# Presentation: 745967

## STATE ENERGY PROGRAMOpportunities and Challenges

- Western States Meeting
- Mark Bailey
- August 2, 2006

## The Road Today

- Budgets
- SEP Business
- Services
- Marketing/Communications
- Strategic Directions

**Notes:**
It’s great to be here with you all today, and to have the chance to talk with you about SEP and plans for the future.  Jim Powell and I have had many discussions with Andy Karsner about SEP and the States, and he considers it vital to keep our partnership strong.  He sees the States as “Embassys” for EERE.

I’ll try to keep my formal presentation short to leave plenty of time for questions and discussion.

My presentation focuses on these areas.

## SEP Addresses Major Issues

- Increasing dependence on foreign oil
- Impact on environment from energy use

- A vulnerable national energy infrastructure
- Rising fossil fuel prices

**SEP Addresses Major Issues**

**Notes:**
Vulnerable Energy Infrastructure
Photo – Refinery in Pascagoula, Mississippi 
U.S. infrastructure includes natural gas and oil pipelines, LNG terminals, electric T&D grids, and oil refineries
Growing demand for natural gas is projected to increase demand for imported liquid natural gas (LNG) to 23% of U.S. natural gas demand by 2025. 
Environmental Impacts of Fossil Fuels
Photo  – “Brown Cloud Day” over Boston, MA – January 21, 1999
Rising Energy Prices
Photo - Price of gas at a station in Santa Barbara, Calif. Tuesday morning May 11, 2004, was $3.11 for full service, 91 octane. 
Increasing Dependence on Foreign Oil
Photo – ChevronTexaco’s 150,000-ton John Young, with a capacity of more than a million barrels of oil, was designed primarily for the growing trade between Indonesia and the U.S. West Coast. 
America currently imports 55 percent of the oil it consumes; that is expected to grow to 68 percent by 2025. 

## SEP Budget Trend

**Notes:**
The good news is this Administration has steadily increased the budget although not by large amounts.  The challenge is now in the Congress.  

FY 07 HOUSE MARK = $25M
FY 07 SENATE MARK = $49.5M

CONFERENCE = ??

We need to raise awareness of the benefits of SEP.

## IG Report

- DOE IG conducted an audit to determine whether the Department had implemented controls for the State Energy Program to
- ensure grant funds were used for their intended purpose
- determine the cost benefit of the program in meeting its goals
- IG Letter Report Recommendations
- Specify the monitoring responsibilities and staffing of the program at the PMC field sites.
- Implement regularly scheduled monitoring visits that address administrative, financial, and programmatic areas
- Completing work with the States to design appropriate quantifiable performance measures and to use the results to re-evaluate SEP cost/benefit.

- Good News!

**Notes:**
IG staff conducted interviews at DOE HQ, three Regional Offices and several States.  

I would like to thank the State Energy Offices from Colorado, Idaho, and Utah for the time and effort you put into these interviews. It made a difference. A Letter Report is the best possible outcome from an IG audit.  

Recommendations

Basically, it means that there were no negative findings and there is no need to proceed with a full-scale audit.  The recommendations for improvement are more in the nature of suggestions to management.  

In fact, the Audit Report remarks favorably on the activities carried out by the States they visited, and on the financial controls maintained by those States to ensure proper expenditure and tracking of the SEP funds.

## IG Report – EERE Response

- Monitoring working group will establish revised monitoring guidance and develop a coordinated grant monitoring schedule
- SEP Strategic Plan to include more specific and measurable performance measures
- A second outside review of the methodology used in the ORNL SEP study will soon be completed.  Planning for the next SEP evaluation will begin in FY07 and will include SEO input.

**Notes:**
NEXT STEPS

A monitoring working group is currently being formed.  States will be included in the process.

The monitoring guidance will include programmatic and financial areas to be covered in desk and on-site monitoring.  

The schedule will coordinate the monitoring visits  for SEP, Weatherization and other grants to achieve efficiencies in time and travel costs.

