Department of Agriculture and Consumer Services

Transcription

1 Department of Agriculture and Consumer Services Adam H. Putnam, Commissioner Operational Audit Office of Energy Report Number IA July 2012 Office of Inspector General Ron Russo, Inspector General

2 ` TABLE OF CONTENTS Executive Summary... 1 Objectives, Scope and Methodology... 7 Office of Energy... 9 History... 9 Program Responsibility Energy Initiatives State Funded Energy Initiatives Federal Energy Initiatives (Non-ARRA Funded) ARRA Funded Energy Initiatives State Energy Program (SEP) Energy Efficiency and Conservation Block Grant (EECBG) Energy Assurance Grant Program Rebate Programs Results and Recommendations Appendix A. ARRA Funding by State/Territory B. ARRA Funding of Energy Initiatives by State/Territory C. Management Response... 55

3 Department of Agriculture and Consumer Services Office of Inspector General July 2012 Report No. IA Operational Audit of the Office of Energy Executive Summary On July 1, 2011, after the passage of House Bill 2156, the Office of Energy (OOE) was transferred from the Executive Office of the Governor to the Department of Agriculture and Consumer Services (Department). In an effort to thoroughly evaluate the various energy programs, Adam Putnam, Commissioner of Agriculture, requested that the Office of Inspector General (OIG) conduct an audit of the OOE. The purpose of this audit was to evaluate the overall effectiveness of the OOE in its implementation and oversight of the energy programs, grants, and activities under its purview. Additionally, this review evaluated energy grants to determine if the contractually stated goals were reached, if the anticipated investment returns were realized, and if there were indicators of fraud or waste. This audit reviewed agreements executed or active between January 1, 2009 and March 31, 2012 and selected actions through May 16, OVERVIEW The audit team examined the grant agreements of all five grant programs and the rebates in all four rebate programs, totaling $219,748,384. The five grant programs included 176 grants, the majority of which (129) are ongoing, with 32 terminated or in process of termination and 15 (10%) completed, as shown in the tables below. Additionally, the OIG conducted onsite visits at 15 grant recipient locations. Overview of Grant Programs* As of March 31, 2012 PROGRAMS ONGOING COMPLETED TERMINATED** TOTAL State Funded Energy Initiatives Federal Non-ARRA Energy Initiatives ARRA Funded Energy Initiatives: State Energy Program (SEP) Energy Efficiency and Conservation Block Grant (EECBG) Energy Assurance Grant Program TOTAL *This table does not include vendor contracts or the Energy Economic Zone Program. ** Terminated or in process of termination. Office of Inspector General Page 1

4 During the period audited, the OOE administered four rebate programs that issued a total of 129,333 rebates, amounting to $61,173,765, as shown in the table to the right. Grant recipients 1 were provided funding either through state or federal dollars, which included the American Recovery and Reinvestment Act (ARRA). The programs collectively have expended 60% of funding, as shown in the table below. Overview of Rebate Programs NUMBER ISSUED AMOUNT ISSUED REBATE PROGRAM ENERGY STAR Appliance Rebate Program (rebates and bonuses) 113,890 $15,047,717 ENERGY STAR HVAC Rebate Program 4,268 6,402,000 Solar Rebate Program 11,109 39,394,048 Plug-In Hybrid Electric Vehicle Conversion Rebate Program ,000 TOTAL 129,333 $61,173,765 Overview of Awarded and Expended Amounts for Grants and Rebates* PROGRAMS NUMBER OF GRANTS/ REBATES AMOUNT AWARDED AMOUNT EXPENDED AS OF 3/31/12 PERCENT EXPENDED State Funded Energy Initiative Grants 26 $44,768,368 $20,963,505 47% Federal Non-ARRA Energy Initiative Grants 6 6,185,124 6,044,177 98% ARRA Funded Energy Initiatives: ENERGY STAR Appliance Rebates (rebates and bonuses) 113,890 15,047,717 15,047, % ENERGY STAR HVAC Rebates** 4,268 6,402,000 6,402, % State Energy Program (SEP) Grants 98 78,184,588 32,689,970 42% Solar Rebates 11,109 39,394,048 39,394, % SEP TOTAL 117,578,636 72,084,018 61% Energy Efficiency and Conservation Block Grant (EECBG) Grants 44 28,106,968 10,143,288 36% Plug-In Hybrid Rebates , ,000 66% EECBG TOTAL 28,606,968 10,473,288 37% Energy Assurance Grant Program 2 1,159, ,906 33% TOTAL $219,748,384 $131,402,611 60% * This table reflects the amounts awarded and expended to recipients and excludes vendor payments and administrative cost. ** Approximately $3,993,756 of the State Energy Program funds was used for the ENERGY STAR HVAC Rebate Program. 1 For purposes of this report, a recipient is any organization awarded grant funds from the OOE. Office of Inspector General Page 2

