Murkowski, Other Senators Ask Treasury for SolarCity Update

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By Ari Natter

Nov. 23 — The chairman of the Senate Energy and Natural Resources Committee and eight other Republican senators are asking the Treasury Department for an update into a three-year old investigation of a Recovery Act program that gave billions of dollars in cash grants to SolarCity Corp. and other renewable energy developers.

San Mateo, Calif.-based SolarCity first revealed it and other “significant participants” in the rooftop solar industry were the subject of a Treasury Department Inspector General investigation in a 2012 regulatory filing, but the Inspector General for Tax Administration missed a self-imposed deadline to release the results this past June, said the letter, which was obtained by Bloomberg BNA Nov. 23.

“Based on the information available, we remain concerned that the 1603 cash grant program and the administration of the investment tax credits lack sufficient transparency, oversight and enforcement to protect taxpayers,” Sen. Lisa Murkowski (R-Alaska) and the other lawmakers wrote to Treasury Secretary Jacob Lew in a letter dated Nov. 13.

The Section 1603 program of the American Recovery and Reinvestment Act of 2009, which expired in 2011, allowed the owners of commercial solar systems and other qualified renewable energy projects to receive a grant equal to 30 percent of the cost of an eligible project instead of an investment tax credit.

‘Little Oversight.'

The program had awarded $25 billion in cash grants as of Oct. 1, but it “appears there has been little oversight from the Department,” said the letter, spearheaded by Sen. Jeff Flake (R-Ariz.).

The Treasury Department has disclosed little about the investigation.

The letter cites an Oct. 30 Securities and Exchange Commission filing in which SolarCity said it had received over $500 million in cash grants through the program and described the investigation, being conducted in conjunction with the Justice Department, into “possible misrepresentations concerned the fair market value of the solar energy systems submitted by the Company in U.S. Treasury grant applications.”

SolarCity did not respond to an e-mail seeking comment.

Richard Delmar, a spokesman for the department's Office of Inspector General, told Bloomberg BNA in 2012 that a “number of entities” are being investigated and the inquiry was focused on several issues. He did not return a request for comment Nov. 23.

The investigation followed the 2011 bankruptcy of Solyndra LLC, the California-based solar panel manufacturer that received a $500 million loan guarantee from the Energy Department, which led congressional Republicans and others to scrutinize the Obama administration's subsidies for clean energy.

Solar Tax Credit Questioned

In the letter, the senators also requested information on the “administration and implementation” of the solar investment tax credit, which automatically drops from 30 percent to 10 percent for commercial projects and expires for residential solar projects at the end of 2016. The credit has been the subject of fierce lobbying by the solar industry, which says it should be extended and expanded to avoid putting a record expansion of U.S. solar power at risk.

“We believe Congress needs to more fully understand how these programs have been administered, and the results of the investigations will be critical to our analysis,” said the letter, which was also signed by Sen. Jeff Sessions (R-Ala.), John Barrasso (R-Wyo.), John McCain (R-Ariz.), James Lankford (R-Okla.), Pat Toomey (R-Pa.) and Tim Scott (R-S.C.).

To contact the reporter on this story: Ari Natter in Washington at anatter@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

For More Information 
The letter is available at http://src.bna.com/beb.