Defense Infrastructure: Improvement Needed in Energy Reporting and Security Funding at Installations with Limited Connectivity
Published: 2016-01-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD is the largest energy consumer in the federal government, spending about $4.1 billion on facilities' energy at more than 500 permanent military installations throughout the world in fiscal year 2013. To help ensure oversight of DOD's fulfillment of energy performance goals, Congress requires that DOD track energy savings, investments, and projects in its annual Energy Report. The Energy Report also details DOD's activities to enhance energy security.
Congress included a provision for GAO to review DOD's fiscal year 2013 Energy Report and energy security at energy-remote military installations—that is, those installations located in areas with limited connectivity and without significant infrastructure of power plants, transmission lines, or distribution lines.
GAO assessed the extent to which (1) DOD addressed the 12 required reporting elements and reliably reported data in its fiscal year 2013 Energy Report and (2) the military services help ensure energy security at energy-remote military installations in the United States. GAO analyzed DOD's Energy Report and interviewed officials from the Office of the Secretary of Defense, military services, defense agencies, and all installations in Alaska and Hawaii because they were identified as energy remote.
section_title: What GAO Found
paragraphs: The Department of Defense's (DOD) fiscal year 2013 Annual Energy Management Report (Energy Report) addressed some of the required reporting elements and correctly incorporated data from the military services and defense agencies. However, the report is not fully reliable because the data were captured and reported using different methods, hindering comparability across the department. Specifically, the Energy Report addressed six, partially addressed four, and did not address two reporting requirements. For example, the Energy Report addressed the requirement to describe actions taken to implement DOD's energy performance master plan, partially addressed the requirement to describe progress to meet various energy goals (it described progress for three of five required goals), and did not address the requirement to describe the types and amount of financial incentives received. The Energy Report correctly reflected data provided by the military services and defense agencies. However, the military services and defense agencies used different methods for capturing and reporting on data in the Energy Report such as on energy consumption and projects. These inconsistencies resulted from guidance that was either unclear or lacking. For example, DOD did not provide guidance on reporting end-of-fiscal-year energy data; thus, the military services and defense agencies used different reporting methods. Without clear guidance for reporting data consistently, it will be difficult for DOD to have reliable data to plan effectively to reach energy goals, and Congress will have limited oversight of DOD's energy consumption and difficulty in comparing energy projects.
The military services generally help ensure energy security (the ability to continue missions in the event of a power outage) at their energy-remote military installations in Alaska and Hawaii by providing access to multiple power sources. However, GAO identified areas of risk to energy security regarding installation electricity systems, high energy costs, and funding. GAO found that the military services addressed some risks by conducting studies on integrating renewable energy into electricity systems and identifying alternative energy solutions to lower costs. However, military service efforts to incorporate energy security into funding decisions have been limited. The processes to evaluate projects for funding generally do not consider energy security in prioritizing those to receive funding, and officials from all four military services stated that there is no military service or DOD guidance related to evaluating projects for funding that focuses on energy security. As a result, six of the nine locations GAO visited in Alaska and Hawaii cited difficulty obtaining funding for energy security projects. For example, officials at the Air Force's Alaska Radar System said they have sought funding since 2002 to build a networked system of multiple fuel tanks at three off-grid locations that each have only one fuel tank, but they said energy security projects do not compete well against other projects, such as those for new facilities. Navy officials similarly stated that energy security projects—which have significant infrastructure costs—do not compete well for funding against energy conservation efforts based on return on investment. Without clarification of the processes used to compare and prioritize projects for funding to include consideration of energy security, it will be difficult for decision makers to have sufficient information to adequately prioritize energy security projects for funding when appropriate and thus address energy security issues.
section_title: What GAO Recommends
paragraphs: GAO recommends, among other things, that DOD revise its guidance for producing the Energy Report and clarify funding processes to include consideration of energy security. DOD concurred with all recommendations.

section_title: Letter
paragraphs: The Department of Defense (DOD) is the largest energy consumer in the  federal government, spending about $4.1 billion on facilities’ energy at  more than 500 permanent military installations throughout the world in  fiscal year 2013. These permanent installations are critical components of  DOD’s ability to fight and win wars, and they account for approximately 30  percent of DOD’s total energy use. To help ensure oversight of the  department’s fulfillment of energy performance goals, Congress requires  that DOD track energy savings, investments, and projects in its Annual  Energy Management Report (Energy Report). The Energy Report also  details DOD’s activities to enhance energy security and resilience, with  DOD reporting that it is critical for installation commanders to understand  the vulnerabilities and risks associated with power disruptions that affect  mission assurance. These power disruptions become even more critical  at DOD installations that are located in areas without significant  infrastructure of power plants, transmission lines, and distribution lines  (i.e., energy-remote locations), which may have fewer options to obtain  sufficient and reliable energy to ensure continuation of mission.
Since 2005, we have issued over a dozen reports on defense energy  issues, including reports on specific requirements in DOD’s Energy  Report, renewable energy, and energy project financing options. In our  September 2010 report, we found that the fiscal year 2009 Energy Report  did not include information on the eight specific issues identified by the  National Defense Authorization Act for fiscal year 2010. In our January  2012 report, we found that DOD’s fiscal year 2010 Energy Report fully  addressed two, did not address one, and partially addressed five of the  eight expanded reporting requirements. The Related GAO Products  page at the end of this report provides a listing of our related work.
Section 2925 of Title 10 of the United States Code requires that, not later  than 120 days after the end of each fiscal year, the Secretary of Defense  shall submit to the congressional defense committees an installation  energy report detailing the fulfillment during that fiscal year of select  energy performance goals. Specifically, under the law, DOD’s Energy  Report must include 12 reporting elements, such as a table detailing  funding for all energy projects funded through appropriations, a table  listing third-party financing mechanisms, a description of actions taken  and energy savings realized from DOD’s energy performance master  plan, and details of utility outages at military installations. In the Joint  Explanatory Statement accompanying the Carl Levin and Howard P.  “Buck” McKeon National Defense Authorization Act for Fiscal Year 2015,  Congress included a provision that we review DOD’s fiscal year 2013  Energy Report and energy security at energy-remote military installations  in the United States. This report addresses the extent to which (1) DOD  addressed the 12 required reporting elements and reliably reported data  in its Energy Report and (2) the military services helped ensure energy  security at energy-remote military installations in the United States.
To determine the extent to which DOD addressed the 12 required  reporting elements and reliably reported data in its Energy Report, two  GAO analysts independently reviewed the fiscal year 2013 Energy  Report, comparing it with each element required by the law and  determining whether each required reporting element was included. In the  case of any conflicting determinations, a third GAO analyst adjudicated  the difference. To gain a full understanding of the elements included in  the Energy Report and to discuss the methodology used for collecting  information and reporting on the required elements, we met with DOD  officials knowledgeable about compiling information for the report,  including individuals from the Office of the Secretary of Defense (OSD)— specifically, the Assistant Secretary of Defense for Energy, Installations,  and Environment; the four military services; and the 10 defense agencies  that contributed to the report. We also reviewed the data and other  inputs provided by each military service and defense agency to be  included in the Energy Report. We looked for any anomalies in the data,  such as missing data fields or numerical outliers. To examine whether the  data and other inputs were correctly reflected, we then compared the data  and other inputs from each military service and defense agency to the  published Energy Report, using as criteria GAO’s Standards for Internal  Control in the Federal Government and DOD’s Annual Energy  Management Report Fiscal Year 2013 Reporting Guidance. To  standardize responses among the military services and defense  agencies, we sent a structured questionnaire to knowledgeable officials  from the four military services and 10 defense agencies regarding data  collected for the Energy Report, including information about how facilities  within each military service and defense agency reported energy  consumption, energy projects, and September 2013 end-of-fiscal-year  energy consumption data included in the Energy Report.
