california valley, solar ranch, project amp. where do they sell the power that they generate? >> they all sell to california, mainly to pacific gas and electric. >> pg&e. why is that market so strong in california? >> it's strong because california has a 33% renewable portfolio standard. >> which means what? >> which means by a certain year, i think it's 2020 -- >> by government mandate. >> yes. >> so the government says you must buy this renewable energy. >> the state government. >> no -- well, okay. so the market was created by a government mandate. >> which i think was -- >> no, i understand that. it was created by a government mandate saying, you will supply it at this level. so the market wasn't created by a market demand, it was created by a government saying, this is what you're going to do, you're going to do it with renewables okay? 1703 did address nuclear, 1705 doesn't. i understand that. i understand, so you go where

the money is. i get it. it's the old jerry maguire, show me the money. the government that creates the market through a mandate, that's not the same thing. at the end of the day, no matter how much you subsidize it, if it's not market ready, it won't float. so we create these markets, and then we create a business opportunity, i do not fault you for taking advantage of a government that mandated something on people that they didn't want on their own. we forced it down their throat. they didn't just go out and buy it because they wanted to. so we create a market and then we say, then we're going to create the funding for you folks to go after it. i get it. but at the end of the day, every single penny came out of taxpayers' pockets. it did not come from the government. it was funneled through the government. any government spending is flat-out taxes. that's all it is. that's all it is. we've lost a connection. we've disconnected ourselves from the revenue source. it's the hard working american

taxpayers. i yield back my time, mr. chairman. i appreciate your patience with us. but i've got to tell you, where i come from, these people are struggling. they're out of work and trying to figure -- some of them working two and three jobs, moms working and trying to figure out what the heck are you people doing with the money we sent you. doesn't make sense to the average american. >> thank the gentleman. yield now to the gentleman from south carolina, mr. mulvany. >> i appreciate the courtesy extended to me to participate today. mr. crane, i want to talk to you about the statement towards the end of your both written and oral testimony, which i think is important. the mentioned that nrg has actually invested $1 billion in the three projects we've discussed previously. i think the notes i had said that $400 million of that, for example, were in the california valley solar ranch cvrs program. i think that's an important -- you went on to say that in blunt terms, we don't get repaid unless the government has been repaid. i think you hit on an important

issue there, because i think a lot of the frustration that you hear amongst the panelists today, at least the members, is a reflection of what folks back home are hearing. which are why are these folks getting paid when the taxpayer is still on the hook. they see the owners and sometimes officers of these companies making money when the taxpayers are still ultimately on the hook. i want to talk about this for just a second. are you selling us, sir, on that $400 million in equity, there's no preferential payments, no return on that equity until the debt has been repaid? >> congressman, what i'm saying is in the waterfall of payments, the debt service happens before there's any returned equity. i don't know the month-on-month, year-on-year. but the debt has a higher payment than on equity. >> the debt service is on the waterfall. what about the payment of the principal of the loan?

>> that service is interest plus principal. >> okay. you all collect fees, and management consulting fees, i would assume, for the management of the project, correct? >> well, yeah. operating fees, and operating fees for solar voltaic project are small. there's no moving parts. yeah, operating fees for any project go above debt service, because you have to keep the project operating during the income. >> i have no kdifficulty with that. have the owners of the company extended any debt to this cvsr program? >> no. >> it's just equity? >> we don't ever put debt to any type of project. >> all right. >> we're not debt providers. >> what are the repayment terms -- how long will it take to repay the $1.2 billion government guaranteed loan? >> congressman, i'm sorry, i should know, but i don't know

what the term of the repayment is on the projects. usually the -- i would say the debt's tied to the length of the purchase agreement. these are 20, 25-year -- >> that would make sense. i don't know the specific terms of this, but the ones i've seen before, they would be tide to that agreement. you have a guaranteed flow of funds coming in. >> that's right. >> and your debt would be very close, the loan terms would be very close to that. >> usually the debt ends a little bit before the power stream. >> exactly. here's what i'm struggling with. the statement that you made, in blunt terms, we don't get repaid unless the government gets repaid. the taxpayer in theory is going to be on the hook for something for the next 20 to 25 years. >> yeah. >> you made a statement to wall street analysts in august that the company would get all your capital back in two to five years. >> do you want me to explain that? >> that's what i'm asking you, yes, sir. >> that statement was -- which was later taken out of context by "the new york times" had to do with a solar project that has

no long-term loan guarantee. >> it's your testimony here again today there will be no return on equity, and no return of equity on the cvsr program until the government guaranteed loans are paid in full? >> i'm not saying exactly that. no project, if you say equity, we're not going to give you a dollar back for 20 years, there's never going to be equity in a project. what i'm saying is that the debt service under the terms of the loan will be serviced, you know, before any money can come out as we call in the business, out of the waterfall to equity. so debt gets repaid before equity. >> sure. i understand that. i understand how debt and equity work. when you say the debt is going to get serviced before the return of equity, it doesn't mean the same as the debt is going to be paid in full before there's return on equity? >> yes, that's probably correct. >> so i guess you will get repaid, at least something on that equity before the taxpayers

