NCPA - National Center for Policy Analysis

Department of Energy Falsely Claims Loan Profits

November 19, 2014

The Department of Energy has just released a report that seems to indicate that its clean energy loans have been profitable. But that's not at all true, writes Donald Marron, director of economic policy initiatives at the Urban Institute. According to Marron, the Department of Energy (DOE) is ignoring borrowing costs in order to show inflated figures.

The report shows the DOE as having earned $810 million in interest while losing $780 million on the loans -- a $30 million profit. The problem, says Marron, is that the $810 million in interest does not take into account the Treasury's borrowing costs, as the Treasury first borrowed money (with interest) in order to make loans to the energy companies at very low interest rates. Taking into account those borrowing costs, Marron says that taxpayer losses on the loans are likely in the hundreds of millions of dollars.

Similarly, the report says that the loan program is expecting $5 billion in interest payments. But that $5 billion is not a profit, says Marron -- it is only interest payments, without accounting for borrowing costs or possible defaults on the loans.

Source: Donald Marron, "Spin Alert: DOE loans are losing money, not making profits," Urban Institute, November 17, 2014.


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