Colorado Proposals for a National New Energy Economy Stimulus Package

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1 OFFICE OF THE GOVERNOR 136 State Capitol Building Denver, Colorado (303) (303) fax STATE OF COLORADO Bill Ritter, Jr. Governor Colorado Proposals for a National New Energy Economy Stimulus Package Prepared for President Elect Obama Transition Team National New Energy Economy Stimulus 1/16

2 Summary of Colorado proposals for a U.S. New Energy Economic Stimulus A. Appropriated investment to increase access and availability of energy efficiency and renewable energy 1. Increase Weatherization budget to $1B (up from $227M in FY08 and $477 in FY09 CR). 2. $10 billion direct install energy efficiency retrofit program for all types of buildings to be run by the states industrial, commercial, institutional, residential: a. The first $5 billion would go out within 30 days of enactment b. The second $5 billion would go to the states that demonstrate performance based upon monitored and verified savings 1 year after enactment 3. Fund the Energy Efficiency and Conservation Block Grant at the full $2 billion authorization. 4. Appropriate up to the $125M authorized level State Energy Program (SEP) grants to states (currently at $34M). 5. Establish revolving loan fund to be administered by states for the purpose of providing short term loans to cover the up front costs associated with solar, paid for through the existing federal tax credit. 6. Establish revolving loan fund to be administered by states for the purpose of providing loans to public and private fleets to cover the cost of an accelerated replacement of inefficient vehicles. 7. Appropriate up to $1 Billion to establish buy back programs to remove high emitting, inefficient (less than 13 mpg) vehicles and establish local recycling facilities to decommission these vehicles. B. Policy changes to allow states to work to increase access to energy efficiency and renewables 1. (As an alternative to #5 above) Make ITC tax credit transferrable so we can up front finance costs for small businesses and homeowners through transference of the tax credit to a financing entity this would encourage the ITC to be monetized by investors and would help eliminate the up front cost problem associated with an increasing reliance on the federal tax credit and associated reductions in the up front rebates. 2. Repeal the anti double dipping provision as applies to energy efficiency and renewable energy improvements so local governments and state governments can offer direct incentives without sacrificing the federal tax credit. National New Energy Economy Stimulus 2/16

3 3. Reduced rates for financing the purchase of ENERGY STAR rated homes and home refinancing that includes the installation of a renewable energy system. 4. Increase Energy Efficiency Tax Credit from the current 10% for most improvements to 30 50%. Remove the $500 cap on efficiency tax credits or raise it to $2500. Allow for the tax credit to be refundable and/or transferrable so we can secure financing by allowing for a third party to monetize the tax credit for those who have no taxable income or can t fully benefit from the tax credit. C. Utility Scale Renewable and Infrastructure Development 1. Launch a major infrastructure construction project to achieve the vision for a National Renewable Energy Backbone or Renewable Energy Superhighway which will guarantee access for renewable energy generation with price guarantees for power distributed through the backbone if the developer can get the power to the backbone. 2. Construction of regional high voltage transmission networks should be stimulated to connect rich renewable energy zones. This can be assisted by raising the Private Activity Bond (PAB) cap to allow transmission funded by state established funding authorities to issue tax exempt financing for this purpose. In addition, seed capital investment for transmission feasibility studies for build out of transmission into renewable resource zones would provide needed assistance. 3. Allow the PTC and ITC as well as the associated modified accelerated cost recovery system (MACRS) to be refundable for facilities placed in service in 2008 and 2009 only, transferrable thereafter. D. Manufacturing Stimulus 1. Renewable Energy Manufacturing Provide a 7 year federal tax moratorium on all new Renewable Energy manufacturing facilities. 2. Establish long term purchasing contracts for PV on all Federal facilities nationally, require US manufactured PV be installed via these contracts. E. Forest Health and Biomass Industry Stimulus 1. Allow for a greater portion of the $175 million allocated in the emergency supplemental bill [P.L ], that was dedicated to wildfire suppression to be used for forest health restoration and management projects. 2. Decrease the amount cancellation ceiling amount for multi year stewardship contracts so to allow for local businesses to engage in the stewardship contracting procedure to properly harvest and utilize biomass from federal forests. National New Energy Economy Stimulus 3/16