are completely off the hook? >> i'm sure we'll get some income, yes, before the debt is fully off the books. >> thank you, mr. chairman. thank you, mr. crane. thank you to all of the panelists. >> mr. crane, were you taken out of context in other quotes, like i've never seen anything i've had to do anything that was less than these projects? was that in context or out of context? >> that's in context. i believe in the context of -- >> do you intend to do as much of this business as you can get your hands on? >> yes. keep in mind, mr. chairman, we are working to build a nuclear power plant. i would say building in the california desert is about the least risky project you can do in the power industry. >> okay. >> so no, that was not taken out of context. >> i just wanted to be clear, which was in context and which was out of. mr. rakowich, to your knowledge, before you got any -- before you

got the loan guarantee, conditional or final, did the d.o.e. share any internal documents with you on your company or representatives of your company? >> i'm not sure i follow. what types of documents would you be referring to? >> any documents. i put up the one e-mail where you guys got to edit a -- does drew torbin work for you? >> yes, works for or company. >> understand. and does jonathan plow work for your company? >> no, jonathan plow does not work for our company. i believe he works for bank of america. >> okay. but drew torbin does? >> yes. >> you got to edit an internal memo, but i wonder did they share any other internal documents with you? >> i don't know. but i will say we were completely transparent with the d.o.e. with the situation that was evolving at that point in time as it relates to solyndra. and needless to say, we wanted

certain documents in the final loan document. we wanted the d.o.e. to acknowledge that. so there was back-and-forth that took place as it relates to that particular e-mail, and that's not unusual. >> you don't think it's unusual? >> i don't. >> that someone from your company gets to edit an internal memo, what's going to be distributed to the department of energy employees? paid by the taxpayers? >> mr. chairman, i don't think it's unusual, given the back-and-forth that needed to take place before the loan document was signed, that there would be back-and-forth conversation, editing and the like that needed to take place before the parties. >> you didn't participate in any of that back aubd forth? >> no. >> as a ceo, you didn't participate? >> i was not even aware of it. >> we've got another e-mail here that astounds me. this is from mr. peter o'rourke at the department of energy to jonathan plow, who works for bank of america, drew torbin who works for you all, right?

okay? it says, please feel free to use the concepts that we articulate in your own words if you don't already have that in your message, and that refers to, if we can -- can we put the next slide up? but refers to project amp, department of energy develop document, that they're going to send to you with all kinds of information that you guys can use in your presentation. i mean, let's think about the way -- i think that the american citizen would see this. this is like telling two of the students, not the whole class, two of the students, hey, here's what's going to be on the test. we're going to give it to you. in fact they say to you, don't send it beyond the two of you. don't tell anyone else the answers to the exam. you say, that's fine, that's the normal course of business, back-and-forth? >> well -- >> and you didn't have any knowledge of it as the ceo of the company? >> mr. chairman, i think as it relates to what was sent, which

was the presentation -- >> mr. crane, did you get that kind of treatment? did you get internal documents from the department of energy telling you, here's the answer to the exam, if you say things this way, you're likely to get billions of dollars in taxpayer money and guaranteed loan? >> i can guarantee i've never seen a department of energy internal memorandum. >> you didn't get it? mr. mancini, did you get that special treatment? >> not that i'm aware of. >> okay. miss bronicki? >> not that i'm aware of. >> doctor, does this seem unusual to you? this is par for the course when you head down this road, i assume, right? this is what happens when you decide you're going to have this cronyism in government. >> i'm not entirely surprised. i don't know this particular case. >> mr. rakowich, did you think it was a little unusual? that torbin is the one that worked for you, maybe he's a great guy, he's been working hard, we're going to tell him the answers to the exam. >> chairman, i don't think that

sending a presentation, as to what project amp is about, that is our project. and so sending the presentation, i don't see as being unusual, no. >> feel free to use the concepts that we articulate in your own words. so this is certainly intellectual property development at the department of energy they're sending out, hey, you might want to use this language when you send it back to us. that's the implication i draw from that statement. is that not what you conclude? >> i don't know. i haven't seen it. >> again, we've got to take this -- that's why we've had several hearings on this. you take this all in context. mr. kelly said 26 companies were in this loan guarantee. 22 of them had credit ratings of double b minus, junk status. most of the companies that got money, significant number at least, had strong connections to the obama administration, either

