Sep Summary

FFIS

ISSUE BRIEF 09-09 ARRA Provides Big Funding Boost for State Energy Program March 18, 2009

Summary

The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-05) provides $3.1 billion in for the State Energy Program (SEP, CFDA 81.041). This is an enormous funding increase for a program that has never received annual funding of more than $50 million. Accordingly, both states and the Department of Energy (DoE) have a steep learning curve to navigate as they seek to distribute and invest program funds in a timely and effective manner. To that end, DoE has released a Funding Opportunity Announcement (FOA) that explains the steps states must take to secure their shares of funding. This brief summarizes that announcement.

Background

Congress created SEP in 1996 by consolidating two other programs: the State Energy Conservation Program (SECP) and the Institutional Conservation Program (ICP). Both programs went into effect in 1975. SECP provided states with funding for energy-efficiency and renewable-energy projects. ICP provided hospitals and schools with technical analyses of buildings and identified potential savings from proposed energy conservation measures. Several pieces of legislation form the framework for SEP: •

The Energy Policy and Conservation Act of 1975 (P.L. 94-163) established programs to foster energy conservation in federal buildings and major industries. It also established SECP.

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The Energy Conservation and Production Act of 1976.

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The Warner Amendment of 1983 (P.L. 95-105) allocated oil overcharge funds (called Petroleum Violation Escrow [PVE] funds) to state energy programs. In 1986, these funds became substantial when the Exxon and Stripper Well settlements added more than $4 billion to this mix.

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The State Energy Efficiency Programs Improvement Act of 1990 (P.L. 101-440) encouraged states to undertake activities designed to improve efficiency and stimulate investment in and use of alternative energy technologies.

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The Energy Policy Act (EPAct) of 1992 (P.L. 102-486) authorized DoE funding to be used to finance revolving funds for energyefficiency improvements in state and local government buildings; however, no funding was provided. The EPAct also expanded the policy-development and technology-deployment role for the states.

Federal Funds Information for States, 444 N. Capitol St., NW, Suite 642, Washington, DC 20001

Grant Formula

ARRA Guidelines

SEP has a two-tiered formula. Appropriations up to $25.5 million are based on historical allocations for the two programs that were merged to form SEP. Allocations in excess of $25.5 million are based: •

One-third divided equally among states

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One-third based on population

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One-third on the energy consumption of participating states

On March 12, 2009, the DoE released an announcement for SEP funding provided by ARRA. Included in the announcement are state allocations for the program, which are listed in Table 1. The FOA lists the following four goals for state use of SEP funds: 1. Increase energy efficiency to reduce energy costs and consumption for consumers, businesses and government. 2. Reduce reliance on imported energy. 3. Improve the reliability of electricity and fuel supply and the delivery of energy services. 4. Reduce the impacts of energy production and use on the environment. Preference will be given to activities that can be started and completed quickly, including a goal of using at least 50% of funds provided for activities that can be initiated not later than June 17, 2009. DoE anticipates making grant awards that will have a three-year period of performance.

Governor’s Assurance To receive funding, each state must notify the DoE in writing that its governor has obtained the following assurances: A. The applicable state regulatory authority will seek to implement a general policy that ensures that utility financial incentives are aligned with helping customers use energy more efficiently. B. The state—or units of local government that have the authority to adopt building codes—will implement: 1) a residential building energy code that meets or exceeds the most recent International Energy Conservation Code (or achieves equal or greater energy savings), 2) a commercial building energy code that meets or exceeds the ANSI/ASHRA/IESNA Standard 90.1-2007 (or achieves equal or greater energy savings) and 3) a plan to achieve 90% compliance with the above codes within eight years.

C. The state will prioritize grants toward funding energy-efficiency and renewable-energy programs, including: 1) the expansion of existing energy efficiency programs that are funded by the state or through utility rates under the oversight of the applicable regulatory authority, 2) the expansion of existing programs to support renewable energy projects and deployment activities, and 3) cooperation and joint activities among states to advance more efficient and effective use of this funding.

Deadlines The due date for initial state applications for SEP funds is March 23, 2009. A state’s comprehensive application must be received by May 12, 2009. In keeping with ARRA, all funds must be obligated by September 30, 2010. FFIS Issue Brief 09-09

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Matching Requirements The 20% state match for the SEP is waived for ARRA funds. However, states are required to use ARRA funding to expand existing programs and not to supplant or replace existing state, utility customer or other funding.

