Interactions between Energy Efficiency Programs funded under the Recovery Act and Utility Customer-Funded Energy Efficiency Programs

Since the spring of 2009, billions of federal dollars have been allocated to state and local governments as grants for energy efficiency and renewable energy projects and programs. The scale of this American Reinvestment and Recovery Act (ARRA) funding, focused on "shovel ready" projects to create and retain jobs, is unprecedented. Thousands of newly funded players –cities, counties, states, and tribes – and thousands of programs and projects are entering the existing landscape of energy efficiency programs for the first time or expanding their reach. The nation's experience base with energy efficiency is growing enormously, fed by federal dollars and driven by broader objectives than saving energy alone. State and local officials made countless choices in developing portfolios of ARRA-funded energy efficiency programs and deciding how their programs would relate to existing efficiency programs funded by utility customers. Those choices are worth examining as bellwethers of a future world where there may be multiple program administrators and funding sources in many states. What are the opportunities and challenges of this new environment? What short- and long-term impacts will this large, infusion of funds have on utility customer-funded programs; for example, on infrastructure for delivering energy efficiency services or on customer willingness to invest in energy efficiency? To what extent has the attribution of energy savings been a critical issue, especially where administrators of utility customer-funded energy efficiency programs have performance or shareholder incentives? Do the new ARRA-funded energy efficiency programs provide insights on roles or activities that are particularly well-suited to state and local program administrators vs. administrators or implementers of utility customer-funded programs? The answers could have important implications for the future of U.S. energy efficiency. This report focuses on a selected set of ARRA-funded energy efficiency programs administered by state energy offices: the State Energy Program (SEP) formula grants, the portion of Energy Efficiency and Conservation Block Grant (EECBG) formula funds administered directly by states, and the State Energy Efficient Appliance Rebate Program (SEEARP). Since these ARRA programs devote significant monies to energy efficiency and serve similar markets as utility customer-funded programs, there are frequent interactions between programs. We exclude the DOE low-income weatherization program and EECBG funding awarded directly to the over2,200 cities, counties and tribes from our study to keep its scope manageable.