Additional Questions from the States about Using Recovery Act Funding To Implement Projects through the State Energy Program

The following questions are from state officials who are helping to implement ARRA to U.S. Department of Energy (DOE) staffs who set requirements for states to receive funding. For more information, see the Recovery Act and State Funding Web page on the SEP Web site.

Questions About Timing

ARRA gives preference to activities that can be started and completed expeditiously. For example, its goal is to use at least 50%of the available funds for activities that can be initiated by June 17, 2009. If our state plan (under SEP) has not been approved before June 17, or if we have not received funding by June 17, how do we meet these requirements?

The language applies in general to all ARRA funds rather than to a specific goal. The intent is to initiate projects as soon as possible within the procedures that govern each program. The Funding Opportunity Announcement for SEP is being amended to include a statement that the June 17 date does not apply to the SEP Recovery Act program because of the schedule associated with the announcement (PDF 372 KB). Download Adobe Reader.

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I just returned from the Western States Energy Program Conference in Santa Fe, New Mexico. We learned from DOE and National Energy Technology Laboratory representatives that, if we used ARRA-SEP or block grant funds for revolving loan programs, those loans must be "completely turned over" before the grant period ends or DOE will take back the funds. What does "completely turned over" mean? Does it mean all the funds in the loan program have to be "completely loaned out" by the end of the grant period, or does it mean "completely loaned out and repaid" by the end of the grant period? There is scant chance we would receive millions of dollars in funds loaned out and repaid by March 31, 2012.

Funds are considered expended when the entire capital fund is loaned out.

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The SEP Funding Opportunity Announcement under the Recovery Act says that initial applications can be submitted to DOE no later than March 23, 2009. We have just completed the registration requirements: DUNS number, CCR registration and FedConnect registration. Has this initial application date been extended? If not, what can we do? How do we submit an application? Any and all information would be greatly appreciated.

The initial application date has not been extended. Based on the organizational information provided in your question, you are not an eligible applicant under this funding opportunity announcement. As stated in Part III, Eligibility Information, "In accordance with 10 CFR 600.6(b), and DOE Program Rule 10 CFR Part 420, State Energy Program, eligibility for award is restricted to States, Territories and the District of Columbia (hereinafter States) applying for formula grant financial assistance under the Department of Energy's (DOE's) State Energy Program (SEP)." Please contact your state energy office for further information.

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What are the start and end dates for this grant? I realize it is on a three-year period.

The period of performance will be from the date the award is signed or May 1, 2009, whichever is earlier, and will continue through April 30, 2012.

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Questions about Eligibility

One of our projects replaces incandescent bulbs in traffic signals with LEDs. We have discovered that most LEDs are manufactured in Asia. Does this cause a problem with the ARRA requirement that iron, steel, and manufactured goods be produced in the United States?

No. If U.S. products are not available for the specified use, you may use products that are manufactured elsewhere.

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At the beginning of the project, we may need to use federal funds to purchase stamped steel parts (hoods, doors, pans, frames, etc.) from nondomestic sources as supplies to the American operation. U.S. labor would be used for welding, painting, and assembly. Can this nondomestic steel be purchased with DOE funds?

The Buy American requirement applies to these purchases; therefore, the nondomestic steel cannot be purchased with DOE funds.

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We are trying to determine the applicability of the Buy American iron, steel, and manufactured goods requirement for common types of energy efficiency retrofit projects: installing energy-efficient HVAC equipment and more efficient lighting equipment, adding insulation or other weatherization materials.
1. Does the Buy American requirement apply to this type of work?
2. If a subrecipient or contractor believes it has a qualifying exception to the requirement, does it have to obtain a waiver from the Secretary of Energy? Or does the state have the discretion to waive the requirement in specific cases?
1. Based on the information provided, the Buy American requirement will likely apply. To the extent HVAC may be considered manufactured goods and if they are used to construct, alter, or repair a public building, Buy American will apply.
2. The recipient needs to work through NETL and the PMC to obtain a waiver from the Secretary of Energy. The state cannot waive this requirement.
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We are trying to determine the applicability of the "Buy American" iron, steel, and manufactured goods requirement for common types of retrofit projects such as installing energy-efficient HVAC and lighting equipment or adding insulation or weatherization. Does the "buy American" requirement apply to this type of work?

The "Buy American" requirement would not apply to this situation.