## PVE Funds

- Good News:  OHA will distribute $42 million within a few days, mostly to States and local governments.
- Not-so-Good News:  No requirement that these funds be used for energy-related programs.
- These funds represent direct restitution to individual claimants for documented overcharges
- Could go into a State’s general fund, or to a specific agency
- GET YOUR “BID” IN EARLY!

**Notes:**
The case that was tied up in the courts has been settled  [the lawyer lost!]

We have a list of all the individual distributions.  In some cases a specific State agency is named – e.g., KY Dept. of Education; in others the recipient is simply the State, e.g., the State of Connecticut.  Recipient shares are based on the amount of oil purchased at overcharge rates.

Even though there’s no requirement to use these funds for energy-related programs, whatever use the funds are put to may free up other State funds for energy programs.  Could also go into a State’s Public Benefit fund, which SEO’s could access.

SLIGHT POSSIBILITY OF ONE MORE VERY SMALL DISTRIBUTION, BUT MOST LIKELY, THIS IS THE LAST OF THE PVE FUNDS.

## PVE Funds – Balancing $$

- Significant number of discrepancies between PVE fund records maintained by DOE and the States; need to reconcile *as much as possible*
- E-Mail to be sent out to each State with the information we have on file from DOE’s systems and the State Annual Reports.
- Please follow up with Faith Lambert (202-586-2319, _[faith.lambert@ee.doe.gov](mailto:faith.lambert@ee.doe.gov)__) or Harvey Major (202-586-0124 or __[harvey.major@ee.doe.gov](mailto:harvey.major@ee.doe.gov)__) with questions_
- Deadline for submission of FY 2007 Annual Reports extended 60 days for all States to allow for reconciliation

**Notes:**
PVE DATA RECONCILIATION

It’s entirely reasonable that discrepancies have occurred, given that 1) we’ve been at this for 20 years, 2) multiple records are kept by different people at DOE and in the States, 3)staff has turned over a number of times, 4) accounting systems and terms vary and 5) the State and federal fiscal years are different.

SO, it’s no one’s fault!   We appreciate your willingness to work with us on this.

It’s likely that many States are completely spent out of either Exxon or Stripper Well funds, or both – once we verify that we can close the books on that State (no more need to report to DOE, or be bugged by DOE for missing reports...)

## Technical Assistance (TAP)

- Policy and technical assistance for states ~ $5k
- Four initial topic areas:
- Systems benefit charges or other rate-payer funded utility efficiency and renewable programs
- Renewable or efficiency portfolio standards (RPS)
- Use of clean energy technologies to reduce air emissions
- Use of renewable energy on state or local public lands
- New Areas
- Use of renewables for disaster relief, mitigation, and planning (NEW)
- Future TA to include broader scope
- Midwest/Western States Results
- 56 requests received to date/25 states assisted
- Examples:
- Analysis for Montana Governor’s Office on renewable portfolio standard design and implementation
- Analysis of state-level biomass feedstock resource for the Pacific Regional Biomass Energy Partnership
- Quantification of emissions reduction benefits from an energy efficiency project for the Louisiana Department of Natural Resources

**Notes:**
Not intended to be all things to all people or to overlap with existing activities – fills a niche in crosscutting areas and in its quick response
The requests are fulfilled by the relevant technical expert in one of the three participating labs.
Very quick turnaround time: states can get approval and begin receiving assistance in a matter of days for high priority and time-sensitive requests.
Effective model for internal coordination of assistance, very responsive to customer needs and deadlines.

Montana Example: LBNL’s Ryan Wiser assisted the Montana Governor’s Office, providing information and analysis on renewable portfolio standards in other states.  Wiser outlined the pros and cons of different approaches and provided examples to assist the state legislature in drafting their RPS. Mike Volesky in the Montana Governor’s Office noted, “The request process worked very smoothly.  We needed help on short notice to help craft renewable portfolio standard legislation, and received a very quick response.”  Mike also noted they were “Absolutely satisfied” with the TAP assistance, stating that “Ryan Wiser was knowledgeable, helpful, and great to work with.” 

