that opportunity. so when you see that out there, it's like are you kidding me? are you kidding me?

i can borrow this money at this ralt? that's what i'm going after. i'm going after that brass ring or that gold ring. you didn't need to capitalize through this program. the truth of the matter is the money was so cheap, you had to go after it. that's not a condemnation. it's a good business move. not for the american taxpayer, but those of us that can borrow money at a very low rate. now, i'm trying to imagine this feeding fren si. so my question is what did the american taxpayer invest in. we have a slide. can somebody put the slide up? >> when you're in school, an a is a really good score.

bs are good. but the truth of the matter is, a b is a high-risk. it's a junk rate. now, american taxpayers may say you know, we risk some of youfr money -- you know what, we had to take that gamble. so we're telling people we made good investments for you. but the truth of the matter is most of the money went to junk-grade opportunities, all right. now, that brings me down to so how do you navigate that territory. how do you get the guy that is win the money? so there has to be a process. now, i was looking at some gao numbers. there's 460 applications to the program. about 7% of the people that applied got the money. my question is what did those people do to get that money?

>> who is paul thompson? >> paul thompson is a business development -- skbl okay, so who does he work for? >> who is he working for? >> yes. >> in the company? >> yes. >> he's a lobbyist for your firm, right? >> i don't know -- i wouldn't characterize it -- >> okay, he's a lobbyist for your firm. let me ask you this. before thompson worked for you, bho did he work for? >> i don't know. >> it was harry reid. i want you to see something. this may refresh your memory. there's a little thing i want to show that we can maybe put up. this will help you remember this. >> i was driving along i-80. it may not look like much, but it's geothermal energy. it could mean other 16,000 construction jobs in nevada.

>> yeah, harry reid got over 144 million. >> it's nevada 20 bucks. >> senator reid is making that happen. >> i'm harry reid, and i approve this message. >> yes, i'm sure he does. you go through this. here's my point. here's my point. there's a way to navigate these waters. when only 7% of the applicants actually get the prize, you've got to wonder as an average american, sitting in my home, sitting in my business, how did these guys get there and all the rest didn't? and we find out that almost every single one of these is tied in in some way to the administration. so there's a way to navigate the waters. there's a way to be successful. the idea is, you better be tied into somebody who is influential. now, mr. thompson right now is busy. and i know that harry reid,

business format -- i visit a lot of facilities throughout western pennsylvania, too, because i want to know what's going on. but the american people are starting to wonder, billions and billions and billions of dollars invested by a government that picks winners and losers, and a lot of it based on highly suspect ways of, how do you get there. i wish i had more time. this is an interesting subject. and i know people don't want to hear about this, but at the end of the day, people want to know how their money get there. free money is free money. this feeding frenzy had to be phenomenal. when you guys got that information, it had to be, wow, man, let's get our share. it was amazing who got their share and how they got their share. it's the old table, if you're not on the table, you're probably on the menu. somebody got a bigger share of the pie than other people. who funded it all? hard working american taxpayers. and they deserve to know how that worked out and how that

happened. >> i thank the gentleman. we'll come for a second round and the gentleman can get more time. >> i hope so. >> mr. kucinich? >> i just want to say that i want to associate myself to the concerns that my friend mr. kelly has expressed. but bottom line we're talking about power and money, how people get to the table. i don't think it has to do with republicans or democrats. mr. thompson, if i'm correct, just to show his bipartisan nature, he was able to be a part of involved in the transition for then governor givens, for energy -- or natural resources issues. so, you know, the fact of the matter is, we can go -- and i have gone into who is

contributing to whom. part of the problem with this process, men and women who sit on these committees are good people. people who serve in congress are good people. the system is rotten. it's up for sale. and the unfortunate assumption that -- or the assumption that occurs about this unfortunate nexus between money and power is, you know, it's inarguable. the only question is, what about these programs. >> the gentleman yield? >> oh, of course. >> i would just point out i think that was the point that the doctor made, that this isn't a one-party problem. this is a problem when you have government handing out -- >> i agree with that. now, also, just to make a point, there are some of my friends from the other side of the aisle who signed a letter, actually an urgent letter to secretary salazar of the interior saying, look, let's get these programs moving. i would like to put that in the record.