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What is allowable for funding ratepayer-funded incentive programs with utilities? Under SEP rules, states cannot use DOE funding to replace ratepayers' funds, but can supplement these funds by offering incentives above and beyond those funded with ratepayer funds. Can we simply add ARRA funds to a rebate program to allow more rebates by using ratepayer and ARRA funds? Does it matter whose funds are spent first? If ARRA funds are spent first, does this not supplant ratepayer funds? If the ARRA funds have to be spent when ratepayer funds are exhausted, does that present problems with spending ARRA funds within a certain time frame?

The state must provide assurance that state funds do not supplant program funds and that they are spent in the required timeframe. As long as the ARRA funds increase the total amount of funds available for rebates—they may not replace originally available funds that are then removed from the program—this would be acceptable. The rebate program should be designed to ensure that all sources of funds are spent within the applicable budget period.

ARRA funds also should be spent and tracked according to program guidance. The state should coordinate rebate activities with the ARRA appliance rebate program when funds become available.

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We are trying to determine whether ARRA funds can be used to rehabilitate an old pipeline from oil to natural gas.

No. This activity does not fall within the scope of the SEP.

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Per Federal Code of Regulations Title 10, Chapter 11, Part 420, section 420.17 (Optional Elements for State Energy Program), Section (b) allows for a state-level Energy Technology Commercialization Services Program.

The Utah State Energy Program (USEP) has received a request to fund a program through a Technology Commercialization Program at the University of Utah with SEP ARRA funding. USEP's concern is that it may violate the criteria and intent of the SEP ARRA Funding Opportunity. Specifically, USEP believes that it would not be an eligible option because of Section 9.7 (p.36) of the SEP Funding Opportunity Announcement, which states:

"States are prohibited from using SEP financial assistance… to conduct or purchase equipment to conduct research, development, or demonstration of energy efficiency or renewable energy techniques and technology not commercially available." Would you please help us clarify this issue.

If the Commercialization Program at the University of Utah meets the requirements described in the State Energy Program Regulations, Section 420.17, subsection (b) (1) through (3), this activity would be permitted. As referenced in Section 420.18, subsection (a) (5), states are prohibited from using SEP funds to conduct research and development; however, states can facilitate research as described in Section 420.17.

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Section 5.9 defines eligible leveraged funds as "non federal funds added to an SEP activity that would not otherwise have been spent for energy efficiency and/or renewable energy programs, and are not included in the grant budget."

Does that mean utility funding, public goods charge funding, energy efficiency loan program funds, etc., cannot be shown as leverage even if these funds are used in conjunction with ARRA funds?

Nonfederal funds (utility funding, public goods charge funding) can be used as leveraged funds. We will need further clarification about the source of the energy efficiency loan program funds.

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Can SEP Recovery funds be used to pay for energy efficiency or renewable energy improvements to privately owned residential, commercial, or industrial facilities?

Yes.

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We would like to support our Clean Energy Development Fund (CEDF) with these funds. We were thinking of investing some ARRA funds to support our March round of grant awardees to encumber some funds immediately. By doing this, the funds originally intended to support the March round (CEDF special funds currently in the CEDF budget) would instead support future grant rounds. Can we do this, or is it considered supplanting?

As long as the ARRA funds increase the amount of funds available for CEDF grants long term, this would be acceptable. In other words, as long as no funds currently available in the CEDF are removed and replaced with ARRA funds, but remain available for future grants, this would not be considered supplanting and would be an eligible use of the funds.

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Can ARRA funds be used for utility incentive programs? Can ARRA money be used to replace current funding? If funding for an incentive has run out, can ARRA money be used to provide additional incentives? Can ARRA funding be used to create new incentives from utilities? Can ARRA funding be used to increase the amount of a utility incentive? What uses of ARRA funding are prohibited for utility incentive programs?

ARRA funds cannot be used to supplant (replace) current funding. The funds can be used to: (1) supplement current funding; (2) fund activities that no longer have funding available; and (3) implement new initiatives such as new incentives from utilities. The current prohibited expenditures apply to all SEP-funded activities.

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Can ARRA funds be used for incentives, grants, or loans for energy efficiency or renewable energy improvements or equipment for private commercial or industrial facilities?

Yes.

