Touted by Reid in 2010, stimulus-backed geothermal company headed towards bankruptcy

Victor Joecks

Another reminder of why government shouldn’t try and pick the winners and losers in the economy. Despite receiving almost $100 million from taxpayers, Nevada Geothermal Power is going broke.

A geothermal energy company with a $98.5 million loan guarantee from the Obama administration for an alternative energy project in Nevada – which received hearty endorsements from Energy Secretary Steven Chu and Senate Majority Leader Harry Reid – faces financial problems, and the company’s auditors have questioned whether it can stay in business.

Much like Solyndra LLC, a California solar-panel manufacturer with a $535 million federal loan guarantee that went bankrupt, Nevada Geothermal Power (NGP) has incurred $98 million in net losses over the past several years, has substantial debts and does not generate enough cash from its current operations after debt-service costs, an internal audit said. …

Mr. Reid, a Nevada Democrat who led passage of the $814 billion stimulus bill and worked to include the loan guarantee program to help finance clean-energy projects, predicted in 2010 that NGP would “put Nevadans to work” and declared that Nevada was the “Saudi Arabia of geothermal energy.”

In one sense, Sen. Harry Reid’s prediction that government handouts to NGP would “put Nevadans to work” was correct. I bet bankruptcy attorneys are staying plenty busy with this one.

NGP’s failure isn’t an isolated case. It’s just the latest in a long, long string of government failures when it comes to economic development.

It’s (long past) time for the government to let individuals, not bureaucrats, pick winners and losers in the market place.

(h/t Boyd)