To determine the extent that the military services helped ensure energy  security at energy-remote military installations in the United States, we  first determined the scope of energy-remote military installations by  evaluating electrical interconnectedness and robustness. First, to review  interconnectedness, we conducted research on the U.S. electric power  system and determined that Alaska and Hawaii have limited  interconnectedness. Second, once we identified these states, we sought  to further narrow the scope by determining which areas in Alaska and  Hawaii are less “electrically robust” (i.e., those areas where there is a  smaller number of power plants and transmission lines surrounding the  installation or no connectivity to transmission lines—for example, an  installation that uses diesel generators for primary power) and therefore  more energy-remote. Ultimately, all 26 installations in Alaska and 35  installations in Hawaii were included in our scope. We then visited or  contacted facility energy managers at 9 locations that were responsible  for overseeing all 61 installations. For each location, we interviewed  facility energy managers to identify the procedures, equipment, and plans  in place to ensure energy security on site. We compared their actions to  relevant DOD and military service regulations and guidance on their roles  and responsibilities regarding energy security, including DOD’s Energy  Report, DOD installation energy guidance, and military service energy  security guidance. We also interviewed military service officials to discuss  their efforts and potential progress in helping to ensure energy security at  energy-remote military installations. More details about our scope and  methodology are included in appendix I.
We conducted this performance audit from March 2015 to January 2016  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: DOD Roles and Responsibilities for Energy Management on DOD Installations
paragraphs: Within DOD, the military services and defense agencies are responsible  for installation management, with oversight by the office of the Assistant  Secretary of Defense for Energy, Installations, and Environment, who  reports to the Under Secretary of Defense for Acquisition, Technology  and Logistics. The office of the Assistant Secretary of Defense for  Energy, Installations, and Environment is responsible for—among other  things—issuing facility energy policy and guidance to DOD components  and coordinating all congressional reports related to facility energy,  including the Energy Reports. In addition, each military service is  responsible for developing policies and managing programs related to  energy and utility management, and has assigned a command or  headquarters to execute these responsibilities. The defense agencies  also develop policies and manage energy programs, and each has a  designated senior energy official to administer their respective programs.  At the installation level, the public works, general facilities, or civil  engineering departments oversee and manage the day-to-day energy  operations.
section_title: Annual Energy Management Report Process
paragraphs: DOD undergoes an annual process to report on energy data in its Energy  Reports, collecting data required by section 2925 of Title 10 of the United  States Code for the reports over a 5-month time period. The overall  process, with participation by installations, military service headquarters,  defense agencies, and OSD, is detailed in figure 1.
section_title: Military Installations’ Energy Security Efforts
paragraphs: Across the military services, energy security is considered critical for  mission assurance. Energy security is defined by 10 U.S.C. § 2924 as  having assured access to reliable supplies of energy and the ability to  protect and deliver sufficient energy to meet mission essential  requirements. There are multiple ways, although not all are mutually  exclusive, to help ensure energy security at installations, including:
Diversification of energy sources. To help ensure energy security,  installations may seek to obtain energy from multiple sources to  prevent reliance on a single source. This may include natural gas,  petroleum, coal, and incorporation of renewable sources of energy— e.g., wind, solar, and biodiesel.
Use of renewable energy. Installations may work to incorporate  renewable energy sources as a way to lessen dependence on the  grid, lower energy costs, and increase utility resilience in the event of  an outage. For example, renewable energy may be used to power a  microgrid, in which the installation can disconnect from the utility grid  during an outage and run solely on the renewable energy stored.
Energy redundancy. Installations may seek assured access to  reliable energy through back-up energy sources that may be used in  the event of an outage, such as on-site generators and power plants.
Energy conservation. Installations may use energy conservation  initiatives as a way to reduce energy consumption, lower energy  costs, and ensure that sufficient funds are in place to meet future  energy requirements.
DOD installations may use one or more of these approaches to help  ensure energy security. Each installation’s efforts to help ensure energy  security may vary depending on its location, staff resources and funding  available, and the nature of energy vulnerabilities identified.
section_title: Electrical Grids and Energy-Remote Installations in the United States
paragraphs: According to the U.S. Energy Information Administration, there is not a  single national power grid in the United States. Instead, there are three  synchronized power grids that cover the 48 contiguous states that are  loosely interconnected with each other: (1) the Eastern Interconnection  (serving states generally east of the Rocky Mountains), (2) the Western  Interconnection (spanning the area from the Pacific Ocean to the Rocky  Mountain states), and (3) a system that serves nearly all of Texas.
The electricity systems in Alaska and Hawaii operate independently of the  three continental grids and of each other (see fig. 2). In particular, there  are several distinct electrical systems within Alaska and Hawaii that cover  only portions of the states, such as the interconnections serving  Anchorage, Fairbanks, and the Kenai Peninsula in Alaska and the  individual islands in Hawaii.
Energy-remote installations in Alaska and Hawaii face some unique  differences from the installations located in the 48 contiguous states. For  example, the cost of energy at energy-remote installations is high in  comparison to the cost of energy at installations in the 48 contiguous  states. According to the U.S. Energy Information Administration, Hawaii  had the highest cost of electricity in the United States in 2013 and 2014,  with the average price for commercial customers more than triple the U.S.  average. Moreover, in 2013, Hawaii imported 91 percent of the energy it  consumed—mostly as oil-based fuels—making it vulnerable to price  fluctuations in the energy market and disruptions to the transportation of  fuels. In 2013 and 2014, Alaska had the second-highest cost of electricity  in the United States, with the average price for commercial customers 64  to 68 percent higher, respectively, than the U.S. average. In addition, the  U.S. Energy Information Administration stated that in many areas of  Alaska, commercially-supplied electricity is not available and consumers  must generate their own electricity, sometimes using diesel generators,  which have a high cost of operations. Given Alaska’s extreme weather  environments, its energy demand per person is the third highest in the  nation.
section_title: DOD Met Some Reporting Requirements and Correctly Reflected the Military Services’ and Defense Agencies’ Data and Other Inputs in Its Fiscal Year 2013 Energy Report, but the Data Are Unreliable
subsections: section_title: DOD’s Fiscal Year 2013 Energy Report Met Some but Not All Reporting Requirements
paragraphs: Of the 12 reporting requirements for DOD’s Energy Report, our analysis  showed that the department fully addressed 6, partially addressed 4, and  did not address 2. The requirements fully addressed included describing  actions taken to implement the energy performance master plan and  energy savings realized from such actions, among other requirements.
