A GOP Gubernatorial Candidate Has Deep Ties To Scandal-Plagued Company

Kelly Ayotte, once a U.S. senator from New Hampshire, has portrayed herself as a champion to clean energy. But as she mounts a bid for governor of the Granite State, her past role on the board of a troubled company may undermine that message.

Ayotte joined Bloom Energy Corp.’s board of directors in November 2017, about a year after narrowly losing her 2016 reelection bid to Democratic Sen. Maggie Hassan. At the time, the California-based fuel cell manufacturer was in the midst of mounting financial and environmental scandals.

Bloom saw in Ayotte someone with a “track record of working in a bipartisan manner to promote energy solutions that are good for the economy, the environment and national security,” as the company’s founder and CEO KR Sridhar said at the time.

In Congress, Ayotte had bucked her party on energy and climate change, becoming the first Republican to endorse the Obama administration’s Clean Power Plan to curb carbon pollution from power plants and joining a handful of GOP lawmakers in supporting a nonbinding amendment that stated “climate change is real and human activity significantly contributes to climate change.”

The Bloom post, along with joining the right-leaning environmental advocacy organization Citizens for Responsible Energy Solutions as a senior adviser, allowed Ayotte to further position herself as a clean energy advocate. In a news release announcing her appointment to the board, Ayotte said Bloom’s mission aligned with three of her top priorities: “ensuring energy security, reducing harmful emissions, and the creation of high quality advanced manufacturing jobs.”

Media investigations and a 2019 report from Hindenburg Research, an investment research firm, have poked many holes in Bloom’s claims that its fuel cell technology is clean, green and cheap. Ayotte’s tenure followed and overlapped with many of Bloom’s financial and legal woes.

Ayotte’s campaign did not respond to HuffPost’s requests for comment. Bloom Energy also did not respond.

The extent to which Ayotte was aware of or played a role in the company’s missteps is unclear. But as a member of Bloom’s board from November 2017 to May 2019, she was tasked with helping to “oversee the integrity of Bloom Energy’s financial statements and financial reporting process,” as well as to “prevent and detect violations of law, regulation, or Bloom Energy’s policies and procedures.” Ayotte served as chair of the board’s nominating, governance and public policy committee.

Ayotte is one of four candidates running to succeed New Hampshire Republican Gov. Chris Sununu, who is not seeking reelection. A former senator and state attorney general, Ayotte will face Chuck Morse, a former state senator, in September’s Republican primary.

On her campaign website, Ayotte writes that she would “take an all-of-the-above approach to lower energy costs while focusing on stability, affordability, modernization, sustainability, and market-driven solutions.” And in a September interview with the New Hampshire Bulletin, she said her energy policy would focus “on the very best affordable clean energy” for New Hampshire residents.

But her time at Bloom, for which public filings show she earned at least $131,250 and received more than 13,000 company shares, threatens to complicate her image as a clean energy advocate.

Former Republican Sen. Kelly Ayotte of New Hampshire speaks at a campaign rally on Sept. 22, 2020, at Lanconia Municipal Airport in Gilford, N.H. Ayotte announced last year she'd run for governor, days after fellow Republican Chris Sununu said he’s not seeking reelection to a fifth term.
Former Republican Sen. Kelly Ayotte of New Hampshire speaks at a campaign rally on Sept. 22, 2020, at Lanconia Municipal Airport in Gilford, N.H. Ayotte announced last year she’d run for governor, days after fellow Republican Chris Sununu said he’s not seeking reelection to a fifth term.
via Associated Press

The September 2019 Hindenburg report on Bloom Energy, released just four months after Ayotte stepped down from the board, was damning.

It detailed a purported $2.2 billion in undisclosed service liabilities, “tricky accounting” that allowed Bloom to mask servicing costs and losses, and a history of Bloom executives making what Hindenburg described as “false” statements about its carbon emissions and its profitability. It also found that Bloom had received more than $1 billion in clean energy subsidies — money that a former Bloom employee told Hindenburg likely kept the company from going under.

The report concluded that “contrary to myths about Bloom, our research indicates that Bloom’s technology is not sustainable, clean, green, or remotely profitable.” And it forecast that Bloom would “become yet another tombstone in the Silicon Valley cemetery of dead unicorns.”

Bloom disputed the Hindenburg findings, arguing the report “presented factual inaccuracies, misleading allegations, and drew erroneous conclusions, including about the future viability of Bloom.”

Subsequent investigations from Forbes and Axios respectively concluded that Bloom’s technology is “too dirty and too costly” to transform the electric grid and that the company has “a history of playing fast and loose with its numbers.”

Bloom maintains that its solid oxide fuel cells — most of which run on gas, a planet-warming fossil fuel, and have been installed and touted by corporate giants like Home Depot, Target and Walmart — “produce nearly 50% less carbon emissions” compared to average power generation from the grid. In a 2016 news release, Home Depot bizarrely claimed that its gas-powered Bloom fuel cells were “providing on-site renewable energy.”

Hindenburg detailed a far dirtier picture, finding that Bloom’s fuel cells emitted more carbon dioxide than the grid in four out of five key states it operated in at the time.

“The company’s ‘clean’ narrative is absurd,” the report stated. “Its emissions are comparable to those of modern natural gas power plants.”

