The Elite in the Department of Energy Make Incompetent CEOs

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The best minds are not in government. If any were, businesses would hire them away.

~Ronald Reagan

The government is doing a fine job of running our free enterprise system – into the ground, that is. Case in point is Beacon Power Corp, which operates a flywheel energy storage plant. Beacon Power received $43 million in backing from the U.S. Energy Department (of Solyndra fame) last year. They filed for bankruptcy yesterday.

Their flywheels simply cost too much and the company had nothing of provable value to sell. The patent for this flywheel is about 2 years old, but flywheels have been around since the 30’s.

Beacon Power, and two of their affiliates, were struggling to find private funding after eating through the taxpayer money. Supposedly, there are protections for the taxpayer in this deal, we’ll see. Money News reports, …the Energy Department also had agreed to restructure Solyndra’s debt in a last-ditch effort to keep the company alive, a deal which put taxpayers behind $75 million in private investment. But for the Beacon project, the government loan is the first debt the company must pay, the spokesman said…

I have a question though, if Beacon Power couldn’t get private backing, shouldn’t that have told the government something?

GE was, perhaps is, an investor in Beacon Power. I’m sensing some cronyism in this situation.

The Federal Energy Regulatory Commission approved a rule providing incentive payments to companies such as Beacon. Maybe the government should stay out of the free enterprise system? I’m just saying. They muck up everything they touch. It certainly isn’t doing anything for the jobs picture and that is the sad part of the story – the jobs that will be lost.

Coincidentally (irony), this bankruptcy took place two days after the White House ordered an independent 60-day evaluation.

I imagine the White House got a heads up on the bankruptcy and decided to try and cover themselves with the 60-day evaluation – what do you think the chances are that the WH didn’t know about the upcoming bankruptcy?

According to Business Week: In addition, Beacon received $29 million in grants from the U.S. and Pennsylvania for a 20-megawatt plant in that state and hired Group Robinson LLC to help raise more funds for the $53 million project. Group Robinson, a Menlo Park, California- based renewable-energy consulting company, also was helping Beacon find customers outside the U.S.

Ironically, the CEO of Beacon Power, was concerned about the predatory lending and trading of banks in 2009 as a reason for his company’s failure to raise adequate capital when he wrote to the SEC –

His letter contains this interesting connection to the Department of Energy: …Our work has also been consistently supported by the U.S. Department of Energy and various state energy agencies and grid operators.

As we have made steady progress toward commercializing our technology, there has been a significant level of short selling in our companys stock. This has made it more difficult for us to raise capital at reasonable terms. It is impossible to know which groups are behind this activity unless the SEC identifies the large holders of short positions…

That was then. Now, they’re blaming the bankruptcy on their inability to secure additional investments due to the financing terms mandated by the Department of Energy, its recent delisting by the Nasdaq stock market and the current “political climate,” so reports Money News.

He didn’t seem to have all that much trouble raising capital from the government. Maybe his fund raising problem was connected to the inadequacy of the product?

Beacon Power, another Obama disaster, brought to you by the Department of Energy.

 

 

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