The requirements partially addressed included describing progress made  to achieve three of five energy goals; a table detailing funding, by  account, for all energy projects funded through appropriations; a table  listing all energy projects financed through third party financing  mechanisms; and details of utility outages at military installations. The  requirements not addressed were information on renewable energy  certificates associated with energy projects financed through third-party  financing mechanisms and a description of the types and amount of  financial incentives received. According to OSD officials, these  requirements were not fully addressed for a number of reasons, such as  inclusion of the information in another report and concerns about public  release. However, DOD did not identify that the information could be  found elsewhere or that it had public release concerns to clarify why it did  not include required elements. Table 1 below summarizes our  assessment of the extent to which DOD’s report included each of the  required reporting elements. Appendix II includes our detailed evaluation  of each of the required reporting elements, including the reasons OSD  officials provided for any requirements that were not fully addressed.
We found that the required reporting elements were not all met because  OSD’s process for producing the Energy Report did not ensure this  occurred. Specifically, in 2011, OSD developed its current process for  collecting energy data and producing the Energy Report, including a  standard format that it populates each year with updated narrative and  energy data. This process, however, did not account for certain steps. For  example, the process step of deciding what data to collect from the  installations did not identify all data to be captured to fulfill the  requirements. OSD’s guidance and template for collecting energy data  did not include instructions to collect these data. As a result, OSD did not  have comprehensive data to report on requirements such as financial  incentives and renewable energy certificates received from utility energy  service contracts and energy savings performance contracts.  Additionally, OSD’s process step for consolidating specific requirements  into the written report had not been reexamined in several years, resulting  in some requirements remaining unaddressed. Specifically, the decisions  OSD made in 2011 for consolidating requirements into the Energy Report  have not been updated or examined. For example, our review of the fiscal  year 2014 Energy Report, issued in May 2015, found that many of the  required reporting elements that were not fully addressed in the fiscal  year 2013 Energy Report were also not fully addressed in the fiscal year  2014 Energy Report.
Standards for Internal Control in the Federal Government call for  agencies to update internal control activities when necessary to provide  reasonable assurance for effectiveness of operations and compliance  with applicable laws and regulations. Without further updates or  examination of OSD’s process for producing the Energy Report, DOD is  at risk of future annual reports also falling short of providing congressional  decision makers with a complete and accurate understanding of the  extent to which DOD has fulfilled select energy performance goals.
section_title: DOD’s Fiscal Year 2013 Energy Report Correctly Reflected Input but Data Are Unreliable and Hinder Comparability
paragraphs: In our review of DOD’s Energy Report, we found that the underlying data  correctly reflected input from the military services and defense agencies.  However, DOD’s report was not fully reliable because the data and other  inputs the military services and defense agencies provided were captured  using different methods and thus hindered comparability.
subsections: section_title: DOD Correctly Reflected the Military Services’ and Defense Agencies’ Input in Its Energy Report
paragraphs: In our review of DOD’s fiscal year 2013 Energy Report, we found that the  vast majority of the data and other input submitted by the military services  and defense agencies were correctly reflected in the published Energy  Report. Any inaccuracies we found were insignificant. Specifically, in  comparing the data submitted by the military services and defense  agencies to the published Energy Report, we found 2 inaccuracies out of  nearly 2,000 data inputs provided. For example, DOD received  information about energy consumption and cost by square footage from  705 installations and facilities. However, DOD did not include in the  published report information on four facilities from the National  Reconnaissance Office and one facility from the Air Force—an exclusion  of less than 1 percent of the total number of installations that could have  been reported. DOD responded that it chose not to include installation  data for sensitivity reasons. Additionally, we found DOD incorrectly  published in the Energy Report 1 out of 1,288 appropriated projects as  contributing to energy efficiency goals rather than renewable energy  goals.
However, in July 2015, we reported on material inaccuracies in duration  and cost data on utility disruptions reported in DOD’s fiscal year 2012 and  2013 Energy Reports. Regarding the duration of disruptions, we  reported that three of the four military services reported some disruptions  that were less than the DOD criteria of commercial utility service  disruptions lasting 8 hours or longer. According to a DOD official, these  disruptions constituted about 12 percent of the 266 disruptions DOD  reported in the fiscal year 2012 and 2013 Energy Reports. Regarding the  cost of disruptions, we reported that $4.63 million of the $7 million in utility  disruption costs reported by DOD in its fiscal year 2012 Energy Report  were indirect costs, such as lost productivity, although DOD had directed  that such costs not be reported. We recommended, among other things,  that DOD improve the effectiveness of data validation steps in its process  for collecting and reporting utilities disruption data in order to improve the  comprehensiveness and accuracy of certain data reported in the Energy  Reports. DOD concurred with our recommendation but did not provide  information on the timeline or specific actions it plans to take to implement  the recommendation. To date, no action has been taken to address this  recommendation but DOD stated it expects to implement the  recommendation by April 2016.
OSD, each of the four military services, and several defense agencies  mentioned difficulties with conducting a quality data review. Specifically,  officials said the timeframes were too short and resources too limited to  conduct a thorough review. For example, Marine Corps officials said they  scan data submitted by the installations for obvious errors, but OSD’s  review process is more rigorous. Similarly, the Navy told us it relies  heavily on OSD’s data reliability efforts. An OSD official and certain  military services’ officials also explained that—in their limited time to  validate all of the data included in the Energy Reports—they prioritize  validation of certain data types, such as utilities disruption data.
To conduct their review, OSD officials said that they compared the fiscal  years 2012 and 2013 Energy Report data to see if there were any major  differences. The officials also compared data for consistency among  similar data entries, such as renewable energy consumption, that were  sent by each military service and defense agency in two different  workbook submissions. From this review, the officials identified specific  areas of concern and sent a three-to-four page questionnaire to each of  the military services and defense agencies. The officials estimated they  received about a 90 percent response rate and were able to make many  edits to the data. They added that their review time was too limited to  correct everything that might have been inaccurate, but from their  perspective any inaccuracies would most likely be statistically  insignificant. In July 2015, we found that, based on our review of the fiscal  year 2014 utilities resilience data submitted by the military services to  OSD—and OSD’s data validation efforts—the accuracy of some of DOD’s  data may be improving. This improvement, along with actions to  implement our recommendation to further improve the effectiveness of  data validation steps, may provide the Congress better oversight of the  efforts being undertaken by DOD.
section_title: DOD Reported Data in Its Energy Report That Was Captured and Reported Using Different Methods, Rendering It Unreliable
paragraphs: We found that the military services and defense agencies captured and  reported data using different methods in three areas of the Energy  Report: energy consumption of tenants and hosts, energy projects, and  end-of-fiscal-year data. This situation—which ultimately affects all data  presented in the Energy Report—occurred because guidance was either  unclear or lacking. In previous work examining, among other things,  DOD’s efforts to effectively implement existing guidance, we found that  clear and complete guidance is important for its effective  implementation. Without collecting and reporting data using consistent  methods, decision makers in DOD will be hindered in their ability to plan  effectively for steps to reach energy goals, and Congress will have limited  oversight of the department’s energy consumption and difficulty in  comparing energy projects among those reporting.
