Audit Report: The Department of Energy's American Recovery and Reinvestment Act – California State Energy Program

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The Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) provides grants to states, territories and the District of Columbia (states) through the State Energy Program (SEP). Federal funding, based on a grant formula that considers the population and energy consumption in each state, amounted to $25 million for Fiscal Year (FY) 2009 for the entire Program. The American Recovery and Reinvestment Act of 2009 (Recovery Act) expanded the SEP by authorizing an additional $3.1 billion to states using the existing grant formula. EERE grant awards to states were designed to achieve SEP Recovery Act objectives to preserve and create jobs, save energy, increase renewable energy sources, and, reduce greenhouse gas emissions.

The California Energy Commission (Commission) received a SEP Recovery Act grant of $226.1 million. The Commission planned to use $193 million of these funds to provide energy efficiency retrofits for 29,000 residential and 5,500 commercial buildings and to create 2,100 jobs. Over $80 million was to provide loan capital for business equipment and public building retrofits while $113 million was allocated to incentive programs to encourage energy efficiency retrofits of existing residential and commercial buildings. The remaining $32.4 million was provided for program management and green jobs training. EERE program guidance emphasized that states were responsible for administering the SEP and for implementing controls over the use of Recovery Act funds.

Because of the states' role in the implementation of the Recovery Act, we initiated this review to determine whether California was effectively administering its SEP Grant.