4 3. Provide a 5 year exemption from federal business and personal property taxes for qualified businesses that remove trees killed by bark beetles or other diseased trees if such businesses assist in forest restoration efforts on the affected federal land after the diseased timber is removed. 4. Establish a federal revolving fund to provide start up revenues for new U.S businesses that process and sell beetle killed timber or other hazardous forest fuel for beneficial uses. National New Energy Economy Stimulus 4/16

5 DETAILED DISCUSSION OF COLORADO PROPOSALS A. Appropriated investment to increase access and availability of energy efficiency and renewable energy To drive the investment in efficiency and renewable energy investment is needed to achieve marketability that goes beyond simply a desire to do good things for the environment. If we are to mainstream efficiency and renewable energy, we need to address mainstream values economy, simplicity, ease of access and an infrastructure of businesses able to provide services to citizens in their communities. 1. Increase Weatherization budget to $1B (up from $227M in FY08 and $477 in FY09 CR) Accompanying an increase in resources to address low income populations (currently defined as 185% of FPL), allow for a percentage of the money received to reach out to populations up to 80% of the Adjusted Median Income (AMI) and also allow for targeted investment of the funds to achieve energy efficiency goals without prescriptive measures for each home. This would allow weatherization programs to partner with local affordable housing groups (which generally work from AMI not FPL) and to target services for homeowners at their specific needs rather than incentivizing a maximum number of measures per home serviced whether those investments are appropriate or not. Also allow these funds to go to private business as a means to quickly ramp up capacity while immediately spurring jobs on the local level. 2. $10 billion direct install energy efficiency retrofit program for all types of buildings to be run by the states industrial, commercial, institutional, residential. a. The first $5 billion would go out within 30 days of enactment b. The second $5 billion would go to the states that demonstrate performance based upon monitored and verified savings 1 year after enactment. Allow for this funding to be used creatively by states for most appropriate investments in each of the categories. Direct installation rebates, interest rate buy downs, partnerships with local governments and non profits, establishment or improvements in existing Energy Service Company Performance Contracting programs, K 12 and other public building efficiency increases, etc Offer incentives to states in the second year to implement the most effective of the programs with blue prints for successful implementation. 3. Fund the Energy Efficiency and Conservation Block Grant at the full $2 billion authorization or higher. For the purposes of economic stimulus, eliminate the competitive solicitation for the first year it will take too long to get the money out the door and on the ground. Use the existing formula for quick implementation: 68% for Cities; 12% through State Energy Programs; 16% through the State Energy Offices to towns under 35,000 population. Allow for partnerships between these entities to implement large scale regional programs for greater effectiveness. National New Energy Economy Stimulus 5/16

6 4. Appropriate up to the $125M authorized level State Energy Program grants to states (currently at $34M) The State Energy Program (SEP) provides funds to the state energy offices through the Department of Energy to fund energy efficiency and renewable energy programs impacting every sector of the economy. A study conducted by Oak Ridge National Laboratory concluded that for every Federal dollar invested, over $7 in direct energy savings is achieved and almost $11 in non Federal funds are directly contributed to energy programs and projects. This study is a few years old, so that with much higher energy prices, the savings are significantly greater. 5. Establish revolving loan fund to be administered by states for the purpose of providing short term loans to cover the up front costs associated with increased tax credit for solar, paid for through the existing federal tax credit While the extension of the ITC for 8 years and the lifting of the ITC cap of $2,000 for residences was an important federal action to stimulate investment in the renewable market, many utilities responded by reducing existing rebate programs. In Colorado, the rebate for solar power by Xcel Energy was reduced from $4.50/watt to $3.50/watt. Many other states and utilities around the country have also reduced their incentive levels with the same logic. The impact of this reduction was to shift costs up front to consumers. Furthermore, because the upfront ITC cost is a short term liability (paid back with forthcoming tax credits), it s not a good candidate for inclusion in the long term financing generally used for purchase of solar PV systems. 6. Establish revolving loan fund to be administered by states for the purpose of providing loans to public and private fleets to cover the cost of an accelerated replacement of inefficient vehicles. Public and private fleets may decelerate the rate of vehicle turnover during this time of tight budgets. This is the time fleets should be thinking about replacing more, not less of their fleet. Older, inefficient vehicles result in higher fuel and maintenance costs. Low or no interest loans made available to fleets would provide an incentive to replace vehicles at an accelerated rate, resulting in lower fuel and maintenance costs. The State of Colorado typically finances (leases) vehicles through an outside financer at a rate of 3.5% to 4.0% interest. In November, the state solicited lease quotes from seven companies. Only one company responded with an interest rate of 5.2%. 7. Appropriate up to $1 Billion to establish buy back programs to remove high emitting, inefficient (less than 13 mpg) vehicles and establish local recycling facilities to decommission these vehicles. Provide individuals with an incentive to turn in older, inefficient vehicles and purchase existing vehicles stock from U.S. car makers. Create local recycling facilities to decommission older vehicles. B. Policy changes to allow states and local governments increase access to energy efficiency and renewable energy National New Energy Economy Stimulus 6/16