Pacific Example:  This is the first multi-state TAP request, providing assistance to a coalition of state officials from Alaska, Hawaii, Idaho, Montana, Oregon, & Washington.  Resource information and analysis provided by experts at Oak Ridge National Lab will help these states gain a deeper understanding of available state-level biomass resources, sustainability issues and potential bioenergy industry development.

Louisiana Example: This TAP assistance effort was successful in getting an energy efficiency project recognized as an air pollution mitigation measure in the Shreveport Early Action Compact for air quality planning. This was a first in the country. NREL's Energy Analysis Office provided a range of analysis on this project, including modeling and verification of emissions reductions estimates from the energy efficiency project. Louis McArthur, Program Manager for Louisiana DNR comments, "The assistance received from all parties greatly exceeded any expectations that we may have had from the program. Our office has been interested in exploring quantification of demand side emissions reductions for some time now, but the TAP assistance allowed us to take the next step."  

Overall results:  
111 requests received to date (64 completed, 39 active)
43 states assisted.  
$532k committed.

## TAP Services Delivered 

- 3*

- 4*

- 2

- 6

- 3

- 4

- 4

- 1

- 5

- 3*

- 2

- 2

- 3*

- 2

- 3

- 3

- 4

- 2

- 3

- 6

- 3 NH
- 4 MA
- 1 RI
- 3 CT
- 1 DE

- 3

- 2

- 4

- 1

- 1

- 1

- 2

- 1

- 2

- 2

- 2

- 1

- 1

- 2

- 2

- 1*

- 1*

- 2

***Includes Multi-State Request(s)**

**Notes:**
For more information:

	Jerry Kotas (Golden PMC) at 303-275-4850, jerry.kotas@go.doe.gov  

				OR

	Stephanie Savage (NREL) at 303-275-4266, stephanie_savage@nrel.gov

These contacts are direct during PMC transition period.  PMC role to be decided.

## Marketing/Communications

- Branding SEP
- Critical to link contribution of SEP to project success.
- Build statewide recognition of SEO value.
- State Energy Information Group provides guidance.
- State energy offices submit news releases, project descriptions for bimonthly newsletter, *Conservation Update*, and success stories*.*
- WIP sponsors state-oriented Web sites for EERE:
- SEP site. _www.eere.energy.gov/state_energy_program/_
- EERE State Activities & Partnerships* *_*[www.eere.energy.gov/states/](http://www.eere.energy.gov/states/)*_

**Notes:**
We need do better job of building local constituency around program.  Doesn’t have to have SEP on front of brochure, but must recognize DOE/SEP recognition. 

SEP Site organizes descriptions of state energy office projects by topic and 

EERE website - state links to state content on EERE Web sites, publishes energy statistics, organizes news by state. 

## EPAct 2005 – States 

- SEP Specific
- Establishes goal of 25% or more improvement in energy efficiency by 2012, as compared to 1990.
- Requires the Secretary of Energy, every three years, to invite the Governor of each State to review and if necessary revise the SEP State Plan, in consideration of the Plans of other States within the region
- State Energy Offices *(subject to funds availability):*
- Section 125:  Establishes an Energy Efficiency Program for Public Buildings for States
- Section 913:  Establishes a Program to demonstrate renewable energy in public buildings.
**Section 140:  Establishes a Pilot Program of financial assistance to at least 3-7 States to plan and adopt State-wide programs that encourage energy efficiency ($5M in Senate Mark for FY07)**

**Notes:**
Most of you are familiar with this -=- it’s spelled out clearly in the FY 2006 SEP Program Guidance

FY 2006 SEP Program Guidance provides that the State Plans filed in 2006 should address the 25% goal and describe the States’ plans to achieve it.

Draft letter proposed for Secretary Bodman to send to the State Governors
Requests that the above review/revision be reflected in the SEP State Plans submitted in FY 2007, a little less than a year away
Expresses the Secretary’s commitment to partnering and working with the States and identifies Karsner as point person
Provides list of policy options for consideration. 

