# Presentation: 879234

## STATE ENERGY PROGRAMProgress and Challenges

- Eastern States Meeting
- November 15, 2006

## The Road Today

- SEP Business
- Budgets
- Services
- Marketing
- EPACT
- Future 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.

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 Budget

- FY 2006:			$36.4 million
- FY 2007:
- 	Administration Request	$49.5 million
- 	House Budget			$25 million
- 	Senate Budget			$49.5 million
- At present, DOE is operating on a Continuing Resolution which is expected to run through the end of the year.

**Notes:**
The House Subcommittee provided no funds for 2007, citing the IG’s conclusions regarding cost-benefit.

The Full House added $25 million for 2007

DOE and the Administration appealed the House decision, requesting full funding at $49.5 million.  Andy Karsner strongly supports full funding for SEP.

The House/Senate Conference will decide on the final numbers. 

As most of you know, DOE is operating under a Continuing Resolution.  The current CR expires on November 17, but is expected to be extended through the end of 2006.

The large difference between the House and Senate funding levels, and the changes that will take place on Capitol Hill in January, make it especially difficult to predict what the final 2007 funding level will be.  
If the CR is extended much beyond the end of the year, which has happened before, it will be difficult for the States to begin developing their 2007 SEP State Plans.  While a CR is in effect, any FY 2007 planning must be done at the lower of the House and Senate budget marks, or $25 million. 

## EPAct 2005

- Two changes to SEP:
- 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 and opportunities and actions than could be carried out in pursuit of common energy conservation goals
- SEP regulation has been updated to reflect these changes – revisions in _Federal Register _10/2/06

**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 from Secretary Bodman to the State Governors ( has been circulated to all EERE EUS Offices, is currently in David Rodgers’ office)
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.

## EPAct 2005

- EPACT establishes three programs to be carried out through the State Energy Offices  *(subject to funds availability):*
- Section 125:  Establishes an Energy Efficiency Program for Public Buildings for States
- 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.
- Section 913:  Establishes a Program to demonstrate renewable energy in public buildings.

**Notes:**
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.”

We are working on a solicitation to implement this Section in the event that the funding is included in the Conference budget.  We will be looking for innovative ideas in market transformation in this solicitation

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
- The draft Plan is in final editing and will be available in December.

**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.

## IG Report

- Earlier this year, the 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

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

I would like to thank the State Energy Office staff from Florida, Georgia and Pennsylvania for the time and effort you put into these interviews.  As you can see from the next slide, it made a difference.

## IG Report (cont)

- The IG Letter Report recommended:
- Specifying the monitoring responsibilities and staffing of the program at the reorganized EERE field sites.
- Implementing regularly scheduled monitoring visits that address administrative, financial, and programmatic areas
- Completing work with the State to design appropriate quantifiable performance measures and to use the results to re-evaluate the cost benefit of the program.

**Notes:**
A Letter Report is the best possible outcome from an IG audit.  

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’s Response – Next Steps
- Monitoring working group is revising SEP and WAP monitoring guidance and developing a coordinated grant monitoring schedule.
- SEP Strategic Plan includes more specific and measurable performance measures.
- Planning for the next phase of SEP evaluation efforts has begun, building on ORNL’s metrics work.

**Notes:**
A monitoring working group is currently being formed.

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.

The next phase of evaluation activities for SEP will move away from estimations of program impacts and will involve more targeted evaluation, including direct data gathering where necessary.

## Grants Management Issues

- UNCOSTED CARRYOVER
- Special area of emphasis
- EERE has been criticized for its financial management.  Uncosted carryover in grants and contracts is being targeted
- Uncosted 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 

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

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

## Grants Management Issues

**E-GOV and Grants.gov:**
- E-Gov’s budget for 2007 has been cut, and the system design contractor has been changed.
- SEP Forms are caught in this change.
- Plans are to use Grants.gov for 2007 State Plan submission
**Energy Emergency Plans:**
- 50 States and Territories have submitted updated Energy Emergency Plans to date.
- Copies have been provided to the Office of Electricity Delivery and Energy Reliability

**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.

Thanks to all of you who have sent Joe Konrade your latest Energy Emergency Plan.  As you know, these are required by SEP’s legislation to be submitted for information only.  We pass them along to the DOE office in charge on planning for energy emergencies, now the Office of Electricity Delivery and Energy Reliability.  Alice Lippert, who many of you know, is responsible for working with the States on response to energy interruptions and emergencies.