7 1. Make ITC tax credit transferrable for the middle class and refundable for the low income population Transferability of the residential ITC could be used as an alternative to #5 above, by helping states achieve the same objective through private financing markets. By monetizing the tax credit, transferring the credit to a financing entity, states could establish a funding mechanism to finance the upfront costs associated with the tax credit (described in #5 above). By allowing for a refund of the tax credit, the same types of financing opportunities available to middle income citizens for renewable investments would be available for low income homeowners who don t have the necessary tax liability to benefit from the credit. Ideally, the investment could even be subsidized with rate buy downs through the weatherization program. If the monthly costs associated with the renewable energy system were able to be constrained below the existing utility expenses, it would be a financial benefit to those low income customers because they would net cash flow or be even immediately (#2 below would be a necessary further adjustment to make this viable or the low income homeowner would be precluded from the ITC benefit). 2. Repeal the anti double dipping provision as applies to energy efficiency and renewable energy improvements so local governments and state governments can offer direct incentives without sacrificing the federal tax credit. Change IRS regulations to recognize that energy efficiency and renewable energy improvements fit the definition of Governmental Purpose and that federally tax exempt bonds issued and loans made for that purpose are exempt from the state by state volume cap allocations (VCAs), loan amount caps and household income limits. Currently, if the state attempts to buy down interest rates for the purpose of incentivizing purchase of solar systems by residents or commercial entities, that is considered a government subsidy subject to the double dipping provisions of the ITC and disallows the ITC for the beneficiary. A similar situation exists for local governments attempting to strengthen and streamline financing opportunities for their citizens. Furthermore, California and Colorado have both implemented locally issued bonds for the purpose of allowing citizens to invest in energy efficiency and renewable improvements and pay back the bond through assessments in their property taxes. However, they are currently not allowed to utilize taxexempt bonding for this purpose without running afoul of the IRS Regulations for Home Improvement Loans. IRS regulations specific to the use of PAB financing for home improvement loans have additional requirements, including a limit on the household income of residents who obtain this financing (to 115% of AMI), a $15,000 loan amount cap for residential loans, and some special procedural TEFRA rules. In addition, there also may be a requirement to expend 20% of proceeds in specific geographic areas. The proposed use of these funds are for energy efficiency and renewable energy improvements which will decrease use of fossil fuels, this is very different than other types of home improvement and has a greater benefit to the public good. National New Energy Economy Stimulus 7/16