5 COMPARISON OF FLORIDA S OOE TO ENERGY OFFICES OF OTHER STATES Florida received the 3 rd largest federal ARRA energy award, behind California and Texas. According to the United States Department of Energy (DOE), out of the 56 states/territories, Florida ranks 49 th in the percent of ARRA funds expended as of March 31, The OIG compared the amount of ARRA funds expended by Florida s OOE to amounts expended by nine other states receiving the highest award amount from the DOE. The states selected for comparison were California, Georgia, Illinois, Michigan, North Carolina, New York, Ohio, Pennsylvania and Texas. As reported by the DOE, when compared to the nine other states, Florida ranked 8 th in overall ARRA expenditures as a percent of the award amount, with a total of 60% of its ARRA dollars expended, as of March 31, This comparison also determined that Florida s 61% expenditure of the $126 million State Energy Program (SEP) funds, tied Texas for last. With respect to the Energy Assurance Grant Program, the OOE expended 42% of its $1.9 million 2 of awarded funds, tying New York and placing 6 th to the compared states. Florida also placed 8 th just above Ohio and California, expending approximately 37% of its $30 million 3 Energy Efficiency Conservation Block Grant (EECBG) funds. Finally, the OOE expended 100% of the $17.6 million 4 ENERGY STAR Appliance Rebate funds. Our comparison concluded that all states, 2 Comparison data obtained from DOE s website. There is a slight discrepancy between DOE and OOE data, including award amounts, due to timing differences. 3 Ibid. 4 Ibid. with the exception of Michigan, California, and Ohio had expended their entire amount of rebate funds awarded within the anticipated timeframes. AUDIT RESULTS Our audit identified several issues specifically related to documentation and grant monitoring practices. There were several instances where grant agreement files did not contain required documentation. Some examples of these deficiencies include missing or incomplete monitoring checklists, insufficient reimbursement documentation, lack of correspondence between the grant manager and grant recipient, and missing conflict of interest forms by individuals involved in the application process. Several files were also found to be missing proof of the grant recipient s liability insurance and evidence of the required registration in the U.S. Federal Government s Central Contractor Registration database. Additionally, the OIG selected over $17 million worth of reimbursement requests and their corresponding invoices to ensure that adequate documentation was provided by the recipient to support each request. Of the payment requests reviewed, it was determined that invoices were missing, totaling over $800,000. It was also determined that the OOE did not always adhere to the monitoring plan outlined in its Policies and Procedures. In many instances, risk assessments were not performed prior to entering into a contract with a grant recipient. In addition, on-site monitoring visits were not always performed within the appropriate frequency, as established by the risk assessment. There were several instances where monitoring reports were not issued timely by the grant manager. Finally, we found that in some instances, the recipients had not submitted Office of Inspector General Page 3

