Audit Report: OAS-RA-L-11-07

The Department of Energy's (Department) Office of Energy Efficiency and Renewable Energy (EERE) provides grants to states, territories and the District of Columbia (states) in support of their energy priorities through the State Energy Program (SEP). Based on population and energy consumption, and after a review of proposed projects, EERE allocated a total of $3.1 billion in American Recovery and Reinvestment Act of 2009 (Recovery Act) funds to the states. The grant awards were designed to help states achieve SEP Recovery Act objectives, including preserving and creating jobs; saving energy; increasing renewable energy sources; and reducing greenhouse gas emissions. EERE
program guidance held each state responsible for administering the SEP and for
implementing sound internal controls over the use of Recovery Act funds.
The State of New Jersey's (New Jersey) Board of Public Utilities (BPU) was assigned
responsibility for New Jersey's SEP. BPU received $73.6 million of SEP Recovery Act
funds – a 96-fold increase over New Jersey's Fiscal Year (FY) 2009 funding of $768,000. BPU planned to fund $20.6 million in State grants, $36 million in Memorandums of Understanding (MOU) with other State entities, about $16 million in energy rebates, and budgeted about $1 million in administrative costs. Per the Recovery Act, the Department was required to obligate the funds by September 30, 2010. The State was to have spent the funds by April 30, 2012, the date specified in the grant agreement. As part of the Office of Inspector General's strategy for reviewing the Department's implementation of the Recovery Act, we initiated this review to determine whether New Jersey had internal controls in place to ensure that the goals of the SEP and Recovery Act would be accomplished efficiently and effectively.