8 3. Reduced rates for financing the purchase of ENERGY STAR rated homes and home refinancing that includes the installation of a renewable energy system When a homeowner is considering purchase of a new home, they need an incentive beyond the rating of ENERGY STAR (30% above average efficiency 15% above code). By offering preferential rates for the purchase of these homes, we provide an incentive to choose ENERGY STAR rated homes as well as an incentive for builders to build ENERGY STAR rated homes in a highly competitive market. Similarly, when a homeowner decides to install a solar PV system on their roof, they generally need to finance that system in some fashion. Because PV panels have a guaranteed life of years and an expected longevity beyond 30 years, a 30 year refinance is a sensible way to finance that PV system. By offering preferential refinance rates for inclusion of a PV system, we create an incentive to install PV on the roof of homes, while simultaneously dropping the monthly costs associated with PV power. In conjunction with a strong rebate program and a short term loan to cover the upfront costs of the tax credit, these monthly costs can be brought below standard grid power rates and save the consumer money on home energy use while protecting them from increases in energy costs, providing clean renewable power to the electrical grid and generating local jobs in the construction, PV installation and electrician fields. 4. Increase Energy Efficiency Tax Credit from the current 10% for most improvements to 30 50%. Remove the $500 cap on efficiency tax credits or raise it to $2500. Allow for the tax credit to be refundable and/or transferrable so we can secure financing for those who have no taxable income or can t fully benefit from the tax credit. Currently, the tax credit for energy efficiency investments is 10% of the costs and generally only includes materials, rather than materials and labor. If a homeowner receives an insulation upgrade, one of the best cost/benefit ratio investments a homeowner can make, most of the costs of that investment are in labor rather than the insulation material itself. By increasing this percentage to 30 50%, raising the cap from $500 to $2500, and broadening the eligible upgrades to include materials and labor, we provide meaningful incentives to entice homeowners to invest in the cheapest form of energy the reduction of demand through energy efficiency. Investment in the energy efficiency infrastructure in this way provides employment across the spectrum of the construction trades while creating new jobs in home energy raters that can perform energy efficiency audits. C. Utility Scale Renewable and Infrastructure Development This is an area where perhaps the greatest broad scale changes can be made nationally in our infrastructure to prepare it for the next generation of energy management and delivery. Investments made in this area will create the platform upon which large scale private investment will follow in a New Energy Economy, particularly when matched with strong energy policies establishing a national renewable portfolio standard. National New Energy Economy Stimulus 8/16

9 1. Launch a major infrastructure construction project to achieve the vision for a National Renewable Energy Backbone or Renewable Energy Superhighway which will guarantee access for renewable energy generation with development certainty for renewable generation developers seeking to inject into the bulk power system. The country currently has three disconnected electrical grids all operating individually of each other and at incompatible frequencies. The nature of the grids precludes easy integration between the three grids of electrical generation. The purpose of this large scale construction project, in addition to generating immediate jobs, would be to establish a nationwide renewable transmission backbone, or Renewable Energy Superhighway that would not only allow for transmission of renewable energy nationwide from areas of high production to areas of limited production, but it would also be paired with national energy policy that would guarantee a price for the electricity that is delivered to the backbone, and guarantee a national market through a nationwide renewable portfolio standard. By guaranteeing a market and a price, private investment will develop the wind and solar production and delivery mechanisms to get that power to the backbone. 2. Construction of regional high voltage transmission networks should be stimulated to connect rich renewable energy zones. This can be assisted by raising the Private Activity Bond (PAB) cap to allow transmission funded by state established funding authorities to issue tax exempt financing for this purpose. In addition, seed capital investment for transmission feasibility studies for build out of transmission into renewable resource zones would provide needed assistance. Regional integration of geographically diverse renewable energy increases the capacity of renewable energy over the entire system because production times vary according to regional location and renewable resource thereby requiring less backup generation or spinning reserve. In the western U.S. there are efforts to build a regional renewable energy transmission system through state renewable energy authorities with bonding capability. Wyoming, Colorado, New Mexico all created bonding authorities for this purpose. Allowing transmission to renewable energy zones to qualify for raising of the private activity bond cap (PAB) would allow these entities to issue tax exempt financing for this purpose and would greatly increase the ability of these authorities to accelerate buildout of transmission. In 2008, Senator Crapo had language to accomplish this. Background: Bonds issued by a state owned transmission authority do not qualify as tax exempt under current IRS regulations 26 CFR Part 1 (67 FR 59756). Tax exempt status for bonds is a significant financial incentive to attract new transmission investment, amounting to approximately 1 to 1.5 percent interest rate in current market conditions. In order to receive federal tax exempt status for revenue bonds issued by a transmission authority, certain provisions of the IRS Code and regulations need to be revised. For example, Section (g)(2), Certain use by nongovernmental persons under output contracts (I) Transmission facilities (67 FR 59761) requires that the following to be in National New Energy Economy Stimulus 9/16