during the campaign, or in bright side's case -- this is amazing. we see all this. now we have e-mails going back and forth saying, hey, say it this way, edit this letter we want to send. so when you put it in the big picture, no wonder the taxpayers are saying, what the heck is going on with our government? this is not the way it's supposed to work. and i mean, it's just so frustrating to look at, this is what's going on, the department of energy, they're picking the winners and losers. hundreds of companies applied. 26 got the $15 billion. and those -- i mean, such a deal. such a deal. and you think this is, in your words, just a little bit ago, you think this is customary and the way it's supposed to work? >> what i said, mr. chairman -- >> you said this is the course of doing business. >> i said sending a presentation on our exact project that we're

working on, back and forth, doesn't seem unusual to me, no. >> doesn't seem unusual that the department of energy tells you, this is how you need to say it. here's the answers to the test. this is the way you need to do it. this isn't unusual? this is very important, feel free to use the concepts to articulate in your own words. so feel free to plagiarize, that's what it says. >> it's a presentation that is about our project. and so going back and forth on a presentation that ultimately we will use, or somebody will use in the future, just doesn't -- i don't understand the context of why this was sent. but i can tell you -- >> did you personally have any communication with the department of energy? >> i did not. >> you didn't talk to mr. o'rourke, mr. silver, any of these folks at the department of energy? >> no, sir. >> did you make any trips to the white house? >> no. >> did you talk to anybody in

the administration? >> no. >> did you talk though mr. daley? >> no, sir. >> mr. biden? >> no. >> wow. you got a little different treatment than mr. crane. understand. with that, i yield to the gentleman from -- the ranking member from ohio. >> thank you very much, mr. chairman. i want to go back to the e-mail that you just discussed. here again, it goes right to the bank of america. because the only party to this e-mail that has not provided public testimony in the loan program is bank of america. now, the impact and import of this particular memo, which you cited as a matter of concern, we really don't understand it until we get bank of america's perspective. so i would just like to ask my friend if there's a way that you

and i could work together -- >> sure. >> -- to see if bank of america, and for that matter goldman sachs, who is on another program, that the guys at the top, that they be invited to come in to explain their point of view about this. could we see if we could work together, and would you consider -- >> i would definitely consider that. i appreciate the ranking member bringing that up. i think in light of what we've uncovered today, i think that is something we need to think about. >> i want to also say that, in listening to this discussion, and, you know, my friend, mr. kelly, has a way of continuing to hammer home about the benefits that are going to some at the exclusion of others, that's a valid question. it always is in this town. as you were talking, one of the things that occurred to me about this particular model in this discussion we're having, just to kind of, let's look at it from a

different level, this is all about centralization of power. literally. i mean, we could have a different model, we could be decentralizing power, we could be investing in decentralization of power, get more people involved in manufacturing, let's say microtechnologies, for example, but when you've got a centralized government, and a centralization of power, business power, you put those two things together, there's a different philosophy at work here. and that's something that i just wanted to -- that's not the subject of this hearing, but i just wanted to put that out there as an ongoing concern that i have. because inevitably, people's utility rates under one model are likely to be higher than they are under another model. now, i just want to say that when congress created this 1705 program, which is the subject of this hearing, it, as i mentioned earlier, it appropriated $2.47

billion to pay credit subsidy costs for the energy projects. and that this program became a partnership between the government and the private sector. and that this committee held a hearing that we learned the 1705 is low risk. that the projects will likely achieve a degree of success within this particular model. now, there are some who feel, well, the 1705 portfolio is a bunch of companies on the verge of bankruptcy. that doesn't appear to be the case. it appears to be a collection of projects with solid private and public sector backing, and i would like to hear from our witnesses on why they believe their respective projects will benefit their bottom line, the environment, but most importantly, and it's the question mr. kelly keeps raising, and it's a valid question, how do the taxpayers benefit?

i'm also interested. let's go mr. mancini, your company cogentrix was able to build this solar project in southern colorado. it's my understanding you received about a $90 million loan guarantee from d.o.e., that you successfully built the project. clean energy is being sold to a major colorado public utility. tell me how this is a win-win for your company, the environment, the taxpayers. is it -- tell the committee. >> ranking member kucinich, just a point of information before i answer the question. i just want to clarify that i am a managing director of goldman sachs. i've been with the company almost 20 years. and if there are any questions that you'd like to present to goldman sachs, i would be happy here to answer those questions. so that would be unusual to draw attention to myself. but i think for the record, i need to clarify what my role is. i am not the ceo of, obviously of goldman sachs, but i would be happy to answer any questions i can. to answer the question with respect to the project that we funded, together with the government, what we did is

advance the technology and took it from -- i would call it a context in which it was being applied, applied, you know, in space program, and putting in a different context, to prove that that technology could be applied on a utility scale, commercial scale project to produce green power for the citizens of colorado or citizens anywhere in the country. so one of the benefits was to prove the hypothesis that this particular type of technology could in fact be employed commercially. >> thank you and i just want to responsibility to your calling to attention that you're a managing director and that's in the kmcommoditiecommodities? >> correct, managing director of the commodities business unit.