The Senate included $5 million in its 2007 Budget for the Section 140 program.  EPACT further describes the programs to be developed by the States under Section 140 as “statewide programs that encourage energy efficiency, and reduction of electricity/natural gas use in the State by at least 0.75 percent.”  Funds may also be used to “expand and improve existing programs.”

OWIP will be working with NETL to implement EPAct using SEP Special Projects solicitations – subject to the availability of funds!

## SEP Strategic Plan

- The SEP Strategic Plan, developed by State representatives, establishes the following goals:
- Increase energy efficiency to reduce energy cost and consumption for consumers,  business and government
- Reduce reliance on imported energy
- Improve the reliability of electricity, fuel and delivery of energy services
- Reduce the impacts of energy production and use on the environment
- Critical to the plan is improved metrics and benefit measurement.
- The draft Plan is being revised based on comments from States and NASEO, and should be final in September
- The plan responds to OMB PART identified program weaknesses.

**Notes:**
States developed plan in response to OMB  PART discussions relating to program goals and measurements.

Western region was represented by Maurice Kaya. Bill Nesmith, Janet Streff, Dub Taylor, Sara Ward.

Peter Dreyfuss, and Julie Riel represented RO’s...

## Where are we headed?

- Better Evaluation
- Marketing – Selling success
- Need strategic marketing plan
- Need more partners like NGA
- Focus on programs that can be self sustaining
- Focus on Best Practices
- RFP’s, RFS, Performance Contracting policies, Financing capital pools for EERE projects
- Market Transformation “Game Changers”

**Notes:**
NGA partnership objective is to share best practices with Gov staff and raise awareness of SEO’s.

## www.eere.energy.gov

**Bringing you a prosperous future where energy is clean, abundant, reliable, and affordable**

**1-800-DOE-3732**
**GO PMC**

## BACKUP

- GRANTS.GOV
- UNCOSTEDS
- Energy Emergency Planning
- -----
- AIR/ENERGY
- REPI

## E-GOV – Grants.gov

- E-Gov’s budget for 2007 has been cut
- SEP Form is caught in this reduction causing delay in converting form to Pure Edge Viewer
- Plans are to use Grants.gov for 2007 State Plan submission

**Notes:**
Thanks to those of you who participated in the successful Win-SAGA Grants.gov pilot earlier this year.

As it stands now, we do plan to use Grants.gov for the FY 2007 State Plan submissions – details still to be worked out

We will continue to work to minimize the impact of these changes -- in fact the process should be virtually transparent to the SEO’s who use WinSAGA.

## Grants Management Issues

- UNOBLIGATED CARRYOVER
- Special area of emphasis
- EERE has been criticized for its financial management.  Unobligated carryover in grants and contracts is being targeted
- Unobligated carryover negatively impacts our justifications for additional funding for SEP.

**Notes:**
I know you are all aware of this issue – it’s not a new one for SEP.   You have worked with us on this for a number of years.   

It’s true that the problem is caused in part by the fact that grant awards are made so late in the federal fiscal year, but even so it becomes much more difficult to justify increased budgets

SEP’s established  policy is to work with States to implement program activities as quickly as possible.  

PMCs will notify HQ of States with carryover amounts of 25% or more. 

## Energy Emergency Plans

- SEP Program Notice 06-2, June 30, 2006, requests that States send DOE copies of most recent Energy Emergency Plan by 9/1/06.
- OWIP will deliver them to the DOE Office of Electricity Delivery and Energy Reliability (Alice Lippert)
- Each State’s plan will then be entered into the Office’s data base to be used as a resource in the event of an energy emergency – allows DOE to respond more quickly and effectively

**Notes:**
Requirement of EPCA (Energy Policy & Conservation Act of 1975), and it is especially important in view of recent natural disasters that each State keep their Energy Emergency Plans up to date.

I think most of you know Alice Lippert, who has worked with the States for a number of years on planning for energy emergency response.