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SEP guidelines state that programs to provide support for feasibility studies for the use of renewable energy and energy efficiency resource technologies are eligible. Are they eligible under the SEP ARRA funding as well?

SEP ARRA funds can be used for any program that is eligible under SEP regulations. However, states are encouraged to use ARRA funds for projects that provide immediate energy savings and greenhouse gas reductions.

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The SEO plans to implement a new grant program to fund energy efficiency improvements for state agencies, school districts, and public colleges and universities. This does not supplant any funding program at the state level.
1. Does the prohibition against supplanting of funds apply to our subrecipients?
2. If a state agency has already signed a performance contract, may the SEO award SEP ARRA funds to that agency to pay for implementing some of the performance contracting measures?
3. Does the same guidance apply if the subrecipient is a locally funded school district?
1. Yes. The prohibition of supplanting of funds does apply to subrecipients.
2. The SEO can provide additional funds but not replace the funds.
3. Yes, the same guidance applies.
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One proposed use of ARRA funding would be to pay the first two years of service on a 15-year bond, leveraging significant additional funds. The proceeds of the bond would be used to fund the acquisition of energy-efficient mobile homes, energy retrofits on single family homes, and new construction of energy-efficient modular homes. Is this a permissible use of formula grant or block grant funds?

SEP funds cannot be used to purchase or construct modular homes; however, funds can be used for energy retrofits as long as it does not supplant the Weatherization Assistance Program.

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The SEP funding opportunity announcement prohibits states from using SEP funds to construct or repair buildings or structures. Does this mean that energy efficiency or renewable energy improvements cannot be made to buildings that are being constructed? Several buildings that are about to break ground have contacted us about wanting to add energy-efficient windows, solar panels, etc.

No. EERE improvements can be made to buildings that are under construction.

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Questions about Applying

If a contractor believes it has a qualifying exception to the "buy American" requirement, does it have to obtain a waiver from the Secretary of Energy? Or can the state waive the requirement in specific cases?

The recipient would need to work through the National Energy Technology Laboratory and the DOE Office of Energy Efficiency and Renewable Energy Project Management Center to obtain a waiver from the Secretary of Energy. The state cannot waive this requirement.

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When submitting SEP grant applications in the past, states have submitted an SEP State Plan, which consists of the Master File that covers items that do not change from year to year and the Annual File that contains the SEP narrative information worksheets. On page 31 of the ARRA Funding Opportunity Announcement for the State Energy Program Formula Grants (under 9.0, State Plan, DE-FOA-0000052), it states that "for the sake of simplicity and the expeditious award of SEP ARRA grants, the Master File portion of the State Plan need not include SEP ARRA funds." Then under 9.1, Master File, it reads, "This portion of the State Plan is not required for SEP ARRA funds." Does this mean we do not have to submit the Master File, just the Annual File under the State Plan? Or does it mean that we do not have to revise the Master File language to reference the SEP ARRA funding, but still have to submit the Master File along with the Annual File as part of the overall State Plan document?

Because of the expeditious award of the SEP ARRA grants, the Master File is not required for SEP ARRA funds. However, the Master File is required for the PY 2009 SEP funds as referenced in the SEP PY 2009 Formula Award Funding Opportunity Announcement DE-FA-0000073.

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We were informed that we could not bill to our grant until we had the DOE Contracting Officer's signature. We were originally told that we could bill all our expenses and hire new employees beginning April 1. Could you please clarify?

Expenses can be billed from the start date of your grant award. If expenses are incurred before this date, you must submit a pre-award cost request to the DOE award administrator.

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When will the new sections for various program and project metrics—standard metrics, specific metric activity, and user specified metrics—be updated in the annual file tab in WinSAGA? If a state plans to submit its SEP-ARRA plans before the deadline, how do we account for this information if it is not in WinSAGA?

The WinSAGA application has been updated to include the new metrics section of the SEP annual file.

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What is expected of the ARRA 2009 Additional Budget Justification Information File?

The ARRA Additional Budget Justification Information is the applicants' written assurance that they will comply with the requirement to pay prevailing wages on any projects that receive ARRA funding.

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Where can a state that does not use WinSAGA find the revised Narrative Information Worksheets?

Your DOE Project Officer can provide you an electronic version of the SEP Narrative Information Worksheet.

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Has FedConnect transmitted the official award notification to the states?

Yes. If your award has been made, you will receive an e-mail notification from FedConnect.