there's bipartisan support for the programs, but there's a partisan debate over who got what, and why. now, we also -- another little item i would like to clarify here, that i would want to ask unanimous consent, goldman sachs, now, we know we've got a wholly-owned subsidiary of goldman sachs testifying, but goldman sachs' involvement goes way beyond this sub sid dear. in fact, goldman sachs stands behind several of the loan guarantees granted by doe, which don't involve the subsidiary here today. i want to insert into the record this article from "the new york times," which states that goldman sachs was also involved in the desert sunlight solar farm getting a guarantee of $1.46 billion, without objection. >> no objection. so ordered. >> so several very large

companies participated in projects that received d.o.e. loan guarantees. and unfortunately, the committee's investigation has not asked many of them about their involvement. now, mr. mancini, it is my understanding your company, cogentrix, is a wholly-owned subsidiary of goldman sachs group. given that fact, what was goldman sachs' involvement in the cogentrix project in alamosa, colorado? >> congressman kucinich, to answer that question, i think you have to understand how we structured this project. we structured this project at cogentrix like we would any other project financing for the construction of a power project. >> what was their involvement? >> so the involvement at goldman sachs really was derivative to the whole process. if i could just explain. first, we at the cogentrix level, the operating level, we would have to go out and secure

and negotiate a power purchase agreement with an off-taker, a utility in this case, for the purchase of the power. the next thing we would do would be to select an equipment provider, and a construction manager. and then, and only then, would we go out and try to find the financing package that would make this project viable. >> so what was goldman sachs' involvement? >> so goldman sachs provided equity capital to cogentrix to make $116 million of commitments to this project. we are in fact the project leading financier. >> thank you, mr. mancini. mr. rakowich, it's my understanding your company is mainly comprised of warehousing operations throughout the world. and that project anp deals with placing solar panels on your roofs. i believe bank of america played a significant part in putting

this deal together. what is bank of america's involvement in this project? >> congressman, bank of america would be the lender, to the extent that we roll out the solar on these roofs. >> to what extent, sir? >> well, to the extent of roughly 80% of the project cost. >> and how much is that? >> it's hard to say. the maximum amount of the program is $2.6 billion. >> okay. now, thaunk. mr. mancini and mr. rakowich, your companies have both been the subject of document requests in this committee, and you're both requested to testify here. thank you for being here. now, to your knowledge, mr. mancini, was your parent company goldman sachs ever given a document request, or an invitation to testify, to your knowledge? do you have any idea? >> to my personal knowledge, i do not know. >> how much you, mr. rakowich? as the financer behind your

project, did bank of america ever send document requests? >> document requests? i don't know. >> mr. chairman, i just want to say that, you know, i think that this committee could be ever more effective in its work if we were to have goldman sachs and bank of america here to answer questions about their involvement. since they stand behind it. i mean, these are, in the scheme of things, these are small companies, in the scheme of things. in terms of goldman sachs and bank of america, they're at the highest level. and i think if we were able to bring them forward, the kind of questions that mr. kelly has raised, it would be an opportunity for us to really go deep into finding out what's happening. and also to go into the interplay of the politics and the contributions. >> now yield to the gentleman from south carolina, mr. mulvany. >> thank you very much, mr. chairman. i thank the chairman and ranking member for allowing me to participate today.

i want to talk about something different for a few minutes and follow up on some of the things that mr. kelly and mr. kucinich raised. i want to deal first with the message ms. de rugy mentioned, the true impact of these programs. one of the things that became readily apparent that i want to press on a little bit is whether or not these projects would have been done anyway. mr. rakowich, you said you started this in 2006, you started doing this program. in fact, have actually put some of these systems on your roofs before the loan program started, is that right? >> congressman, that is true. those programs prior to this were almost entirely financed by the utilities that we in essence, you know -- they financed it at that point in time. >> you testified on the program in california. i understand that that has not