KR Sridhar, co-founder and CEO of Bloom Energy, poses in front of Bloom Energy power servers at eBay offices in San Jose, Calif., in 2010.
KR Sridhar, co-founder and CEO of Bloom Energy, poses in front of Bloom Energy power servers at eBay offices in San Jose, Calif., in 2010.
via Associated Press

Along with scrutiny about the extent to which its fuel cells “accelerate the path to decarbonization and better air quality for all,” as the company touts on its website, Bloom has faced hefty fines for mishandling hazardous waste and allegations that it misrepresented its profitability and financial health.

In 2018, the Environmental Protection Agency ordered Bloom to pay more than $1 million in fines for not filling out required manifests for hundreds of canisters containing benzene, a cancer-causing chemical, that the company shipped to waste disposal facilities. Those shipments went to three separate facilities in Ohio, New Mexico and Texas between 2015 and 2020 — a period that included Ayotte’s tenure on Bloom’s board.

Bloom initially contested the alleged violations, arguing that it believed it was exempt from having to fill out such manifests, before ultimately agreeing to pay a $210,000 civil penalty in May 2020, according to company financial statements to the Securities and Exchange Commission and EPA’s final order on the consent agreement. The agreement stipulated that, aside from agreeing that the EPA had jurisdiction on the matter, Bloom “neither admits nor denies the specific factual allegations and conclusions of law” found in the agreement.

Bloom’s biggest blunder has been its record of false and misleading statements about its financial performance and future. On the day that the company went public in July 2018, Sridhar , Bloom’s CEO, told Marketwatch that “the company is already profitable as of the second quarter” and was expecting a bright future. But within hours, Bloom walked back Sridhar’s statements in a “clarification” to Marketwatch. And two days later, Bloom corrected Sridhar’s misstatements in a filing with the SEC. In an opinion piece several days later, Marketwatch columnist Therese Poletti and editor Jeremy C. Owens wrote that Bloom had “squandered its credibility” in less than a week as a public company.

Ayotte was on the board during Bloom’s initial public offering.

The IPO drew renewed attention to a scandal several years prior. In 2012, the SEC charged Advanced Equities, a brokerage firm that raised more than $100 million for Bloom, with misleading investors about the success of the fuel cell startup. Among other things, the SEC accused Advanced Equities of dramatically inflating the number of fuel cells it had on backorder. Bloom was never charged in the scandal. But the Wall Street Journal later reported that Bloom paid $16.7 million to Advanced Equities’ co-founders to settle an ongoing legal dispute. The two co-founders had reportedly threatened to sue Bloom, alleging that it was the source of false information that led to Advanced Equities being sanctioned — a claim that Bloom denied.

More recently, a federal judge last year signed off on a deal in which Bloom, its executives and underwriters agreed to pay $3 million to settle investors’ claims that the company misrepresented or omitted information as part of its initial public offering in 2018, Bloomberg Law reported. And in a February 2020 filing with the SEC, Bloom acknowledged that a large portion of its financial statements in 2018 and 2019 — when Ayotte was on the board — were inaccurate, noting they “should no longer be relied upon due to an error in accounting.” The company said it expected updated statements to reflect a decrease in revenue of up to $180 million and an additional $75 million in net losses.

The 2020 disclosure came just days after a lengthy Forbes investigation, “How Bloom Energy Blew Through Billions Promising Cheap, Green Tech That Falls Short.” The story noted that the recent departure of several Bloom executives, as well as Ayotte from the company’s board, underscored “the sense that Bloom may be living on borrowed time.”

Profitability has continued to evade Bloom Energy, although it’s seen revenues increase in recent years.

Former New Hampshire Sen. Kelly Ayotte accompanies then-Supreme Court Justice nominee Neil Gorsuch to a meeting on Capitol Hill in Washington, D.C., in 2017.
Former New Hampshire Sen. Kelly Ayotte accompanies then-Supreme Court Justice nominee Neil Gorsuch to a meeting on Capitol Hill in Washington, D.C., in 2017.
via Associated Press

A month after stepping down from Bloom’s board, Ayotte published a letter to the editor in which she defended the Republican Party against a Washington Post editorial, “Democrats don’t get everything right on climate. But they’re the only party trying.” Ayotte touted her own “track record of advancing policy in the clean-energy space” and highlighted three Republicans in Congress who she said “have offered concrete legislative proposals that address climate change.”

The reality, however, is that climate change denial remains rampant in today’s Republican Party, with former President Donald Trump leading the charge. While Ayotte continues to paint herself as a clean energy champion, she has endorsed Trump in the 2024 presidential race. Senate Democrats are currently investigating an April meeting between Trump and oil and gas industry executives in which the former president reportedly solicited $1 billion in industry campaign donations in exchange for rolling back many of President Joe Biden’s green energy policies.

In its biography of Ayotte, which appeared in numerous company financial statements, Bloom describes her as “the ’Sherpa’ for Justice Neil Gorsuch, leading the effort to secure his confirmation to the United States Supreme Court” in 2017. Notably, Gorsuch and other conservatives on the court have issued a series of rulings that threaten to severely limit the federal government’s ability to confront climate change and carbon pollution.

In a 6-3 decision last month, the Supreme Court overturned a 40-year precedent that afforded agencies broad discretion to craft regulation, effectively shifting federal regulatory power to judges. S&P Global reported this week that the ruling “could spell the demise of the Biden administration’s signature energy- and climate-related administrative rules.”