Rick Perry, Ron Paul have mixed record on energy subsidies

October 19, 2011

Two Republican presidential candidates who have spoken out against federal subsidies for energy projects tried to obtain such benefits three years ago.

Texas Gov. Rick Perry and Rep. Ron Paul (Tex.) pressed the energy secretary in 2008 to approve a federal loan guarantee to help an energy company hoping to expand a nuclear facility in Texas. NRG Energy was among the many firms vying for a slice of $18.5 billion in federal loan guarantees set aside for nuclear production, according to letters obtained by The Washington Post. That led to a rush of appeals from Congress members and other elected officials, including Perry and Paul, hoping to win support for their projects.

In recent candidates debates, the two have criticized federal energy loan programs.

“We don’t need to be subsidizing energy in any form or fashion,” Perry said during a forum on Tuesday night. Earlier this month, he said the federal government should not “be involved in that type of investment, period. If states want to choose to do that, I think that’s fine for states to do.”

Paul also urged rugged independence for the energy sector: “The government shouldn’t be in the business of subsidizing any form of energy,” he said during Tuesday’s debate.

The issue has taken on political urgency because of how the Obama administration handled a loan to Solyndra, a now-shuttered solar company that won $535 million in loans from the Federal Financing Bank guaranteed through the Energy Department. The company filed for bankruptcy protection in early September, leaving taxpayers on the hook to pay the debt.

Perry and Paul say now that their earlier advocacy for a specific Texas project does not contradict their fundamental beliefs. The Texas project ultimately was turned down for a loan.

Republicans have a history of supporting loan guarantee programs in the Energy Department. The programs were created in 2005 during the George W. Bush administration and were expanded in 2007 and again in President Obama's 2009 stimulus plan. A Washington Post review of Energy Department documents provided by Democratic officials shows that dozens of Republican lawmakers have requested loan guarantees for local projects, including House Speaker John A. Boehner (Ohio) and Senate Minority Leader Mitch McConnell (Ky.).

On Wednesday, Perry spokesman Mark Miner said he thinks loan guarantees are not the same as “subsidizing” corporations, because a well-managed company will not default and leave taxpayers liable for repayment. The governor said energy promotion will be a hallmark of his jobs creation plan during the presidential campaign.

Through a spokesman, Paul defended his support for the local nuclear project as an effort to spend already-approved funding. He, along with 30 other Republicans, opposed the creation of the federal account in 2005. He also opposed the 2009 stimulus plan.

“As a Congressman and as President, Dr. Paul will work to eliminate all federal intervention in the energy market. However, until that happens, he will do his best to ensure that the money Congress appropriates is spent in the best way possible,” Jesse Benton, his aide, said in a statement

Perry wrote to Energy Secretary Samuel W. Bodman on July 29, 2008, asking him to take “this endorsement into consideration as you consider NRG Texas’ loan guarantee application.”

“I am writing to express my strong support for the proposed nuclear power generating facility in Matagorda County,” Perry wrote.

Paul wrote to Bodman the next day, saying: “I am writing in support of the loan guarantee application filed by NRG Energy, Inc. for two new nuclear reactors at the South Texas Project.” He later added: “Additionally, the construction and operation of STP 3 and 4 will lead to the creation of thousands of new jobs.”

The NRG plant had been among 15 finalists for part of the nuclear loan guarantees, but the project ran into internal financing disputes. The Energy Department decided to grant its first round of loan guarantees to a nuclear plant in Georgia.

Last spring, after the Japanese tsunami and the ensuing nuclear crisis chilled the appetite for nuclear investment, NRG Energy abandoned its five-year pursuit of a plant expansion.

Last month, in reaction to the Solyndra bankruptcy filing, Paul said that loan guarantees “worked for a short time for Solyndra” but that they covered up the real market problems. “Real venture capitalists make decisions based not on politics and photo opportunities, but on complex economic estimations of risk and reward. They don’t simply throw piles of other people’s money at a factory and expect magic to happen,” he said.

Instead of federal loan support or subsidies, Perry cites Texas’s “enterprise fund” for emerging energy companies as a model. He said it has created nearly 55,000 jobs in the state for the energy industry.

On Tuesday, Perry said the issue of federal-state involvement in the energy sector needs to be addressed in a national discussion.

“We need to have a discussion in this country about our 10th Amendment and the appropriateness of it, as it’s been eroded by Washington, D.C., for all these many years, whether it’s health care, whether it’s education, or whether it’s dealing with energy. We don’t need to be subsidizing energy in any form or fashion, allow the states to make the decision,” he said.

Paul Kane covers Congress and politics for the Washington Post.
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