Oregon taxpayers will have to bail out US$20M in state energy loans due to series of delinquent renewable energy companies; five loans worth US$13.4M were delinquent, with US$8.2M approved for reduced payments
January 19, 2012
The Oregonian newspaper reported Wednesday that a State Debt Policy Advisory Commission report found the Oregon Department of Energy’s Small Scale Energy Loan Program will need $2 million to $5 million a year over the next five years for a total of up to $20 million to stay solvent.
The program has made 848 loans totaling $574 million since it was approved by voters in 1980. At year’s end, five loans worth $13.4 million were delinquent and reduced payments were approved on five loans worth $8.2 million. Together, the loans make up 10 percent of the program’s portfolio.
Just the economy?
Bob Repine, acting director of the Energy Department, said bad loans made it impossible for the program financed by the sale of state bonds to continue paying for itself. He blamed the losses on the poor economy, not poor management of the program.
Loan program administrator Anthony Buckley said changes have been made to reduce loan delinquencies. The program no longer makes construction loans, or allows companies to use expectations of a business energy tax credit to qualify for loans.
The newspaper said the program went from a small operation financing energy conservation to one financing increasingly speculative renewable energy projects during the green energy boom of the last decade.
Sen. Richard Devlin, D-Tualatin, said the Legislature never authorized higher-risk loans at the level that SELP moved to.
“It is very problematic when risks have been taken that the Legislature is not aware of,” said Devlin, a member of the state debt commission. “It impacts dollars that should be going to schools, public welfare or public safety.” Devlin serves on the state debt commission.
Among recent delinquent loans were $11.2 million owed by Peak Sun Materials Corp. in Millersburg, $1.1 million owed by Central Oregon resort developers Pronghorn Investors, and $999,249 owed by Blue Heron Paper, which ceased operations and went bankrupt.
Cascade Grains, developer of an ethanol plant in Clatskanie, went bankrupt in 2009 owing $18 million. The state lost all but $2 million after failing to make sure it would be at the front of the line of creditors being paid off.
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