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Do subrecipients need a DUNS and to be registered in CCR?

At this time DUNS/CCR is not being required for subrecipients. However, this is subject to change depending on guidance from the Office of Management and Budget. Even though it is not a requirement at this time, we recommend that subrecipients obtain a DUNS number and register in CCR. Please refer to page 5, paragraph 1 of the State Energy Program Funding Opportunity Announcement (FOA) under the 2009 Recovery Act (PDF 372 KB). Download Adobe Reader.

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Subaward Budget Files: Exactly what does it mean "for each subawardee that is expected to perform work estimated to be more than 25% of the total work effort?" Does it mean more than 25% of the total awarded amount that a state received?

No. The 25% does not refer to the total award amount. As stated in the FOA, 25% is of the total work effort. For example, you can essentially have a subrecipient that performs more than 25%of the total award value but only 20%of the total work effort.

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The FOA states that we must supply an SF424A for any subawardee that performs work estimated to be more than 25% of the total "work effort." Can you clarify what is meant by "work effort?" We will doing a revolving loan fund and it will use more than 25% of the funds, but a subgrantee will administer the program. Will we need to do an SF424?

Work effort is the level of effort it takes to perform an activity. Yes, a separate SF424 will be needed for the subgrantee administering the revolving loan program.

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The correction still doesn't make sense. How do states determine the work effort? Is it based on the development of a strategy?

No, the 25% is not referring to the total award amount. It is as stated in the FOA, 25% is of the total work effort. For example, you can essentially have a subrecipient that is performing more than 25% of the total award value but only 20% of the total work effort. Any subrecipient that will be doing 25% of the total approved budget.

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Subaward Budget Files: Exactly what does "for each sub awardee that is expected to perform work estimated to be more than 25 percent of the total work effort mean?" Do they mean more than 25% of the total awarded amount that a state received?

Any subrecipient that will be doing 25% of the total approved budget.

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We have already allocated funds for public school districts, public colleges and universities, and state agencies for energy efficiency improvements. Each eligible organization has to submit a project application describing its proposed energy measures and expected results. The SEO will review the proposals and issue funding awards as soon as the SEO receives approval of its SEP-ARRA Plan. May we allow our subaward applicants to include pre-award costs in their project proposals?

Pre-award costs incurred by prime or sub may be reimbursable after a grant is awarded. They should be documented by the applicant included in the application and reviewed by DOE to ensure they were incurred in direct support of the project and are reasonable, allowable, and allocable in accordance with the appropriate cost principles.

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Given all the requirements that are expected in the final application, how specific does the application need to be? If we are doing an energy performance contract and the investment grade audit has not been completed, how do we identify all the measures and the total project costs? Is it sufficient to say that we are expanding our energy performance contracting program in state buildings and entering an interagency agreement with the Department of Administration to provide the project construction management? Those preliminary audits have begun on 16 state buildings. How much detail do we need when many of the actual costs and measures will be determined in the next phase?

You must provide an "estimate" of the proposed cost and basis for the estimate for the performance contract activity with your application. Sufficient detail needs to be provided so that an assessment of the reasonableness of the proposed cost can be made by the Department. As stated in the FOA: "You must provide a separate budget (i.e., budget for each budget year and a cumulative budget) for each subawardee that is expected to perform work estimated to be more than 25 percent of the total work effort. Use the SF 424 A Excel for Non Construction Programs or the SF 424 C Excel for Construction Programs. These forms are found on the DOE Financial Assistance Forms Page at: http://management.energy.gov/business_doe/business_forms.html."

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Our state Bureau of the Budget is requiring that all contracts or grants that are issued using stimulus funding use our request for proposals process. This pertains even to current projects that are being expanded or enhanced with stimulus funding. We will not know in advance of our application date who any of our contractors or subgrantees will be. Is there specific language you would like us to use in the budget forms, as we won't have any of the usual language we would provide about specific types of expenses? Also, is there some document or language you would like us to use to "prove" that this is a state requirement? We want to make sure that this requirement does not hold up our grant application, because we have no control over it.

You must provide an "estimate" of the proposed costs and basis for the estimate for each activity to be subcontracted. Sufficient detail needs to be provided so that an assessment of the reasonableness of the proposed cost can be made by the Department. In the budget justification file, you can address your state requirement to use the RFP process.