Energy consumption of tenants and hosts. At several installations,  DOD components may serve as either tenants, in which they rent  space from another federal agency or a private organization, or hosts,  in which they lease space to other agencies or organizations. The  Energy Report guidance states that a host will report energy  consumption, unless there is a mutual agreement between the host  and the DOD tenant to report otherwise. However, we found that  limited instructions in the guidance led to different reporting  methodologies among and within the military services and defense  agencies regarding tenant and host energy reporting. The guidance  did not state that the military services or defense agencies should  identify if they were tenants or hosts at each installation, how much  energy they were reporting for tenants, or if they were splitting  reporting among different energy types, such as having the host  report all electrical consumption but the tenant report water and  petroleum consumption. For example, for facilities in which the  Defense Intelligence Agency served as tenants, the facilities either  reported all energy consumption or did not report any energy  consumption, assuming instead that the host would report. In contrast,  all tenant facilities from the Defense Commissary Agency reported  energy consumption that was separately metered or billed and  assumed that the host reported energy consumption that was not  separately billed. As a result, it is difficult to get a clear understanding  of all the data presented in the Energy Report and challenging to  compare it among the installations that reported. Figures 3 and 4  identify some of the different reporting methods used by the four  military services and 10 defense agencies for tenant and host energy  reporting.
Energy projects. The Energy Report lists energy conservation,  renewable energy, and water conservation projects. However,  throughout the report we found that the four military services and 10  defense agencies reported these projects inconsistently (see fig. 5)  because the guidance for the Energy Report does not identify at what  levels they should be reported. Entities reported energy projects by  installation, facility/building, project type, funding mechanism, or other  means. For example, the Navy stated that it might consolidate 10  smaller solar energy projects into 1 larger solar project for reporting  purposes, whereas the Marine Corps stated that it does not track by  project type but rather by installation, building, and energy type.  These different methods of reporting energy projects make it difficult  to clearly understand the size and scope of the projects as well as  compare the projects among those reported.
End-of-fiscal-year data. We found that the military services and  defense agencies used a variety of methods for reporting their end-of- fiscal-year energy data—and, in some cases, installations within each  military service reported their end-of-fiscal-year energy data using  different methods. For example, because OSD requires data inputs by  mid-November, some military services required initial submissions  from the installations by mid-October, which is before some energy  utility bills have been received. As a result, some installations  estimate end-of-fiscal-year usage, and the estimates may be based  on different factors, including previous month data, historical data, or  data from a month with similar weather patterns. Additionally, because  utility bills may straddle months (such as from mid-September through  mid-October), some military services and installations chose to report  according to the utility bills rather than the fiscal year. In contrast,  some installations have meters installed and report actual usage for  the fiscal year. Figure 6 identifies the different methods used by the  four military services and 10 defense agencies to report end-of-fiscal- year data.
In our review of actual energy consumption data from a  nongeneralizable sample of installations, we found some examples of  how different methods of collecting data led to different reporting  results. For example, the Navy’s Joint Base Anacostia Bolling in  Washington, D.C. used estimates to determine its annual energy  costs. In contrast, the Defense Finance and Accounting Service,  National Reconnaissance Office, and Defense Contract Management  Agency each reported actual fiscal year usage, not estimates.  However, the Energy Report did not annotate when estimates were  used. Furthermore, installations used different approaches to estimate  end-of-fiscal-year data. For example, Navy installations used previous  year data to make their estimates while some Air Force installations  estimated based on a specific month with similar weather patterns. As  a result, the data presented throughout the Energy Report cannot be  reliably compared among the military services and defense agencies.
The guidance for the energy report did not identify how the military  services and defense agencies should report energy data when it  cannot reflect actual amounts for the full fiscal year. Additionally, the  guidance did not identify how corrections can be made, if at all. For  example, Navy officials told us they reported estimated consumption  for all installations in the initial submission to OSD, and that although  updated data was available by the December data quality review  process with OSD, they were not allowed to make corrections  because the estimated data had already been reviewed. By not  providing guidance on how to report energy data when an installation  cannot reflect actual data for the full fiscal year for the Energy Report,  it is difficult to accurately compare data among the military services  and defense agencies.
OSD officials told us that they do not include additional instructions in the  guidance for the Energy Report to the military services and defense  agencies regarding energy consumption of tenants and hosts, energy  projects, and end-of-fiscal-year data collection and reporting. In some  cases, OSD officials stated that it would be difficult to provide guidance.  For example, they stated that each installation may receive utility bills at  different intervals, such as monthly or quarterly, making it challenging to  provide specific guidance on how to accurately report energy  consumption for the end of the fiscal year. However, currently there are  no instructions that require installations to identify their end-of-fiscal-year  reporting methods so that OSD, the military services, and the defense  agencies can identify if different reporting intervals exist. As a result, DOD  is not in a position to identify in the Energy Report where different data  reporting methods were used and what data may not be comparable  among the military services and defense agencies.
Standards for Internal Control in the Federal Government states that  information should be clearly communicated, so that users can determine  whether the agency is achieving its compliance requirements. Without  clear guidance for collecting and reporting data consistently, and clearly  identifying where data may not be comparable and the reasons why, it will  be difficult for decision makers in DOD to have reliable data to plan  effectively for steps to reach energy goals, and Congress will have limited  oversight of the department’s energy consumption and difficulty in  comparing energy projects among those reporting.
section_title: Military Services Are Helping to Ensure Energy Security at U.S. Energy-Remote Installations, but Areas of Risk Remain
subsections: section_title: Military Services Are Helping to Ensure Energy Security
paragraphs: The military services are helping to ensure energy security at all  installations in Alaska and Hawaii by installing multiple power sources,  which can be utilized in the event of an outage, at their remote facilities.  Installations that were identified as mission critical by officials had  additional energy security measures in place, such as on-site power  plants and uninterruptible power supplies (i.e., backup that instantly starts  once the grid loses power). For example, of the 20 sites that comprise the  Air Force’s Alaska Radar System, officials stated that 10 of the sites are  located “off-grid” and are equipped with stand-alone power plants  including redundant generation capacity. According to officials, these  sites are equipped with at least one generator that can supply sufficient  power generation and multiple generators to provide redundant back-up  power. The officials stated that the 10 sites receiving their power from  local grids are also equipped with redundant backup generators to ensure  reliable power in the event of an outage. All of the Alaska Radar System  locations also feature uninterruptible power supplies to ensure mission  critical loads remain working. Additionally, given its mission importance,  officials told us the Navy’s Pacific Missile Range Facility in Hawaii has a  backup diesel generator plant that can start automatically in case of a grid  failure. Furthermore, officials stated that the Army recently reached an  agreement with Hawaiian Electric Company to build a 50 megawatt power  plant in the interior of Oahu on Army land. According to Army officials, this  new power plant could potentially provide power if a weather emergency  shuts down the island’s coastal power plants. Moreover, Air Force  officials in Hawaii told us that Kaena Point, a satellite tracking station, has  an Air Force-owned diesel power plant onsite that provides back-up  generation. This power plant is designed to start automatically when the  grid goes down, and it can provide power to the base for about 40 days  without refueling. In addition, officials at Joint Base Elmendorf- Richardson, Alaska, stated Fort Richardson has significant redundancy  through its onsite landfill gas electrical generation plant which, in  combination with back-up generators, can provide complete energy  independence from the municipal electrical grid for 2 weeks in the event  of an emergency (see fig. 7).