If you have any questions on this, call Joe Konrade (202) 586-8039

## EERE Air Quality/Energy Integration

- DOE, in partnership with EPA and states, is supporting air quality/energy  integration of policy, people, and projects.
- 15 states are actively working on EE/RE projects to help achieve air quality objectives with EERE projects
- Successes to date:
- Texas is including nearly 1000 EE/RE projects in its NOX Sip’
- The Illinois PUC looked favorably on an RPS goal with consideration f the air quality benefits
- Connecticut is quantifying and tracking air quality benefits from E/RE
- DOE has provided assistance with quantification of emissions avoidance, tapping expertise at NREL

**Notes:**
Air quality integration is an increasingly important driver for EE/RE technologies.  Harmonizing the benefits of EE/RE on air quality, water quality and economic development supports the adoption of EE/RE.

15 states are actively working on EE/RE air quality integration, others are interested. 

Quantification is critical – EPA rules and regulations require quantification of emissions avoidance. 

## What is REPI? - An incentive payment for public utilities, not for profit electric cooperatives, and Tribal utilities that generates and sells renewable energy to end use consumers.
Qualifying Technologies - solar, wind, biomass, landfill gas, livestock methane, ocean, or geothermal energy

**Qualifying Technologies -**** **solar, wind, biomass, landfill gas, livestock methane, ocean, or geothermal energy

| Fiscal Year | EERE Budget Request 
($million) | Congressional Appropriation ($million) |
| --- | --- | --- |
| 2007 | 4.946 | -- |
| 2006 | 5.00 | 4.856 |
| 2005 | 5.00 | 4.960 |
| 2004 | 4.00 | 3.926 |
| 2003 | 4.00 | 4.816 |
| 2002 | 3.99 | 2.840 |

**REPI**

**Notes:**
Talking Points
REPI is run out of the Golden Field Office.  Christine Carter is the project officer.
REPI was created in EPACT 1992 to provide public utilities an incentive that mirrored the production tax credit for investor owned utilities (note public utilities do not pay taxes and therefore were not eligible for PTC.) 
REPI pays public utilities and not-for-profit electrical cooperatives 1.5 cents per kilowatt hour of electricity generated and sold.  (1.5 c kWh is indexed for inflation.  Current rate is about 1.8 cents per kilowatt hour).
Once the utility is in the program they are in for 10 years.
The appropriations average around $4.5 – 5.0 million.  This small amount of money is shared between the 92 qualifying facilities.  As you can imagine, REPI is oversubscribed.  
Total REPI requests (in dollars) in FY05 was about $60 million. REPI only paid out $5 million on a pro rata basis.  Everyone receives something, albeit small.
EPACT 2005 
Reauthorized the program until 2016 with a sunset date of 2026.  Once the utility is in the program they are in for 10 years.  So the last day to apply is Sept 30, 2016.  Payments will no longer be paid out on Sept 30 2016.
Qualifying participants was extended to Tribal and Native Alaskans
Ocean was added.

Chart on Right:  Tiers 1 & 2 declined in 2004 because first year(1994) recipients had completed their 10 year run and left the program.  Tier 1 rose in 2005 with the program’s reauthorization.  Tier 2 declined in 2005 despite reauthorization probably because applicants in this group had received no payments after 2002.  With the new 60:40 split (as designated in EPACT 05), Tier 2 participants will now receive a small payment. 
EXAMPLE – Assume $5million.  $3 million will be paid to 66 qualifying facilities (formerly Tier1) and $2 million will be paid to the Tier 2 folks (primarily landfill methane qualifying facilities).

## REPI Contact Information

- Program policy questions contact:
- Dan Beckley
- 1000 Independence Ave, SW
- Washington, DC 20585
- Email: _[dan.beckley@ee.doe.gov](mailto:dan.beckley@ee.doe.gov)_
- For REPI implementation questions contact:
- Christine Carter
- 1617 Cole Boulevard
- Golden, Colorado 80401
- Email: christine.carter@go.doe.gov

- REPI Website
**http://www.eere.energy.gov/wip/program/repi.html**