10 The facility is owned by a government person; The facility is operated by an independent transmission operator in a manner that satisfies Paragraph (g)(1)(ii) of this section; and The facility is not financed for a principal purpose of providing that facility for use by that nongovernmental person. Under current law, the state owned transmission authority will not meet these restrictions, thereby limiting their usefulness to attract new transmission investment. U.S. Senator Mike Crapo (ID) introduced legislation during the 110 th Congress (S. 1630) that would amend the Internal Revenue Code to exempt, for five years after enactment of the Act, nongovernmental operators or users of electric transmission facilities from the private business use test for tax exempt financing of such facilities. Western states have supported this policy and currently Kansas, North Dakota, South Dakota, Wyoming, Colorado, Idaho and New Mexico have all created public transmission authorities, which are designed to foster new transmission construction and investment in the West. These new public entities are designed to act as catalysts or otherwise assist private development that will foster and transport diverse energy resources, such as wind, coal and biomass, to regional load centers. 3. Allow the PTC and ITC as well as the associated MACRS to be refundable for facilities placed in service in 2008 and 2009 only, transferrable thereafter. Equity Financing Problem: Because they are relatively new and are involved in a very capital intensive industry, most wind and solar energy generation companies don t have enough taxable income to utilize the tax credits (renewable production tax credit (PTC), solar investment tax credit (ITC), and accelerated depreciation (MACRS)) intended to incentivize investments in renewable energy facilities. In order to receive value for tax benefits generators cannot use themselves; these companies have entered into flip partnerships with institutional investors. Large financial firms and renewable energy companies have formed partnerships and allocated tax benefits and cash flow to the institutional investors in exchange for an upfront payment for the partnership interest. The upfront payment permits the renewable energy companies to recover construction costs and obtain value for tax benefits they cannot otherwise use. Unfortunately, many of the companies engaged in providing such equity financing have now left that market with no timetable for returning. In the face of growing needs for such equity financing within the renewable energy market, supply of this financing has shrunk National New Energy Economy Stimulus 10/16

11 The loss of equity financing means that a substantial portion of new wind power capacity planned for 2009 could be cancelled. This reduced investment could cost tens of thousands of jobs, further dampening our already weakened economy. Equity Financing Solution: Allow the PTC and ITC as well as the associated MACRS to be refundable for facilities placed in service in 2008 and 2009 only. In addition, the proposal would permit a generator to elect, as an alternative, to carry back PTCs earned in 2008 and 2009 to offset income tax paid during the previous ten years if the revenue earned is reinvested in renewable generation. Currently, credits can only be carried back for one year. This provision is unlikely to drive a significant score because Congress already assumed these tax credits would be utilized with the original legislation. D. Manufacturing Stimulus 1. Renewable Energy Manufacturing Provide a 7 year federal tax moratorium on all new RE manufacturing facilities. International PV manufacturing companies are looking to the U.S. to set up more manufacturing bases. However, with a large potential PV market both at the distributed and centralized power scale in the Southwest, there is a potential that these companies will locate in Mexico and deliver the panels by truck over the border. In addition, numerous European biomass boiler and generation development companies are interested in locating manufacturing facilities in the United States. These boiler manufacturers would not only bring additional supply that is greatly needed, but would further develop the technologies that are needed to increase the usage of biomass in the US. By providing a national tax incentive for the location of these companies within the United States, we increase our competitiveness in providing these manufacturing jobs within the country. 2. Establish long term purchasing contracts for PV on all Federal facilities nationwide, require US based manufacturing for PV contracts The Federal Government has an opportunity to lead in the installation of large scale distributed systems. Already, in Colorado Ft. Carson Army Post has installed a 2MW PV system, the Federal Center in Denver has installed a 1 MW PV system and Shreiver Air Force Base intends to issue an RFI for a 20 MW PV system. This creates a significant market for PV when extended across the entire federal system including penitentiaries. By requiring that these systems are manufactured in the US, we further drive decisions on manufacturing locations prior to those decisions being made by industry. D. Forest Health and Biomass Industry Stimulus National New Energy Economy Stimulus 11/16