Timing of Funds Release SEP funds will be released to states as follows: •

10% of total allocation at time of initial award of ARRA funds

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40% of total allocation upon DoE approval of state plan

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20% of total allocation upon demonstration that state has obligated at least 50% of previously awarded funds, is complying with reporting requirements and is creating jobs

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Remaining funds upon demonstration by a state that it is making continuing progress in obligating funds, meeting reporting requirements and creating jobs

Table 1 shows the amounts available to each state under this schedule.

Priority Use of Funds The following types of programs have been identified as having the greatest potential to achieve the goals of ARRA funding for SEP: •

Establishing and enforcing energy-efficient building codes and standards

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Loans, grants and incentives for energy-efficiency and renewableenergy measures

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Building retrofits

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Traffic signal synchronization and replacement with LEDs

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Industrial retrofits

No limits are placed on capital spending associated with these projects.

Expenditure Reporting States must report quarterly on progress, including specific activities and amounts of funding obligated and expended. Expenditure information should be tracked and reported as follows: •

Expenditures for project activities

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Expenditures for administration

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Amount of project funding that was leveraged from other sources

For additional information, Marcia Howard contact: Phone: 202-624-5848 Fax: 202-624-7745 Website: www.ffis.org E-mail: [email protected] Copyright © 2009 FFIS Federal Funds Information for States. All rights reserved.

FFIS Issue Brief 09-09

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Table 1 ARRA Funding for the State Energy Program (dollars in thousands) State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Puerto Rico American Samoa Guam Mariana Islands Virgin Islands TOTAL

Initial Award $5,557 2,823 5,545 3,942 22,609 4,922 3,854 2,423 2,202 12,609 8,250 2,593 2,857 10,132 6,862 4,055 3,828 5,253 7,169 2,731 5,177 5,491 8,204 5,417 4,042 5,739 2,586 3,091 3,471 2,583 7,364 3,182 12,311 7,599 2,459 9,608 4,670 4,218 9,968 2,396 5,055 2,371 6,248 21,878 3,536 2,200 7,000 6,094 3,275 5,549 2,494 3,709 1,855 1,910 1,865 2,068 $306,900

Second Award $22,228 11,293 22,179 15,766 90,437 19,689 15,417 9,692 8,809 50,436 32,998 10,372 11,429 40,528 27,448 16,218 15,314 21,013 28,678 10,922 20,709 21,964 32,814 21,669 16,167 22,957 10,342 12,364 13,886 10,331 29,457 12,728 49,244 30,396 9,834 38,433 18,682 16,873 39,874 9,584 20,220 9,484 24,993 87,513 14,145 8,800 28,000 24,378 13,098 22,195 9,976 14,834 7,420 7,639 7,460 8,271 $1,227,600

Third Award $11,114 5,646 11,089 7,883 45,219 9,844 7,708 4,846 4,404 25,218 16,499 5,186 5,714 20,264 13,724 8,109 7,657 10,507 14,339 5,461 10,354 10,982 16,407 10,834 8,084 11,479 5,171 6,182 6,943 5,165 14,729 6,364 24,622 15,198 4,917 19,217 9,341 8,436 19,937 4,792 10,110 4,742 12,496 43,756 7,072 4,400 14,000 12,189 6,549 11,098 4,988 7,417 3,710 3,820 3,730 4,136 $613,800

Remaining Funds $16,671 8,470 16,634 11,825 67,828 14,767 11,563 7,269 6,607 37,827 24,749 7,779 8,572 30,396 20,586 12,164 11,485 15,760 21,508 8,192 15,532 16,473 24,611 16,252 12,125 17,218 7,757 9,273 10,414 7,748 22,093 9,546 36,933 22,797 7,376 28,825 14,011 12,655 29,905 7,188 15,165 7,113 18,745 65,635 10,609 6,600 21,000 18,283 9,824 16,646 7,482 11,126 5,565 5,729 5,595 6,203 $920,700

Total Allocation $55,570 28,232 55,447 39,416 226,093 49,222 38,542 24,231 22,022 126,089 82,495 25,930 28,572 101,321 68,621 40,546 38,284 52,533 71,694 27,305 51,772 54,911 82,035 54,172 40,418 57,393 25,855 30,910 34,714 25,827 73,643 31,821 123,110 75,989 24,585 96,083 46,704 42,182 99,684 23,960 50,550 23,709 62,482 218,782 35,362 21,999 70,001 60,944 32,746 55,488 24,941 37,086 18,550 19,098 18,651 20,678 $3,069,000

Copyright © 2009 FFIS Federal Funds Information for States. All rights reserved.

FFIS Issue Brief 09-09

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