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What activities can be considered administration for the initial 10% allocation? For instance, can developing baseline data (e.g. energy audits of all schools and state and local government buildings; getting energy consumption data from energy distributers and building a database; mapping energy consumption and any other relevant mapping, etc.) be considered administration?

Activities should be categorized as administration or program based on what has been typically done in the past by your organization. The activities listed appear to be more program related, not administration.

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Can we file for an extension for state applications?

All applicants are encouraged to submit their applications by the required due date. No application will be rejected if it is submitted late.

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Questions about Terminology

What does completed mean? If we have an interagency agreement with a government agency, is it completed when we sign the agreement? Or is it completed when the funding for the agency's program or project has been spent? For example, if we work with a state agency to administer an energy performance contracting program, is it completed when we sign the agreement, or do we have to wait until the agency's projects are completed?

The project is completed when the funding for the program or project has been spent.

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DOE encourages states to propose measures that will achieve at least 10 million source Btu saved per $1,000 spent (Section 5.7, page 28 of the FOA). Do you mean over the lifetime of the measure or just the three-year grant period?

These are annual savings over the life of the measure.

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Does renewable energy installed capacity and generated (Section 5.6, page 28 of the FOA) refer to the lifetime of the measure or just the three-year grant period?

Renewable energy installed capacity refers to the total output capacity such as kW or MW, over the life of the program. Generated refers to annual generation such as kWh, over the life of the program.

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What is the definition of initiating? Does having preliminary audits of buildings qualify?

Initiating is defined as any action that leads to the implementation of a program activity. Preliminary audits of buildings for energy efficiency audits would be included in this definition.

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We continue to seek guidance on the 10 MMBtu per $1,000 Spent Metric. Is this annual savings or savings over the life of the projects? Is this a goal or a requirement?

These are annual savings over the life of the measure and a goal.

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We were told that, if we have revolving fund programs using the ARRA grants, those funds must go through a "complete cycle" before the end of the grant period, or DOE will take back the funds . What does "one complete cycle" mean: Getting all the funds loaned out? Or Getting all the funds loaned out and paid back? It will be impossible to have the loans repaid unless we have one-year loans. And having a one-year loan period defeats the purpose of a loan program.

Funds shall be considered expended when the entire capital fund is loaned out.

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Questions about Procedures and Deliverables

Under 10.3A, Critical Annual Reporting Metrics, when is the first annual report due? Ninety days after the end of the reporting period? When will the standard calculation methodology be provided?

The annual report is due 90 days after the end of the reporting period. The calculation methodology will be available by June 30, 2009.

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Does DOE have a formula for estimating greenhouse gas reductions? We need something to help us calculate this.

DOE will provide this information by June 30, 2009.

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Does DOE have a formula for estimating savings related to revolving loan funds or know of a state that has experience estimating savings relating to them? We need something to help us calculate this.

DOE does not have such a formula. However, the California Energy Office uses the Energy Commission's Guide to Preparing Feasibility Studies for Energy Efficiency Projects (PDF 560 KB). Download Adobe Reader.

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How will the ARRA funds be released? Will it be drawdowns on a reimbursement basis? Or drawdowns on an encumbered basis?

In accordance with 10 CFR 600.221(c), "Grantees and sub-grantees shall be paid in advance, provided they maintain or demonstrate the willingness and ability to maintain procedures to minimize the time elapsing between the transfer of the funds and their disbursement by the grantee or sub-grantee." Funds will be released through the ASAP drawdown system.

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Can we use the former GO-PF20 for the Budget Justification Files?

Yes.

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What determines 50%? When is it allocated or when it is spent?

Additional grant fund disbursement will occur after the state provides information that 50%of the funds have been obligated to specific programs or projects.

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Will Data Tree set up the proper form to be used for financial reporting in WinSAGA? In the past it was the SF269. For ARRA funds, it is the SF425.

Yes, the SF425 replaces the SF269, 269a, and 272. The SF425 will be used for all grants.

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Has the official award notification been transmitted to the states by FedConnect?

Yes. You should receive an e-mail notification from FedConnect.

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Was I supposed to do anything after I received the notification?

Once you receive the e-mail notification from FedConnect, you must log in to FedConnect and acknowledge receipt of the award. Once you acknowledge receipt, an e-mail is sent to DOE confirming that you have received your award.