12 1. Allow for a greater portion of the $175 million allocated in the emergency supplemental bill [P.L ], that was dedicated to wildfire suppression to be used for forest health restoration and management projects. The lack of funding for preventative forest health management projects is placing tremendous pressure on fire suppression efforts and is sky rocketing both local and federal costs. By increasing the amount of funding available to properly reduce fire fuels, the expenses for fire suppression should dramatically decrease, new jobs will be created and long term forest health conditions will improve. 2. Decrease the amount cancellation ceiling amount for multi year stewardship contracts so to allow for local businesses to engage in the stewardship contracting procedure to properly harvest and utilize biomass from federal forests. Numerous states have gone on record to both the U.S Department of Agriculture and Us Department of Interior, stating that they have not been able to make use of Stewardship Contracts due to the Federal Acquisition Regulation requirement (FAR ) that specifies the United States Forest Service (USFS) must fund cancellation ceiling amounts for a multi year stewardship contract at the time the contract is approved, thus tying up potentially millions of appropriated dollars that could be used to treat acres on the ground. This tie up of funds is delaying the necessary work to be done and is not allowing for numerous local biomass and forest companies from partnering with federal forests for contracts and is increasing costs of projects. 3. Provide a 5 year exemption from federal business and personal property taxes for qualified businesses that remove trees killed by bark beetles or other diseases trees if such businesses assist in forest restoration efforts on the affected federal land after the beetle killed timber is removed. This tax exemption would allow for new businesses to develop that would partner with the federal government in healthy forest initiatives. By utilizing the already established stewardship contracting mechanism in conjunction with this tax exemption, new businesses will be developed to support the removal of forest fire fuels. 4. Establish a federal revolving fund to provide start up revenues for new U.S businesses that process and sell beetle killed timber or other hazardous forest fuel for beneficial uses. This fund would be used to help new or expanding forest industry businesses to include much needed equipment for harvesting and processing of forest fuels. Currently, the high price of business capital is causing new and existing lumber businesses to limit or reduce the amount of new equipment purchased each year. The revolving fund would provide low interest loans, through the USDA, to biomass and lumber companies that can be paid off over 7 years. The collected interest would be used to generate new loans for future years. SAMPLE LEGISLATION: DIRECT INSTALLATION OF ENERGY EFFICIENCY PROGRAM National New Energy Economy Stimulus 12/16

13 Section 1. Short title. This Act may be cited as the Energy Efficiency and Jobs Creation Act of Section 2. Congressional findings and declaration of purpose. (a) Findings The Congress finds that (1) energy use in private and public sector owned and managed buildings is excessive and implementation of aggressive energy efficiency measures will have an immediate and substantial effect in reducing energy demand; (2) the development and implementation of comprehensive energy efficiency projects in existing buildings will dramatically help residential consumers, schools, government and businesses become more energy efficient, upgrade their infrastructure, generate energy cost savings, and produce high quality jobs; (3) the widespread use of energy efficiency measures in existing buildings will reduce regulated air pollutants and greenhouse gas emissions; and (4) the Federal Government has a responsibility to promote the use of energy efficiency measures and pursue energy efficiency policies in all sectors of the economy and for all homeowners in order to stimulate the economy by reducing energy demand and the resultant amount of fossil fuels that need to be purchased outside of the United States, by generating energy cost savings, and creating new jobs. (b) Purpose. It is the purpose of this Act to promote energy efficiency and create jobs. Section 3. Authorization of appropriations For the purpose of carrying out this Act, there are authorized to be appropriated $10,000,000,000. Section 4. Use of funds. (a) Of the amount provided in this Act, one half will be for institutional and state and local buildings, and the remaining half distributed among residential buildings, commercial buildings, and industrial buildings. (b) Within thirty days of the release of funds under this Act, the Secretary of Energy shall distribute 49.5% of the funds to the state energy offices in the states, as defined by 42 U.S.C. 6322, or National New Energy Economy Stimulus 13/16

