Dear Secretary Chu:
We write to request an immediate and indefinite halt to any allocation of taxpayer dollars through the Western Area Power Administration (WAPA) borrowing authority enacted in the 2009 stimulus spending law, officially known as the American Recovery and Reinvestment Act. As the respective Chairmen of the appropriate authorizing Committee and Subcommittee in the U.S. House of Representatives, we firmly believe that any additional funding allocations made from this program puts American taxpayers and existing WAPA ratepayers at unacceptable financial risk. The Department of Energy (DOE) should cease and desist with any and all WAPA borrowing authority expenditures and activities.
The DOE Inspector General’s November 7, 2011 “Management Alert" on WAPA’s borrowing authority is deeply troubling. The Alert makes it abundantly clear that WAPA not only lacks the qualifications and internal controls to carry out this program, but also points out that officials “encountered pressure…to spend Recovery Act funds expeditiously." The end result is that WAPA contributed $161 million (or 75%) of American taxpayer funds towards a Canadian company’s project that later experienced “significant delays and cost overruns" and is now at a “standstill."
The Inspector General also found that existing program management funding will run out later this fiscal year. This was supposed to be a “self-financing" program, but the lack of revenues in this failed program will likely lead to a funding gap. The report indicates that WAPA is considering “various options" to meet funding requirements. We are very concerned that the agency could be contemplating additional taxpayer funding or tapping existing ratepayer revenues to overcome this funding shortfall.
As you should be aware, the House Natural Resources Committee has acted on legislation to repeal WAPA’s borrowing authority. On October 5, 2011, the Committee voted to favorably report the legislation to the full U.S. House of Representatives for consideration. We are committed to advancing this legislation and repealing this risky program that puts billions of taxpayer dollars in jeopardy of failure and bailout. Until this bill is enacted, taxpayer funds should not be further gambled on the WAPA borrowing authority. The risk of taxpayer bailouts and the loss of hundreds of millions of dollars are very real considering the underlying statute, which explicitly states: “If, at the end of the useful life of a project, there is a remaining balance owed to the Treasury under this section, the balance shall be forgiven." The troubling findings in the Inspector General’s Management Alert amplify the very serious, legitimate and imminent concerns that the WAPA program could lead to taxpayer defaults, an overall lack of transparency in decision-making, and potential raids on existing ratepayer-financed projects.
In addition to asking for an immediate halt to all WAPA borrowing authority allocations, expenditures and activities, we will be continuing our oversight of this program and decisions made to date. The Energy Department and WAPA will be receiving specific requests for information and documents. As the Natural Resources Committee conducts further oversight, prompt cooperation is expected.
Sincerely,
Doc Hastings Tom McClintock
Chairman Chairman
House Natural Resources Committee House Water and Power Subcommittee
cc: WAPA Administrator Timothy Meeks