>> we want to talk to the person that runs goldman-sachs, you don't run the whole company? >> i do not. but one comment that is in very important debate. because in the doe loan program, there was no little favor. >> thank you for saying that, you just said that for the record. thank you, mr. chairman. >> mr. mancini, let me ask you this, if the gentleman just for one second. if the 1705 program had not been in place, would goldman-sachs, would you have funded -- would you have put capital at risk in the cogentrics of the project. just to be clear, you're a wholly owned subsidiary of goldman-sac goldman-sachs, but if that money wasn't there, that you got from

the taxpayer, would gold man say, we believe in this, we're going to put up the cash, what would you guys have done? >> remember, our first stop was to no less than ten commercial banks to see if we could get goldman-sachs from a debt percentage. >> you would not have done the project? >> we could not have done is project. a proves our point, this is not where private capital would go, but it's okay to put the taxpayer money at risk. >> which own 3% of and do not have any board seat. >> and what about excel energy, do you have a direct financial interest in that company? or an indirect financial interest in that company? >> we do not.

there are funds that are managed by goldman-sachs asset management, which is much like fidelity or vanguard, that puts together a portfolio of communities for which we earn a fee that's based not on the returns of any particular company within that portfolio, but just based on the raw dollar amounts that are vested across -- >> would it be fair to say an indirect relationship, if there's a fund you manage, that does have direct relationship with excel energy. >> i would say it was very tenuous. >> i just want to ask that, the loan arrangement, in the low agreement that you had with the department of energy, did that agreement also include the fact that cogentrix and that amenex would be the sole provider to

cogentrix? >> excel owns public service of colorado, public service of colorado sells that electricity at no profit to their customers. there is no markup because it is regulated in a specific way that does not allow them to pass through any additional costs or markup other than the cost of the -- >> the loan agreement between the department of energy and cogentricx included the details that are part of that agreement was that excel energy and cogentrix and amenex -- >> it has a power purchase agreement and excel is a parent company to -- but we don't have any relationship directly. >> but certainly with amanex? >> amanex is the sole provider.

>> and you have a direct financial interest in amanex. >> yes, public service of colorado required us to use a certain type of technology, amanex was one of four companies that were the leading manufacturers. our engineers threaten evaluated all four of those companies. >> do you have a financial interest in the others? >> no, not to my knowledge. >> so it did work out that the there were four possibilities based on what you just said, and oh, by the way, the one that was selected is the one that amanex had a financial interest in. >> but it benefits goldman? >> how it benefits goldman is almost inconsequential.

>> it's inconsequential that the four chosen -- >> that ignores the fact mr. chairman -- >> you got to go back to the first point, particularly when cogentrix was a wholly owned subsidiary of goldman sachs. you have the dent of agriculture get -- oh, by the way, the solar panels, there's four companies you can choose from, and the one they're going to pick is amanex that is of particular interest to goldman all the way around? >> you said we wouldn't finance it, banks wouldn't do it, but we're going to put the taxpayer money down for it.

this is wonderful for everyone except for the rate payers and the . >> it was also required -- >> whoa, whoa, whoa, you just said the independent folks at d.o.e.? if we there's one thing that we have proven here today, one thing that's completely clear is that it's not independent, we got e-mails going back and forth, edit this, is this the letter we're going to send to the white house chief of staff. if there's one thing we have proven, it's not independent. >> the engine years that are advising doe are not our engineers meaning that they're advising someone other than us, so they had to make an independent judgment that was not our judgment. that in fact they agreed that amanex was the lowest cost to the rate payers.

now fiesto -- they did so as the lowest cost provider. >> let me ask you this, is it -- so you would have preferred that -- well, it's certainly a benefit that amaex was selected by the so called independent engineers. >> it's certainly better for goldman that amanax was selected by the independent engineers? >> i would suggest that with $116 million of our equity capital because of a 3% interest. >> i'm not suggesting that, what i'm suggesting is that we have go to back to the first point. you sit on the board of directors. >> i just want to disassociate myself with your line of questioning, thank you. >> what you have settinging is that goldman-sachs, and coge

cogentrix -- >> i'm not suggesting that, i'm just suggesting that there is this close-knit relationship up and down the line and there's this cozy relationship between the department and folks who are getting along. that's what i'm suggesting. i'm not saying it's a bad thing you did this, or bad that it worked out this way, i'm just pointing out, this is what's involved here, and this is buy we're having the hearings and this is what the american taxpayers are saying, this is not what we're supposed to be doing. >> this depiction is incredible, i'm sorry, to suggest that we have an interest that is somehow benefiting goldman-sachs is just not correct. >> i think the focus of my questioning wasn't on excel. i accept that point, i'm not cop