14 other agency designated by the Governor of the state or the Mayor of the District of Columbia, with onehalf of the funds disbursed in accordance with population and one half disbursed on an equal basis to all the states and the District of Columbia. Of the amounts provided in this section,.1% of the funds shall be disbursed equally to Puerto Rico, Guam, American Samoa and the U.S. Virgin Islands. (c) The Secretary of Energy will disburse the funds to each state, the District of Columbia, Puerto Rico, Guam, American Samoa and the U.S. Virgin islands upon receipt of a certification from each state Governor or the Mayor of the District of Columbia that the funds will be disbursed during the next nine months for the following purposes: (1) Investments in comprehensive energy efficiency retrofits of existing state buildings and facilities, including buildings and facilities of state universities and community colleges, and local government buildings and facilities, including buildings and facilities of municipalities, counties, vocational districts and school districts; (2) Investments in comprehensive energy efficiency retrofits of existing residential homes, either single or multi family, so long as the residences are not eligible for participation in the Low Income Weatherization Assistance Program in that jurisdiction, and for already established programs that deliver these energy efficiency retrofits on a direct install basis and that does not require a financial contribution from the resident to pay for the retrofits; (3) Investments in energy efficiency retrofits in commercial facilities, particularly energy efficiency retrofits in existing retail and other small commercial facilities (under 450 kw) on a direct install basis pursuant to programs that have been established in the marketplace in any jurisdiction; and (4) Investments in industrial energy efficiency retrofits in existing industrial facilities, utilizing established methods, including implementing potential investments identified as a result of the US Department of Energy s Save Energy Now program. d) Within three months of the date of enactment of this Act, the Secretary of Energy shall publish guidance which sets forth the metrics that the Secretary shall utilize in evaluating the state reports submitted in accordance with subsection (f). (e) Within nine months of the release of funds from the Secretary of Energy, the states, the District of Columbia and the designated territories shall have disbursed these funds for energy efficiency retrofits in the existing buildings described in subsection (c). Energy efficiency programs implemented in accordance with this section shall be: National New Energy Economy Stimulus 14/16

15 (1) monitored and verified to ensure that energy efficiency measures are being implemented and are saving energy on a cost effective basis, that is that they have scores on the Total Resource Cost (TRC) test as defined in the California Standard Practice Manual for energy efficiency programs of greater than 1.; and (2) implemented by the states or third parties designated by the states, such as energy service companies or electric or gas utility companies or local governments. (f) Within ten months of the release of funds from the Secretary of Energy, the states, the District of Columbia and the designated territories shall report to the Secretary on the use of funds, including the monitored and verified energy savings actually produced, projected energy savings over the next twelve months, the specific entities implementing the energy efficiency programs, and the direct and indirect employment created as a result of these programs. (g) Within twelve months of the release of funds from the Secretary of Energy, the Secretary shall disburse the remaining 50% of the funds to the states and the District of Columbia in accordance with the performance of these entities in achieving monitored and verified cost effective energy savings and increases in employment, as determined by a review and analysis of the reports submitted in accordance with subsection (f). A three month period will be given to these jurisdictions to cure any failures in compliance with the requirements under subsection (c) and subsection (f). In the event of failure to successfully meet these requirements after the three month cure, period the Secretary shall provide no additional funding under subsection (g) to that jurisdiction. Section 5. Limitation on the use of funds. (a) In the event the states, the District of Columbia or the designated territories determine that the funds disbursed under this Act cannot be expended for the respective residential, commercial, institutional or industrial purposes in accordance with the percentages required in subsection 4(a), then the states may reallocate these funds to other energy efficiency purposes in the other sectors for direct installation of energy efficiency in existing buildings after submitting a report to the Secretary of Energy within ten months after the initial distribution of funds by the Secretary under this Act consistent with subsection 4(f). Subject to approval of the report by the Secretary, the additional disbursement of funding under subsection (g) will be permitted. (b) The states shall not utilize more than ten percent of the funds provided under this Act for administration of the programs under this Act, and no more than five percent of the funds provided under National New Energy Economy Stimulus 15/16

16 this Act shall be utilized for monitoring and verification activities and ensuring the energy savings are sustained. Section 6. Effect on other laws. An Environmental Impact Statement or any other environmental review, in accordance with the National Environmental Policy Act of 1970, shall not be required under this Act. [APPROPRIATIONS NOTE THE STATUTE IS AN AUTHORIZATION THE FOLLOWING LANGUAGE COULD BE UTILIZED FOR THE APPROPRIATIONS LANGUAGE ASSUMING A SUPPLEMENTAL APPROPRIATIONS BILL/STIMULUS PACKAGE] Department of Energy Energy Efficiency and Renewable Energy For an additional amount for Energy Efficiency and Renewable Energy, $10,000,000,000, to remain available until expended: Provided, that of the funds appropriated, the entire amount is directed to the Energy Efficiency and Jobs Creation Act of 2009: Provided further, that of the funds appropriated for this purpose, the Department of Energy shall disburse the funds to the states no later than thirty days after enactment for purposes of section 4(b) of the Energy Efficiency and Jobs Creation Act of 2008, and within twelve months of enactment for purposes of section 4(e) of the Energy Efficiency and Jobs Creation Act of National New Energy Economy Stimulus 16/16