Audit Report: DOE-OIG-18-17

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February 8, 2017

The Office of Fossil Energy’s Oversight of the Texas Clean Energy Project Under the Clean Coal Power Initiative

The Department of Energy’s Clean Coal Power Initiative (Initiative) is a partnership with industry to demonstrate advanced coal-based technologies. The Initiative’s goal is to accelerate commercial deployment of promising technologies to ensure the nation has clean, reliable, and affordable electricity.  The Department’s original share of the Project’s total cost was $350 million, which was later increased by $100 million. The awardee, Summit Texas Clean Energy LLC (Summit), was to provide the remaining costs.

Subsequent to our review, the Department terminated the cooperative agreement with Summit due to its inability to secure funding. The purpose of this follow on report was to determine whether Fossil Energy effectively and efficiently managed financial aspects of the Project under the Initiative.  We found Fossil Energy had not effectively implemented ongoing invoice review controls it put in place to manage the risks associated with this complex project.  We directly identified over $2.5 million in expenditures Summit charged to the Project that we questioned as potentially unallowable, including over $1.2 million in potential lobbying costs and $1.3 million in questionable or prohibited travel-related expenses.

The issues identified occurred, in part, because Fossil Energy had not always exercised sound project and financial management practices in its oversight of the Project.  Subsequent to our review, Summit filed for Chapter 7 bankruptcy in October 2017. Issues related to the bankruptcy were outside the scope of this audit and consequently, are not addressed in this report.  Management concurred with the report’s recommendations and indicated that corrective actions will be taken to address the issues identified in the report.

Topic: Energy