The goals of the Recovery Act are to preserve and create jobs and promote economic recovery; to assist those most impacted by the recession; to provide investments needed to increase economic efficiency by spurring technological advances in science and health; to invest in transportation, environmental protection, and other infrastructure that will provide long- term economic benefits; and to stabilize state and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases. The EECBG program was authorized in the Energy Independence and Security Act of 2007 (EISA), which intended to move the United States toward greater energy independence and security and to increase the production of clean renewable fuels, among other things. The EECBG program was funded for the first time by the Recovery Act, through formula and competitive grants. Through the program, DOE allocates formula grants to the 50 states, the District of Columbia, and five territories; to city and county recipients based on their resident and commuter populations; and to Native American tribes based on population and climatic conditions. Applicants eligible for formula funding include cities or city-equivalent units of government, such as towns or villages with populations of at least 35,000; counties, which include county- equivalent units of local government, such as parishes or boroughs with populations of at least 200,000; and all Indian tribes and any Alaska Native village. A city or county is also eligible for direct funding if it is one of the 10 highest-populated cities or counties of the state in which it is located. The EECBG program has broad goals for energy-related outcomes. DOE encourages EECBG recipients to develop new and innovative approaches to meet the purposes of the program: to prioritize energy efficiency and conservation; develop projects in a cost-effective manner that will maximize benefits over time; stimulate the economy; leverage other public or private resources; promote energy market transformation; and to the extent possible, to develop programs that will provide sustainable, and measurable energy savings, job creation, and economic stimulus benefits that will continue beyond the funding period. DOE announced the funding opportunity for interested applicants to submit applications for EECBG formula grant funding on March 26, 2009. DOE required applicants to submit an Energy Efficiency and Conservation Strategy (EECS) that described their strategy for achieving the Recovery Act’s goals of the program. DOE had 120 days to review and approve or disapprove recipients’ EECSs. DOE’s funding announcement also required that recipients select projects from the 14 eligible activities identified in Section 544 of EISA, shown in table 1. The Recovery Act increased the importance of transparency and accountability in its use of funds. Accordingly, DOE requires grant recipients to report grant-level expenditure information and performance information including hours worked, energy cost savings, and percent of work completed as well as other figures, through a Web-based application called the Performance and Accountability for Grants in Energy (PAGE) system within 30 calendar days of the end of each quarter year. PAGE allows recipients to electronically submit and manage grant performance and financial information to DOE. In addition, grant recipients are required to report through www.FederalReporting.gov within 10 days after the end of each quarter. This information is made available to the general public through the Recovery.gov Web site. Grant recipients are using EECBG funds primarily for three activities: energy-efficiency retrofits, financial incentive programs, and building and facilities programs. However, recipients have reported several challenges that have delayed their efforts to obligate and spend these funds. Grant recipients have allocated most EECBG funds to 3 of the 14 activities that DOE designated as eligible for EECBG funding in accordance with EISA. As shown in table 2, recipients have allocated nearly two-thirds (65.1 percent) of EECBG funds for three types of activities: (1) energy-efficiency retrofits (36.8 percent), which includes activities such as grants to nonprofit organizations and governmental agencies for retrofitting existing facilities to improve energy efficiency; (2) financial incentive programs (18.5 percent), which includes activities such as rebates, subgrants, and revolving loans to promote energy-efficiency improvements; and (3) energy-efficiency and conservation programs for buildings and facilities (9.8 percent), which includes activities such as installing storm windows or solar hot water technology. Some EECBG recipients are using their awards to fund projects in all three of these categories. For example, according to information reported through PAGE, New York City plans to use $31 million of its $80.8 million award to fund energy-efficiency retrofits at municipal buildings such as schools, courthouses, police precincts, and firehouses. It has also allocated $16.1 million to a financial incentive program that will provide loans to capital-constrained building owners for energy-efficient retrofits to residential, commercial, or industrial buildings. New York City designated another $2 million for buildings and facilities projects and will fund a retro- commissioning program at city facilities designed to identify efficiency measures and address