## PVE Funds

- Last Remaining PVE Funds Were Distributed in Summer 2006
- Good News/Not-so-Good News
- Good News:  OHA distributed $42 million during July and August, 2006, 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!

**Notes:**
The case that was tied up in the courts was settled this summer. [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

- PVE DATA RECONCILIATION
- Significant number of discrepancies between PVE fund records maintained by DOE and the States; need to reconcile *as much as possible*
- E-Mail 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) or Harvey Major (202-586-0124 or harvey.major@ee.doe.gov) with questions
- Deadline for submission of FY 2006 Annual Reports extended to allow for reconciliation

**Notes:**
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...)

Deadline for submission of FY 2006 reports:		10/31/06 for states with a 7/1-6/30 FY
								11/30/06 for states with a 10/1-9/30 FY
Deadline has been extended for approx. 15 states due to the work involved in reconciling the data.  If you need more time, send a brief request by e-mail or letter to Faith Lambert.

## EERE Air Quality Integration – Market Transformation Opportunities

- DOE, in partnership with EPA and states, is supporting air quality integration
- 15 states are actively working on EE/RE projects to help achieve air quality objectives
- Successes to date:
- Texas is including nearly 1000 EE/RE projects in its NOX SIP
- Colorado spent $500,000 of an enforcement settlement on EE/RE measures in local schools
- The Illinois PUC looked favorably on an RPS goal with consideration of the air quality benefits
- Connecticut implemented  99 new Clean Energy Projects in 2005, including 75 new PV installations & 6 fuel cells
- 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. 

## EERE Addresses Complex National Energy Issues

- EERE Addresses Complex National Energy Issues

- Increasing dependence on foreign oil
- Environmental impacts associated with energy use

- A vulnerable national energy infrastructure
- Rising fossil fuel prices

**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. 

## States Guide State Information Task

**State Energy Information Advisory Board 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: **
**State Energy Program Web site organizes descriptions of state energy office projects by topic and state. **
**	****	****www.eere.energy.gov/state_energy_program/**
***EERE State Activities & Partnerships *****links to state content on EERE Web sites, publishes energy statistics, organizes news by state.****  **
- 		**www.eere.energy.gov/states/**
**Weatherization & Intergovernmental Program site links to all WIP program Web sites.**
**	****	****www.eere.energy.gov/wip/**

**Notes:**
I DON’T UNDERSTAND THIS ONE!!!!    IS IT JUST ME, OR DOES THE  TITLE NEED SOMETHING?

Add info on EERE State Energy Portal?    

## Technical Assistance Project (TAP)

- Crosscutting policy and technical assistance for states (up to $5k)
- Five 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
**Use of renewables for disaster relief, mitigation, and planning (NEW)**

**Notes:**
I WILL JUST MENTION THIS BRIEFLY, SINCE RON BENIOFF IS HERE FROM NREL AND WILL BE TALKING ABUT TAP IN MORE DETAIL.

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.

## State Services Delivered (7-25-06)

- 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)**

## Technical Assistance Project (TAP)

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

## Renewable Energy Production Incentive (REPI)

**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

| 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 |

**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

- For Policy and Appropriation questions contact:
- Dan Beckley
- 1000 Independence Ave, SW
- Washington, DC 20585
- Email: dan.beckley@ee.doe.gov

- For REPI implementation - facility qualifications, applications, and payment 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**

## www.eere.energy.gov

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

**1-800-DOE-3732**