“According to published reports, Beacon’s shares traded for $47 in 2005 but fell to $3.44 in February 2011 and less than $1 a few months later.”
By Dell Hill
Beacon Power, a Massachusetts-based company that won praise from renewable power activists and loan guarantees from the federal government, has filed for bankruptcy, potentially leaving taxpayers on the hook for $43 million.
Loans Called into Question
The company, which promised to build storage devices for intermittent power produced by wind and solar power facilities, was never able to attract investors. Coming on the heels of the Solyndra bankruptcy and ensuing scandal, the Beacon Power bankruptcy has a growing number of people calling for an end to federal loan guarantees for risky alternative energy start-ups.
“I don’t think the government should be picking winners and losers for the private sector,” said Barbara Anderson, executive director of the Massachusetts-based Citizens for Limited Taxation. “Obviously, they’re not qualified.”
According to published reports, Beacon’s shares traded for $47 in 2005 but fell to $3.44 in February 2011 and less than $1 a few months later.
The company was cautioned by Nasdaq it was in danger of losing its listing. In late October, the price per share fell to just under 11 cents, leaving the company with a market value of $3 million.
“We take a pretty dim view of government getting too deeply involved in private companies and picking winners and losers,” said Steve Poftak, research director for the Massachusetts-based Pioneer Institute. “When they start to rend away from support at the early stage of development—at the science and research stage—and get into the balance sheets of companies, that’s [crossing the line].”
And we thought pensions would break the bank? At the rate they’re falling, the federal loan guarantee program might sink this ship any day.
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