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According to the FOA under 9.7B (limitations), loan repayments and interest on loan funds may be used only for activities that are consistent with the rule and are included in the state's approved plan. Does that mean that each time a loan is made using SEP funds from the revolving loan fund, that the loan must first be approved by DOE, even if the loan fund obligation was filed with the initial plan and approved?

No. Each loan does not need to be approved by DOE. As stated in the grant guidance, the loan must be used for activities that are in the state's approved plan.

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DOE has stated that every $92,000 spent equals one job can be used to estimate jobs. However, the new narrative worksheets have the jobs broken down into created and retained. Which block should that number be placed in?

Please record as either new jobs created or jobs retained.

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If "Jobs Created" is calculated by "dividing the proposed funding spent by $92,000," how are "Jobs Retained" calculated?"

Jobs retained would be calculated the same way.

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According to the Summary of Required Forms/Files, table on page 11 of the FOA, the subaward budget files are listed as optional. A notation directs one to see instructions. However, the instructions do not address the optional notation. What criteria would determine whether the subaward budget files were optional?

As stated in the FOA on page 11 (Sub award Budget File(s), Applicants only need to provide a separate budget (i.e., budget for each budget year and a cumulative budget) for each subawardee that is expected to perform work estimated to be more than 25% of the total work effort.

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At the Western States Energy Program Meeting in Santa Fe, New Mexico, a spreadsheet for the SEP grant was distributed listing all the metrics we're to report on. We were told it would be available online for download. Is it ready for download yet? If so, where can I get it? It would help if all the forms needed for a specific grant were on the grant's solicitation page or at another centrally located place.

The SEP ARRA FOA was amended on April 24, 2009, which reflects the changes to the metrics and reporting in Section 10.2A of the Program Guidance. WinSAGA was also updated to reflect these changes on the SEP Narrative Information Worksheet.

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Where can I find and download the new Narrative Information Worksheet for the ARRA SEP grant? It is supposed to have some new sections in red.

WinSAGA has been updated to incorporate the changes to the SEP Narrative Information Worksheets.

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If the SEP office provides funding to another state agency to perform energy efficiency work on state-owned buildings in excess of 25% of our award, is that other state agency considered a "subawardee"? I want to know whether we have to submit a subaward budget file.

Yes, a subaward budget file would be required.

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Using the formula of one job per $92,000: If a category had $50,000 would this equal 0 jobs created or should it be calculated as a fraction of 1 job?

Please calculate as a fraction of one job and round up.

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Does the 10% administration cap apply to a subawardee as a percentage of its contract or as a total of the 10% of the entire grant? For instance, if the SEO takes the 10% for the entire grant, is the subawardee still able to take 10% of their contracted funds for admin? Would sub awardee program staff salaries come out of administrative or program funds?

There are no administrative caps for SEP-funded activities. Subawardees must report administrative costs according to state regulations or procedures. The state reports all subawardee costs to DOE as program costs.

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The SEP ARRA metrics as outlined in section 10.2A have been amended to add "by sector" to some individual metrics.
1. Please address which sectors must be reported.
2. According to the FOA, DOE may or will provide additional guidance to states regarding the measurement and calculation of energy savings as well calculations of cost effectiveness. When will the states receive this information so we can use it to plan our metrics goals?
3. Will job creation and retention number, type, and duration be metrics that must be defined for every market? It doesn't make sense to include it in education, for instance, as we primarily use companies, events, and news outlets that will not need to add staff.
4. Will DOE give additional guidance on the job metrics? If so, when will the states receive it?
Metric sectors must be reported, as applicable. DOE will provide additional guidance by June 30, 2009. States are required to address the job creation and retention metric for every market. Until additional guidance is provided, please use the formula of one job per $92,000.

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Are jobs created based on just ARRA funds? Or does a combination of leveraged funds and ARRA funds create the job?

Jobs created are based on ARRA funds and leveraged funds.

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Printable Version

U.S. Department of Energy

Additional Questions from the States about Using Recovery Act Funding To Implement Projects through the State Energy Program

Questions About Timing

Questions About Eligibility

Questions About Applying

Questions About Terminology

Questions About Procedures and Deliverables

Questions About Timing

Questions about Eligibility

Questions about Applying

Questions about Terminology

Questions about Procedures and Deliverables