We also found that the energy officials at all nine locations we visited or  contacted stated they are generally prepared to respond to energy  disruptions that might occur, although we found that the level of  documentation for energy security planning at energy-remote locations  varies across installations. An OSD Energy Policy Memorandum  requires that defense managers and commanders (1) conduct energy  vulnerability analyses and review for currency annually, (2) establish  energy emergency preparedness and operations plans, and (3) develop  and execute remedial action plans to remove unacceptable energy  security risks. We found differences among installations in regard to  documentation of their plans. For example, Marine Corps Base Hawaii  has a full energy emergency preparedness and operations plan and  remedial actions plans. Officials at U.S. Army Garrison Hawaii, by  contrast, stated that the Garrison does not have any documented energy  emergency preparedness and operations plans. Army officials stated the  response to an energy emergency would depend on the situation, and  they have the expertise to respond if needed. Officials at Eielson Air  Force Base, Alaska, stated that the installation does not have a formal  energy emergency preparedness and operations plan, but they receive  quarterly vulnerability analyses from the inspector general’s office and  have a contingency response plan in the case of a power outage.  However, in cases where an installation did not have formal or specific  energy security documentation, we found that the requirements of the  OSD Energy Policy Memorandum were incorporated into installation-wide  plans, such as continuity of operations plans.
section_title: Some Areas of Energy Security Risk Remain, and the Military Services Are Taking Some Actions to Mitigate Them
paragraphs: During our site visits in Alaska and Hawaii, we identified three areas of  risk to energy security regarding funding, installation electricity systems,  and cost. Specifically, we found that military services’ funding processes  may limit energy security projects’ ability to compete for funding, the  introduction of renewable energy may affect installation electricity  systems, and the high cost of energy may be difficult for installations to  sustain over the long term.
First, we found that military services’ funding processes may limit the  ability of the installations to obtain funding for energy security projects.  DOD Directive 4180.01, DOD Energy Policy, states that it is DOD policy  to, among other things, improve energy security and that the Deputy  Undersecretary of Defense for Installations and Environment should  ensure cost-effective investments are made in facility infrastructure to,  among other things, enhance the power resiliency of installations. In  addition, DOD Instruction 4170.11, Installation Energy Management,  states that DOD components shall take necessary steps to ensure the  security of energy and water resources.
However, across the military services, officials told us that energy security  projects do not compete well for funding because there is no clarity  regarding the role that energy security plays in military service processes  when evaluating a project for funding. In May 2014, we reported that the  military services use “scoring” processes to consider projects for funding.  During these “scoring” processes, DOD officials assign numerical  values—or “points”—to certain project characteristics; potential projects’  relative scores are used to rank the projects; and senior decision makers  at the military services’ headquarters review the rank-order list, selecting  projects based on service priorities. However, energy security is  generally not included in this list of project characteristics. In addition,  since energy security projects are not identified in the decision-making  processes, there is no way of knowing how many of the projects do not  obtain funding.
Officials at six of the nine locations we visited or contacted cited difficulty  obtaining funding for energy security or would like to see dedicated  funding for energy security projects. For example, officials overseeing the  Air Force’s Alaska Radar System stated that they have sought military  construction funding since 2002 to build a networked system of multiple  fuel tanks, referred to as a tank farm, at three off-grid locations that each  has only one large fuel tank. According to officials, if any of the current  tanks were to fail, then the sites would lose all of their fuel for the year  (see fig. 8). Officials stated that the projects would replace the large fuel  tank with a multi-tank system. However, the officials said they are having  difficulties obtaining funding because energy security projects do not  compete well against other military construction projects, such as those  for new facilities or mission-critical activities. According to officials, the  tanks are now close to the point of failure. Also, an official at Marine  Corps Base Hawaii stated that difficulty getting funding for aging  equipment is the biggest vulnerability to the energy system. According to  the official, plans to replace the aging equipment keep getting postponed  in order to provide for other funding priorities. This official also noted that  if older energy equipment is broken, it can be difficult to find  replacements. In addition, Army officials at Fort Wainwright in Alaska  stated that it is difficult to obtain military construction funding for current  mission needs, including energy security projects, versus new mission  needs. Navy officials at Joint Base Pearl Harbor Hickam also stated that  the energy security projects they submit for funding do not compete well.  For example, they said that energy security projects—which have  significant infrastructure costs—do not compete well for funding against  energy conservation efforts based on return on investment.
Additionally, all four military services’ energy headquarters offices told us  that there is no specific military service or OSD guidance or clarity on  energy security funding. As a result, military service officials told us that  they had difficulty incorporating energy security into funding decisions.  For example, Air Force officials stated that the Air Force Civil Engineer  Command wanted to allow for a tradeoff between cost effectiveness and  energy security when considering a new renewable energy project that  could incorporate energy security features, such as a microgrid. However,  the officials said they do not yet have the right criteria to define that  tradeoff and to conduct that level of decision making. Moreover, a Marine  Corps Headquarters official stated that, although the Marine Corps has a  process in place to identify energy security vulnerabilities and mitigating  actions, it can be difficult to get funding for energy security projects  because there is no DOD requirement for energy security. In other words,  there is no specific DOD requirement that identifies the level of energy  security an installation should have. The official further stated that energy  security projects, such as a microgrid or power plant, cannot compete  well against energy efficiency or renewable energy projects that have a  return on investment. Army officials similarly noted that energy security  projects do not compete as well as other projects for funding based on  return on investment, and it would be helpful to have criteria (project  characteristics) for energy security project funding consideration. The  Navy has made limited efforts to incorporate energy security into funding  decisions, but officials told us that the efforts are rudimentary. For  example, the Navy’s energy-Return on Investment tool, which it uses to  assess energy projects, considers energy security in its calculations.  However, a Navy Headquarters official told us that energy security is  considered a “soft benefit,” or benefit that is not the central focus of the  project, and that it is difficult to fund a large project based only on soft  benefits.
Officials at installations told us that, without clarification of how energy  security is considered in military service funding decisions, they have to  try different approaches in their attempts to fund energy security projects.  For example, Navy officials in Hawaii stated that they tried for 10 years to  get funding for grid consolidation at the Pacific Missile Range Facility, but  were not able to until it was shown that grid consolidation will allow the  base to potentially build and then hook up to a landfill gas renewable  energy plant. In Alaska, Air Force officials stated that difficulties obtaining  military construction funding have led Air Force officials to work with  attorneys at the Pacific Air Force Command to assess the viability of  alternative sources of funding to build tank farms at the three off-grid  Alaska Radar System locations that have only one large fuel tank each.  However, as we have previously reported, alternatives to military  construction funding have limitations, may vary in availability, and can be  complex and time-consuming. As a result, this approach may not result  in a funded project, or it may ultimately take longer than the traditional  military construction process to fund a project. Without clarification of the  processes the military services use to compare and prioritize projects for  funding to include consideration of energy security, it will be difficult for  decision makers to have sufficient information to adequately prioritize  energy security projects for funding when appropriate and thus address  energy security issues.
