DOE:

8% of local energy-efficiency funds have been spent -- IG

The Department of Energy has awarded $2.7 billion in energy efficiency block grants, but recipients have spent little more than 8 percent of that money, according to a recent report from the agency's inspector general.

Hampered by administrative delays and bureaucratic confusion, the Energy Efficiency and Conservation Block Grant Program has thus far failed to stimulate the economy as the 2009 American Recovery and Reinvestment Act intended, IG auditors wrote. But they also recognized DOE officials' "herculean effort" to get such a large program implemented in a short amount of time.

"In spite of recent actions by the Department and grantees to overcome impediments associated with the establishment of a new program, the slow rate of spending Block Grant funds has neither met initial Departmental targets nor achieved the desired stimulative effect on the Nation's economy," auditors wrote in the 20-page status report. "However ... rapid spending of Program funds was hampered by numerous administrative and regulatory challenges associated with implementing a new program at multiple levels of government, including Federal, state and local governments."

Created by the Recovery Act, the block grant program provides funding to states and local entities for projects that improve energy efficiency and reduce fossil fuel emissions. Lawmakers and federal officials had hoped that it would inject money into the economy, creating jobs and developing new technology.

DOE has awarded $2.7 billion of the program's $3.2 billion, but the vast majority of that money hasn't made it out of the bank. Most of the top 10 recipients of the grants -- with awards ranging from $22 million to $80 million -- have spent 2.2 percent of their awards or less. Recipients who received more than $2 million, meanwhile, have spent an average of less than 8 percent.

IG auditors partly attribute the slow spending to DOE's struggle to implement the program with virtually no staff in a short amount of time. When the Recovery Act was passed in February 2009, the agency had only two employees assigned to the program and was forced to use employees from other departments to develop new regulations and award the funds.

The agency also put "regulatory holds" on the funding, requiring recipients to comply with various regulations and requirements before spending their grants, according to the report. But those requirements were confusing to recipients, who struggled with what they considering conflicting guidance from the DOE.

DOE officials have recently increased staff and implemented monitoring systems to help expedite funding, according to the report. But they also disagree with the IG's contention that the program has not met its goal of stimulating the economy; while spending might be slow, they say, the awarding of the funds has spawned contracts that in turn created jobs.