anomalies in energy use, equipment schedules, and control sequences that may cause energy waste. As indicated in table 2, these three activities account for 48 percent of all the projects funded through the EECBG program, or 3,674 out of 7,594 total projects. According to DOE officials, a number of factors explain why energy- efficiency retrofits, financial incentive programs, and buildings and facilities programs account for such a large portion of all EECBG-funded projects. DOE officials told us that some recipients had previously identified needed improvements to their buildings and facilities. Recipients also told us that EECBG funds allowed them to undertake planned facilities projects that previously lacked the requisite funding. DOE officials told us that other recipients allocated EECBG funds to these projects to save money on future energy bills and many recipients chose retrofit programs because these programs allowed them to use EECBG funds to engage their broader communities by retrofitting commercial and residential buildings, in addition to government facilities. DOE also encouraged recipients to pursue these projects. In the EECBG program’s funding announcement, DOE asked recipients to “prioritize energy efficiency and conservation first as the cheapest, cleanest, and fastest ways to meet energy demand” and to “develop programs and strategies that will continue beyond the funding period.” Energy efficiency retrofits and buildings and facilities projects meet both of these goals. Although financial incentive programs appear to be the second highest funded activity—receiving over 18 percent of EECBG funds—the data for this activity require further explanation. According to DOE officials, approximately 73 percent of activities classified as financial incentive programs are subgrants made by state governments to units of local government within the state. Such subgrant recipients can use these funds for any of the 14 eligible activities, such as lighting, retrofits, and transportation. The state awarding the subgrant can report details of the activities funded by subgrant recipients. However, the state government reports these details in narrative fields within DOE’s PAGE system while the primary activity type, reflected in table 2, is simply classified as “financial incentive programs.” High-level summary data on these activities may give the impression that over 18 percent of EECBG funds are allocated to financial incentive programs however, nearly three-quarters of these funds may ultimately be used for any of the 14 eligible activities. Although DOE collects information on how these funds are ultimately used, these data are not readily available. DOE has obligated all EECBG funds to recipients, and recipients are beginning to obligate and spend these funds. The Recovery Act required DOE to obligate all funds to recipients by September 30, 2010, and DOE has done so. DOE staff told us that recipients have completed the planning stages of their projects and they expect that recipient spending will soon hit a peak before leveling off as funds are expended. As of December 2010, recipients reported obligating approximately $1.7 billion, 57 percent of their EECBG budgets, and reported spending more than $655 million, approximately 23 percent of their EECBG budgets. DOE officials expect recipients’ spending to increase significantly in forthcoming reporting periods as work begins or increases on more projects. The table below shows the total funds budgeted, obligated, and spent and the percentages of budgeted funds spent for each eligible activity. Some recipients and others have identified several challenges that have delayed spending of Recovery Act funds under this newly funded EECBG program. DOE has made efforts to help recipients address some of these challenges, including launching a Technical Assistance Program and Solution Center to provide recipients with one-on-one assistance, an online resource library, training, webcasts, and a peer-exchange forum for sharing best practices and lessons learned. Because the EECBG program is relatively new—authorized by EISA in 2007 but not funded until the Recovery Act was passed in 2009—some DOE administrators had little previous experience with the program and its requirements. DOE’s Inspector General reported that some of the DOE staff assigned to review EECBG grant applications lacked financial assistance experience and failed to obtain the information necessary to issue awards, which required additional requests for documentation that further delayed awards. The Inspector General also reported that the program lacked a permanent Program Director until April 2010. Some EECBG project officers—the DOE staff primarily responsible for overseeing and interacting with EECBG recipients—told us that they faced a steep learning curve during the initial months of the program, when they began working with recipients to resolve obstacles to applying for funds and address questions about meeting requirements and reporting outcomes. Several project officers compared managing the EECBG program to flying a plane while it is still being built. In addition, several DOE project officers told us that some recipients’ efforts to effectively manage grants and spend funds have been complicated by staff and resource limitations. Some recipients lack the staff and resources needed to comply with EECBG and Recovery Act requirements.