Second, we found that the introduction of renewable energy sources may  affect the stability of remote or small installation electricity systems, but  the military services are taking some steps to address this risk. DOD  Directive 4180.01 calls for the diversification and expansion of DOD  energy supplies and sources, including renewable energy sources.  Military service officials we spoke with generally stated that it is difficult to  integrate intermittent sources of renewable energy (e.g., solar and wind  power) into existing infrastructure. For example, in Hawaii, Navy and  Army officials stated that because the amounts of intermittent renewable  energy can vary significantly, it can cause fluctuations in power quality  such as voltage and frequency on small or isolated electricity systems,  which can damage equipment connected to them. These officials noted  that the amount of electricity generated from solar and wind systems can  vary significantly with ambient conditions such as cloud cover and wind  speed. In Alaska, Air Force officials explained that many of the radar sites  are in locations rated with high potential for wind turbines. However, the  officials said the wind is too turbulent at these locations, such that the  wind has knocked down a wind turbine prototype that was developed.  Furthermore, even if wind energy generation was an option, the officials  explained that because the microgrids at these sites are so small, adding  wind turbines for electrical generation could cause disruptions in the  electrical frequency of the grid.
Despite the potential challenges with integrating renewable energy  sources at energy-remote installations, officials told us that efforts are  underway, including studies on the incorporation of intermittent energy  sources, to continue to increase the use of renewable energy resources  at these locations and mitigate the integration risks. For example, officials  at Marine Corps Base Hawaii told us that they reached out to the Naval  Facilities Engineering Command to conduct studies within the next year  to enable the installation to incorporate its expanding production of  renewable energy. The installation is currently in the process of executing  a power purchase agreement for two megawatts of solar photovoltaic  arrays on rooftops and car ports. Almost all of the installation housing is  owned by a private developer and has solar photovoltaic panels on the  rooftops. Marine Corps Base Hawaii is working on an agreement with the  developer to purchase excess solar photovoltaic power generated from  the housing. In addition, Marine Corps Base Hawaii is conducting a grid- modeling study—expected to be completed in a year—to see the effect of  integrating solar energy into the energy system.
Third, we found that the high cost of energy at remote locations may be  difficult for installations to sustain over the long term and thus could affect  overall mission assurance across the department, but DOD has  conducted studies or taken actions to reduce costs. DOD Directive  4180.01 states that it is the department’s policy to, among other things,  mitigate costs in its use and management of energy. Army officials at  Fort Greely in Alaska told us that their biggest challenge is the high cost  of energy and expressed concern that it may become increasingly difficult  for the Army to sustain the high costs in the long term. Paying these high- cost energy bills could potentially force the military services to make  tradeoffs in a constrained budgetary environment. Fort Greely officials  stated that the Army hired a contractor to conduct a study to identify  alternative energy solutions to lower costs and still provide energy  security. Officials at Fort Wainwright also mentioned the high cost of  utilities, noting that they pay $79 per ton for coal—more than double the  U.S. average price for coal. They stated that it was the primary reason  for hiring the same contractor as Fort Greely to identify alternative energy  options for their installation as well. Both studies were completed in  August 2015 and identified numerous potential energy conservation  measures and recommendations. As of September 2015, senior Army  officials were reviewing the recommendations to determine which to  implement. In Hawaii, Navy officials told us that high oil prices in 2008  greatly increased the energy costs at Joint Base Pearl Harbor Hickam,  such that the base temporarily had to shut down some facilities because  the energy costs were too high. Since then, officials stated the Navy has  instituted renewable energy projects and energy conservation efforts to  help lower energy costs. Also, Air Force officials stated that they are  concerned with the high cost of energy, which ranges from $75,000 to  $100,000 per month, at Kaena Point in Hawaii, and they are working to  lower costs through energy conservation efforts to help ensure access to  electricity in the future.
section_title: Conclusions
paragraphs: The ability of DOD to effectively manage energy at its installations is an  important element of mission assurance, and comprehensive  measurement of facility energy could help the department maintain an  aggressive pace toward its larger energy objectives. Through its Energy  Report, DOD is required to track certain energy conservation measures,  investments, and performance against established goals, as well as  identify certain activities to enhance energy security and resilience.  However, DOD’s process for preparing the Energy Report did not ensure  it addressed all the statutory requirements. In addition, while DOD has  taken steps to help ensure data quality in its Energy Report, the military  services and defense agencies capture and report using different  methods; thus, data are not comparable. Without reexamining the  process for producing the Energy Report to help ensure it fully complies  with statutory requirements, providing more consistent guidance to the  installations, and identifying in the Energy Report instances in which data  may not be comparable among the military services and defense  agencies and the reasons why, it will be difficult for decision makers in  DOD to plan effectively for steps to reach energy goals, and Congress will  have limited oversight of the department’s energy consumption and  difficulty in comparing energy projects among those reporting.
Moreover, the ability of the military services to effectively secure energy  at their energy-remote installations is essential to avoid serious and  potentially crippling operational impacts. The military services have taken  reasonable steps, such as conducting studies on the incorporation of  intermittent renewable energy sources and identifying alternative energy  solutions, to overcome grid stability issues and high energy costs.  However, the military services remain at risk for potentially underfunding  energy infrastructure investments because there is no clarity regarding  the role that energy security plays when evaluating a project for funding.  Without clarifying the processes used to compare and prioritize military  construction projects for funding, to include consideration of energy  security as appropriate, it will be difficult for decision makers to have  sufficient information to adequately prioritize energy security projects and  thus address energy security issues.
section_title: Recommendations for Executive Action
paragraphs: We recommend the Secretary of Defense take the following four actions:  To better provide Congress with information needed to conduct oversight  and make decisions on programs and funding, we recommend that the  Secretary of Defense direct the Assistant Secretary of Defense for  Energy, Installations and Environment to reexamine the process for  producing the Energy Report to help ensure it complies with statutory  requirements, and update it as appropriate. This includes reexamining the  process to include required energy goals, descriptions of energy projects  funded by appropriations and third parties, details of utility outages at  military installations, and a description of the types and amount of  financial incentives received.
In order to improve the consistency of certain data submitted by the  military services and defense agencies to the Office of the Secretary of  Defense and reported in the Energy Report, we recommend that the  Secretary of Defense direct the secretaries of the Army, Navy, and Air  Force, the Commandant of the Marine Corps, the heads of the defense  agencies, and the Assistant Secretary of Defense for Energy, Installations  and Environment to work together to provide more consistent guidance to the installations, including clearly  stating the energy reporting requirements for tenant and host facilities,  energy projects, and end-of-fiscal-year data, and  identify in the Energy Report instances in which data may not be  comparable among the military services and defense agencies and  the reasons why.
To better provide the military services with information needed to make  decisions on the prioritization of funding, we recommend that the  Secretary of Defense direct the secretaries of the Army, Navy, and Air  Force and the Commandant of the Marine Corps to clarify the processes  used to compare and prioritize military construction projects for funding,  including how and when to include consideration of energy security.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report for review and comment to DOD. In  written comments, DOD concurred with all recommendations. DOD’s  comments are summarized below and reprinted in their entirety in  appendix III. DOD also provided technical comments, which we  incorporated as appropriate.
DOD concurred with our first recommendation to reexamine the process  for producing the Energy Report to help ensure it complies with statutory  requirements. In its response, DOD said the Office of the Assistant  Secretary of Defense for Energy, Installations, and Environment is  already taking action to ensure the next annual energy report complies  with the requirements of the recently amended section 2925 of Title 10 of  the United States Code.
DOD also concurred with our second and third recommendations—which,  in its comments, DOD combined into one response—that DOD provide  more consistent guidance to the installations for the Energy Report and  identify in the Energy Report instances in which data may not be  comparable among the military services and defense agencies. DOD  stated that the Office of the Assistant Secretary of Defense for Energy,  Installations, and Environment will work with the military services in fiscal  year 2016 to provide more consistent guidance to military installations  and will identify in the fiscal year 2016 Energy Report where data may not  be compatible.
