SUNUNU SPEAKS ON SENATE FLOOR REGARDING MEAUSRE TO REMOVE LOAN GUARANTEES FOR POWER PLANTS FROM ENERGY BILL

WASHINGTON, DC – United States Senator John Sununu (R-NH) spoke on the floor of the United States Senate on June 23, 2005, regarding an amendment he introduced that would strike loan guarantees for the construction of new power plants from the Energy Bill. Senator Sununu introduced the bipartisan measure with Senator Ron Wyden (D-OR); Sununu’s remarks follow:

“Mr. President, I am pleased to offer this amendment on behalf of myself and Senator Wyden. This is a very comprehensive Energy Bill. As I have said before on this floor and outside this Chamber, I think it is probably much too comprehensive of an energy bill; there is too much in it; it is too large; it spends too much money. There are authorizations. There is mandatory spending. We, unfortunately, voted to waive the budget limitations in our budget resolution earlier today. There is an $11 billion tax package that creates all manner of incentives and subsidies for producing energy.

“It is time that we exercise just a little bit of restraint, and the amendment I offer this afternoon with Senator Wyden would do just that in one particular area, and that is in the area of loan guarantees for building new power plants.

“We need a competitive energy sector including nuclear power, coal, gas, hydroelectric, solar, and wind. And we should do everything possible to establish a competitive marketplace that avoids trying to pick winners and losers in that energy production marketplace. Unfortunately, in too many areas, this bill fails to do so.

“In particular, this title provides loan guarantees – taxpayer subsidized loan guarantees – for building new privately owned power plants. That simply is not sound economic policy, sound fiscal policy, or sound energy policy. They could be coal plants. They could be nuclear plants. They could be renewable energy plants.

“Over the course of the 5-year authorization in this bill, the Congressional Budget Office estimates that nearly $4 billion worth of loan guarantees will be offered at a cost to the taxpayers of $400 million. But the potential cost could be much higher because the Federal government and the taxpayers would be on the hook for the full subsidy, the full cost of those loans.

  “The Congressional Budget Office says the following in their report on the Energy bill: Under the bill, the Department of Energy ‘could sell, manage, or hire contractors to take over a facility to recoup losses in the event of a default, or it could take over a loan and make payments on behalf of borrowers.’ These are private sector borrowers.

“Such payments could result in the Department of Energy – that is the Federal government and the taxpayers – effectively providing a direct loan with as much as a 100-percent subsidy rate.

“That just is not sound economic policy. The administration, through its budget office, states that ‘the administration is concerned about the potential cost of the bill’s new Department of Energy programs to provide 100 percent federally guaranteed loans for a wide range of commercial or near-commercial technologies.’

“Therein lies the heart of the problem. We are subsidizing, providing loan guarantees for privately owned and operated and profitable power plants, whether coal or nuclear or renewable energy. It is not sound economic policy. Our amendment simply strikes this portion of the bill.

“There is still $11 billion in tax subsidies to every conceivable kind of energy production. There is still an 8-billion-gallon mandate to purchase ethanol and it still contains a taxpayer subsidy for ethanol. This does not touch the electricity title. It does not touch the authorization for the clean coal technologies or fossil fuel research and development or other areas in the bill that provide subsidies to successful private companies. We are just trying to target this loan guarantee which just does not make any sense. It would be a new program. It is a terrible precedent, putting the taxpayers on the hook for billion-dollar loans to successful, private, profitable corporations.

“I urge my colleagues to support this amendment. It is supported by a number of taxpayer groups concerned about the size and scope of government – Taxpayers for Common Sense and National Taxpayers Union. It also is supported by the Sierra Club and a host of other environmental groups that are focused on good environmental policy as well as good energy policy.”

-30-