ECOtality Scandal: The Audit

ECOtality’s final flameout came after the U.S. Department of Energy (DOE) released Audit Report OAS-RA-13-29 on 7/25/2013.

It’s an Energy Vehicle Technologies (EVT) audit of $135 million in grants awarded to ECOtality. The EVT program is mostly funded by $2.4 billion from the 2009 Recovery Act.

If not for the audit, ECOtality would be just another obscure green energy company badly mismanaging U.S. taxpayer dollars until it’s all gone. As is, most of it is already gone.

A look at the DOE audit is a study in big government’s failure to be a good steward for taxpayer dollars paid by hard working Americans.

The biggest surprise isn’t what is in the audit, but what isn’t in it!

There wouldn’t be an audit if not for U.S. House Rep. Andy Harris (R-MD).

Making Plug-in Hybrids Viable

ECOtality, Inc. is an electric car charging station manufacturer. It makes BLINK chargers and manages the Blink Network through The EV Project. President Obama singled it out as a Recovery Act success story in his 2010 State of the Union Address.

ECOtality was awarded $35 million in two awards for vehicle testing and $100 million to create a charger station infrastructure network.

As a result of the audit, the DOE cut off ECOtality funding on 8/8/2013. Lacking money, ECOtality announced three days later, in an SEC filing, that it’ll probably go bankrupt.

ECOtality is supposed to spearhead development of a national infrastructure network of electric car charging stations considered essential to making electric vehicles a viable alternative to internal combustion gasoline powered transportation.

Audit Findings

The Department (DOE) and Ecotality had not always effectively managed the Recovery Act award

We made several recommendations to address the issues we observed and to improve the management of this and similar projects
– Inspector General’s DOE Audit Report, 7/25/2013

The IG’s audit is an indictment on government oversight of its green energy projects.

For ECOtality and the DOE it found:

  • Cost-sharing ($550/month/customer) permitted by the DOE “appeared excessive”
  • Award details were not finalized in a timely fashion
  • Facing less than expected EV demand, the DOE and ECOtality arbitrarily changed specs
  • There are inadequate procedures for handling underutilized commercial charging stations

Cost-sharing for EV owners participating in the EV Project was close to the entire monthly payment for their plug-in hybrid cars. How nice!

That is a great deal for car owners, but a terrible deal for taxpayers. It’s especially bad given that plug-in hybrid purchasers already got a $7,000 tax credit. Participating customer’s even get a $17/month internet connection allowance for data collection!

According to the audit, 14,960 total charging stations were to have been deployed by December 2011. A primary objective of the project is to collect usage data from those chargers. Data collection from those stations was to have been completed four months ago.

According to ECOtality’s revised schedule, only 6,500 stations have been deployed so far and data would be collected on only 3,300 chargers for a year or less.

Further, all contracted fast chargers (30 minute) were supposed to be installed by June 2011. As of right now, 70% of those chargers still remain to be installed.

The audit identified “other matters” regarding ECOtality. Specifically, there were overbiling and price gouging complaints for charger installations.

Just for DOE alone, the IG audit recommends:

  1. Evaluate processes for monitoring awards
  2. Review processes for finalizing awards
  3. Revise guidance on third party, in-kind cost-share contributions

The Andy Harris Letters

Why did DOE award ECOtality an additional $26 million contract nearly a year after SEC issued a company subpoena in October 2010 (for insider trading)?
– U.S. House Rep. Andy Harris (R-MD), Letter, 3/26/2012

In early 2012 Congressmen Harris, a Republican, sent two letters – a 3/26/2012 letter and a followup 5/18/2012 letter – to Energy Secretary Steven Chu. He asked for info about DOE’s EVT program. In both, however, Harris asked for specific details about just one named company – ECOtality!!

The IG audit is the result of those letters.

Suspiciously, Steven Chu’s former chief-of-staff, Brandon Hurlbut, was hired onto ECOtality’s board of directors just six days after the audit was released.

Ironically, however, by that time Steven Chu was no longer Secretary of Energy.

Conclusions

ECOtality spent $95 million of the original $100 million charger grant that was supposed to achieve all it’s project goals. Clearly, project objectives have not and can’t be met.

No wonder DOE cut off funding.

The audit also failed to discover a charger overheating problem covered up by ECOtality that has since forced recall of all Blink chargers. The Blink Network is in danger of becoming a rusting monument to big government folly.

The most disturbing of all
There is nothing in the audit report about the $35 million ECOtality got for “advanced vehicle testing”. Ironically, there was no auditing of the $26 million part of it that triggered Congressman Harris’ ECOtality inquiry in the first place.

ECOtality’s wholly-owned subsidiary, etec labs, does exclusive vehicle testing under the auspices of the Idaho National Laboratory (INL).

There is no hard evidence whatsoever that etec labs (or ECOtality North America) did anything remotely close to costing $35 million.

That money just vanished!!

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Posted on Aug 29, 2013, in Business, Climate, economics, Energy, environment, Government, news, Politics, science, technology. Bookmark the permalink. 5 Comments.

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  2. I wonder if our republican conressman would also care to investigate oil and gas subsidies? Military contracts? Farm subsidies? Or is it just high profile political/ environmental subsidies like those awarded to Ecotality from the DOE?

    This is so depressing and it’s why issues facing the environment and politics don’t mix. Obama touts a new environmental project, offers taxpayer funding. The Republicans lick their chops and hit his program with an audit. I’m not saying what Ecotality did was right (probably a lot of other corruption out there though) but while all this bickering has gone on–the planet has warmed another fraction of a degree and the polar ice cap has melted. Can we get it together children?

    But, oh yes I’m indignant about this tax rip off! Money is being misused dammit! How dare they?

    Wake up.

    • You are correct… all subsidies and programs should be looked into.

      The U.S. federal government is the most wasteful spender on planet earth. Savings can be found in literally every program without exception.

      You are on the mark that politics mixes with energy policy and environment policy about as well as vinegar and water.

      When politicians decide energy and environmental policy it has little to do with energy and the environment. It has everything to do with money and power.

  1. Pingback: ECOtality Scandal: The Final Chapter | Inform The Pundits!

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