DOD further concurred with our final recommendation that the military  services clarify the processes used to compare and prioritize military  construction projects for funding, including how and when to include  consideration of energy security. DOD noted that it is pursuing an update  to DOD Instruction 4170.11, Installation Energy Management, and plans  to include guidance to prioritize funding decisions consistent with this  recommendation.
If enacted, we believe that DOD’s proposed actions will aid decision  makers in DOD to plan effectively for steps to reach energy goals and  address energy security issues, as well as provide Congress with better  oversight of the department’s energy consumption.
We are sending copies of this report to the appropriate congressional  committees; the Secretary of Defense; the Secretaries of the Army, Navy,  and the Air Force; the Assistant Secretary of Defense for Energy,  Installations, and Environment; and the Commandant of the Marine  Corps. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  Brian Lepore at (202) 512-4523 or leporeb@gao.gov or Frank Rusco at  (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of our review were to examine the extent to which (1) the  Department of Defense (DOD) addressed the 12 required reporting  elements and reliably reported data in its fiscal year 2013 Annual Energy  Management Report (Energy Report) and (2) the military services helped  ensure energy security at energy-remote military installations in the  United States.
To determine the extent to which DOD addressed the 12 required  reporting elements in its Energy Report, two GAO analysts independently  reviewed the fiscal year 2013 Energy Report, comparing it with each  element required by the law and determining whether each required  reporting element was included. In the case of any conflicting  determinations, a third GAO analyst adjudicated the difference. To gain a  full understanding of the elements included in the Energy Report and to  discuss the methodology used for collecting information and reporting on  the required elements, we met with DOD officials knowledgeable about  compiling information for the report, including individuals from the Office  of the Secretary of Defense (OSD)—specifically, the Assistant Secretary  of Defense for Energy, Installations, and Environment; the four military  services; and the 10 defense agencies that contributed to the report. We  also compared information in the fiscal year 2013 Energy Report to that in  the fiscal year 2014 Energy Report, which was published in May 2015, to  evaluate if the structure and content of each report was similar. Further,  we compared OSD’s process for annually updating its Energy Report to  criteria regarding updating internal control activities in Standards for  Internal Control for the Federal Government.
To determine the extent to which DOD reliably reported energy data in its  Energy Report, we reviewed the energy data and other inputs each  military service and defense agency provided to be included in the Energy  Report. We looked for any anomalies in the data, such as missing data  fields or numerical outliers. To examine if the data and other inputs were  correctly reflected, we then compared the data and other inputs from  each military service and defense agency to the published Energy Report,  using as criteria GAO’s Standards for Internal Control in the Federal  Government and DOD’s Annual Energy Management Report Fiscal Year  2013 Reporting Guidance. We also interviewed the officials who  contributed to the report from OSD, the four military services, and the 10  defense agencies regarding how the data was collected, measures taken  to assure the reliability of the data, and any anomalies observed in the  data.
In addition, we sent a structured questionnaire to knowledgeable officials  from the four military services and 10 defense agencies to collect  information about how facilities within each military service and defense  agency reported energy consumption, energy projects, and September  2013 end-of-fiscal-year energy consumption data included in the Energy  Report. We received responses from all of the military services and  defense agencies. Additionally, as part of the questionnaire, we asked the  military services and defense agencies to provide data from a  nongeneralizable sample of installations regarding September 2013  energy consumption reported in the Energy Report and actual energy  consumption used, as verified via utility bill or meter reading. To  determine our sample, we collected a random sample of 10 installations  each from the Army, Navy, Air Force, and Defense Commissary Agency;  5 installations from the Marine Corps; and all installations from the  remaining defense agencies in our scope. To minimize errors that might  occur from respondents interpreting our questions differently than we  intended, we pre-tested the questionnaire with knowledgeable  representatives from one military service (Army) and one defense agency  (National Reconnaissance Office). During these pre-tests, we discussed  the questions and instructions with the officials to check whether (1) the  questions and instructions were clear and unambiguous, (2) the terms  used were accurate, (3) the questionnaire was unbiased, and (4) the  questionnaire did not place an undue burden on the officials completing it.  We also submitted the questionnaire for review by an independent GAO  survey specialist. We modified the questionnaire based on feedback from  the pre-tests and reviews, as appropriate.
To determine the extent that the military services helped ensure energy  security at energy-remote military installations in the United States, we  first determined the scope of energy-remote military installations by  evaluating electrical interconnectedness and robustness. First, to review  interconnectedness, we conducted preliminary research on the U.S.  electric power system. We determined that Alaska and Hawaii have  limited interconnectedness because they are not connected to the three  power grids in the 48 contiguous states, which are interconnected to each  other. Moreover, the electrical systems in Alaska and Hawaii are not  connected to each other. Second, once we identified these states, we  attempted to further narrow the scope by determining which areas in  Alaska and Hawaii are less “electrically robust” (smaller number of power  plants and transmission lines in the area surrounding the installation or no  connectivity to transmission lines—e.g., an installation that uses diesel  generators for primary power) and therefore more energy-remote. Using  mapping software, we created maps of Alaska and Hawaii using layers of  data (transmission lines, power plant data, and military installations  location data). Additionally, we sent a questionnaire to each installation in  Alaska and Hawaii to gather preliminary information, including the  presence and location of the designated facility energy manager or  another official who is tasked with performing the duties of the facility  energy manager, the source(s) of electricity consumed on site, the  amount of electricity consumed on site during fiscal year 2014, the  supplier of this electricity, the existence (if any) of an energy security plan  focused on utility resilience in case of an electrical disruption, whether an  energy security assessment has been conducted, and whether there are  plans to develop an energy security plan or conduct an energy security  assessment in the future. Based on our assessment, all 26 installations in  Alaska and 35 installations in Hawaii were included in our scope. Table 2  lists the locations we visited or contacted to meet with facility energy  managers and the number of associated installations they oversaw.
Additionally, we interviewed the facility energy managers responsible for  all of the installations in Alaska and Hawaii to identify the procedures,  equipment, and plans in place to ensure energy security on site, as well  as any planned future energy security assessments. We compared their  actions to relevant DOD and military service regulations and guidance on  their roles and responsibilities regarding energy security, including DOD’s  Energy Report, DOD installation energy guidance, and military service  energy security guidance. We also interviewed military service officials to  discuss their efforts and potential progress regarding helping to ensure  energy security at energy-remote military installations.
We conducted this performance audit from March 2015 to January 2016  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: GAO Assessment of the Extent to Which the Annual Energy Management Report Addressed the Required Reporting Elements
subsections: section_title: Required reporting elements and GAO comments 3. A table listing all energy projects financed through third party financing mechanisms (including energy savings performance contracts, enhanced use leases, utility energy service contracts, utility privatization agreements, and other contractual mechanisms), the duration of each such mechanism, an estimate of the financial obligation incurred through the duration of each such mechanism, whether the project incorporates energy security into its design, and the estimated payback period for each such mechanism. The report includes a table that identifies non-governmental third-party-funded energy projects, which identifies projects as either energy savings performance contracts or utility energy service contracts. However, this table does not include the duration of each such mechanism, an estimate of the financial obligation incurred through the duration of each such mechanism, whether the project incorporates energy security into its design, and the estimated payback period for each such mechanism. OSD officials stated that some of this information was not included in the public report due to public release concerns, but that the information exists in a supplemental workbook that has been previously provided to Congress upon request. However, the officials did not identify public release concerns in the Energy Report to clarify why it did not include required elements. 4. In addition to the information contained in the table listing energy projects financed through third party financing mechanisms, as required by paragraph (3), the table also shall list any renewable energy certificates associated with each project, including information regarding whether the renewable energy certificates were bundled or unbundled, the purchasing authority for the renewable energy certificates, and the price of the associated renewable energy certificates.
paragraphs: Required reporting elements and GAO comments  7. An estimate of the types and quantities of energy consumed by the Department of Defense and  members of the armed forces and civilian personnel residing or working on military installations  during the preceding fiscal year, including a breakdown of energy consumption by user groups and  types of energy, energy costs, and the quantities of renewable energy produced or procured by the  Department.  The report estimates the types and quantities of energy consumed, including narrative and charts outlining  energy consumption by user groups, energy consumption by type, energy costs, and quantities of  renewable energy produced or procured.   8. A description of the types and amount of financial incentives received under section 2913 of Title  10 of the United States Code during the preceding fiscal year and the appropriation account or  accounts to which the incentives were credited.  The report does not describe financial incentives. Title 10 U.S.C. §2913(c) states that “the Secretary of  Defense may authorize any military installation to accept any financial incentive, goods, or services  generally available from a gas or electric utility, to adopt technologies and practices that the Secretary  determines are in the interests of the United States and consistent with the energy performance goals for  the Department of Defense.”  According to the department, section 2913 is used as the authority for DOD to enter into certain third-party- financed energy conservation projects with servicing utility companies. OSD officials stated that the financial  benefit received from these arrangements is the avoidance of appropriated capital needed for project  implementation. They added that utility companies provide the capital and DOD pays back the capital  investment over time using the savings realized from the implemented energy conservation projects. The  OSD officials further stated that the report includes information on third-party-financed utility energy service  contracts. However, the report did not describe the types and amounts of financial incentives received, if  any, as indicated in the required reporting element.  9. A description and estimate of the progress made by the military departments to meet the  certification requirements for sustainable green-building standards in construction and major  renovations as required by section 433 of the Energy Independence and Security Act of 2007 (Pub.  L. No 110–140).  The report states that the Department of Energy has not published the final regulation for implementing  Section 433, adding that DOD will start reporting on this requirement after the Department of Energy issues  the final rule. As of the time of this report, the Department of Energy had finalized regulations implementing  certain parts of the rule, but other parts are still pending.  10. A description of steps taken to determine best practices for measuring energy consumption in  Department of Defense facilities and installations, in order to use the data for better energy  management.  The report describes how the department measures energy consumption.   11. Details of utility outages at military installations including the total number and locations of  outages, the financial impact of the outage, and measures taken to mitigate outages in the future at  the affected location and across the Department of Defense.  The report identifies the approximate number, approximate cost, and general locations of utility outages at  installations. However, as we found in July 2015, DOD’s collection and reporting of utility disruption data is  not comprehensive and contains inaccuracies, because not all types and instances of utility disruptions  have been reported and there are inaccuracies in reporting of disruptions’ duration and cost.  12. A description of any other issues and strategies the Secretary determines relevant to a  comprehensive and renewable energy policy.  The department stated that there were no other relevant issues determined for reporting purposes.
Fully addressed  renewable energy certificates and the seventh requirement on estimating the types and quantities of  energy consumed were removed. The ninth requirement on sustainable green-building standards was  revised to require a description of progress toward meeting certain standards under the Unified  Facilities Criteria. The eleventh requirement on utility outages was revised to require details of non- commercial utility outages and DOD-owned infrastructure. Additionally, a new requirement was added  for the inclusion of a classified annex, as appropriate.  In the United States, renewable energy production essentially creates two products: the energy itself  and an associated commodity, called a renewable energy certificate, which represents a certain  amount of energy generated using a renewable resource. Renewable energy certificates are bought  and sold in a fashion similar to stocks and bonds.
section_title: Appendix III: Comments from the Department of Defense
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, Laura Durland (Assistant  Director), Jon Ludwigson (Assistant Director), Emily Biskup, Lorraine  Ettaro, Emily Gerken, Terry Hanford, Alberto Leff, Amie Lesser, John  Mingus, Jodie Sandel, Erik Wilkins-McKee, and Michael Willems made  key contributions to this report.
section_title: Related GAO Products
paragraphs: Defense Infrastructure: DOD Efforts Regarding Net Zero Goals. GAO-16- 153R. Washington, D.C.: January 12, 2016.
Defense Infrastructure: Improvements in DOD Reporting and  Cybersecurity Implementation Needed to Enhance Utility Resilience  Planning. GAO-15-749. Washington, D.C.: July 23, 2015.
Energy Savings Performance Contracts: Additional Actions Needed to  Improve Federal Oversight. GAO-15-432. Washington, D.C.: June 17,  2015.
High-Risk Series: An Update. GAO-15-290. Washington, D.C.: February  11, 2015.
Climate Change Adaptation: DOD Can Improve Infrastructure Planning  and Processes to Better Account for Potential Impacts. GAO-14-446.  Washington, D.C.: May 30, 2014.
Clear Air Force Station: Air Force Reviewed Costs and Benefits of  Several Options before Deciding to Close the Power Plant. GAO-14-550.  Washington, D.C.: May 12, 2014.
Climate Change: Energy Infrastructure Risks and Adaptation Efforts.  GAO-14-74. Washington, D.C.: January 31, 2014.
Renewable Energy Project Financing: Improved Guidance and  Information Sharing Needed for DOD Project-Level Officials.  GAO-12-401. Washington, D.C.: April 4, 2012.
Renewable Energy: Federal Agencies Implement Hundreds of Initiatives.  GAO-12-260. Washington, D.C.: February 27, 2012.
Defense Infrastructure: DOD Did Not Fully Address the Supplemental  Reporting Requirements in Its Energy Management Report.  GAO-12-336R. Washington, D.C.: January 31, 2012.
Electricity Grid Modernization: Progress Being Made on Cybersecurity  Guidelines, but Key Challenges Remain to be Addressed. GAO-11-117.  Washington, D.C.: January 12, 2011.
Defense Infrastructure: Department of Defense’s Energy Supplemental  Report. GAO-10-988R. Washington, D.C.: September 29, 2010.
Defense Infrastructure: Department of Defense Renewable Energy  Initiatives. GAO-10-681R. Washington, D.C.: April 26, 2010.
Defense Infrastructure: DOD Needs to Take Actions to Address  Challenges in Meeting Federal Renewable Energy Goals. GAO-10-104.  Washington, D.C.: December 18, 2009.
Defense Critical Infrastructure: Actions Needed to Improve the  Identification and Management of Electrical Power Risks and  Vulnerabilities to DOD Critical Assets. GAO-10-147. Washington, D.C.:  October 23, 2009.
Energy Savings: Performance Contracts Offer Benefits, but Vigilance Is  Needed to Protect Government Interests. GAO-05-340. Washington,  D.C.: June 22, 2005.