6 progress reports in accordance with the contract agreement terms, and that the grant manager did not document the receipt or review of the audit reports required by the Florida Single Audit Act and OMB Circular A-133. Indicators of Fraud One of the objectives of this audit was to determine if there were any indicators of fraud identified within the grants administered by the OOE. During the audit, we identified several recipients whose project progress and/or reporting documentation contained irregularities. These detections, after closer examination, resulted in the OOE s immediate action to cease payments and/or terminate the grant agreements, resulting in cost avoidance in excess of $2.26 million and the initiation of criminal investigations. This audit also identified several grants totaling almost $198,000 that were involved in bankruptcy proceedings. Subsequent to the OIG s determination of this status, the OOE initiated termination of the agreements due to the failure of the recipient to fulfill its obligations as outlined in the grant agreement. Finally, several grant recipient payments were identified that contained reimbursement for unallowable costs. This information was provided to the OOE for further review and appropriate action. Rebate Programs An analysis conducted on a sample of the ENERGY STAR Appliance rebates determined the existence of some duplicate payments and pricing errors, resulting in overpayments totaling approximately $4,400. These are small amounts when compared as a percent to the total dollar amount of the program. However, the OOE should evaluate its contract with the thirdparty vendor to determine whether overpayments can be reimbursed to the OOE. Return On Investment This audit analyzed existing data in an effort to identify investment returns for each energy program and the grants that make up those programs. For the purposes of this report, return on investment (ROI) is comprised of emission reductions, energy cost savings, energy savings, job creation and project completion. It was determined that, with the exception of the ENERGY STAR Rebate Programs and the Solar Rebate Program, there was insufficient data available and/or insufficient progress made within these programs to determine their overall investment returns. The ENERGY STAR Appliance Rebate and ENERGY STAR Heating, Ventilation and Air Conditioning (HVAC) Rebate programs were successful in meeting their goals by encouraging consumers to purchase over 64,000 new ENERGY STAR appliances and over 4,200 ENERGY STAR HVAC systems. These programs stimulated Florida s economy and resulted in a reduction in energy usage. Based on the total appliances purchased, it is estimated that $51 million was added to the Florida economy, generating over $3.6 million in tax revenues. Additionally, Florida consumers are estimated to collectively save over 7.5 million kwh off their electric bills and approximately 123 million gallons of water each year by replacing their dishwashers and clothes washers. With respect to the HVAC Rebate Program, the HVAC and geothermal systems purchased added $26 million to the Florida economy. As a result, Florida consumers who participated in the program are estimated to collectively save over 4.3 million kwh per year off their electric bills. Office of Inspector General Page 4

7 As it relates to individual energy grants, some recipients, such as local governments, reported progress in energy savings in areas that involved building retrofits, equipment upgrades, and the installation of more efficient lighting. These returns resulted in reductions in greenhouse gases and electric and natural gas consumption, as well as overall dollars saved through increased energy efficiency. The OIG was able to obtain ROI data from final reports submitted for two completed ARRA funded projects - a Compressed Natural Gas grant with the Okaloosa Gas District, and a Local Competitive Government grant with the City of Parkland. It should be noted that although these are completed projects, the ROI data submitted may only represent a partial reporting cycle. Based upon their final reports, the projected energy reductions and savings were not realized for the Okaloosa Gas District project, as they did not meet their goals related to reducing emissions and energy consumption. The City of Parkland s final report indicated that they met their projected energy dollar savings of $11,043 per year, as compared to an estimate of $10,707, but fell short of their projected goals in the areas of reducing energy consumption and greenhouse gas reduction. Our audit also analyzed the results of several completed state funded projects which included a $2.5 million grant to the LYNX GREEN Bio-Fleet Project and a $2.5 million grant for a Photovoltaic and Research Facility and Family Learning Center. Our analysis indicated that both grants achieved or exceeded their investment goals. Specifically, LYNX became the first public transportation system in the United States to build, own and operate a biodiesel fueling facility, replacing 20% of its diesel fuel with biofuel, and reducing emissions by 25%, which was 15% higher than projected. The Photovoltaic and Research Facility and Family Learning Center provided a location for visitors and residents to learn about solar technology and sustainability through research and education. The Center has produced over 2.7 million kwh of solar energy and reduced greenhouse gas emissions in Orange County, which prevented the release of over 6 million pounds of carbon dioxide. CONCLUSIONS Since July 2011, several internal measures have been implemented to improve the OOE s monitoring of grant recipients and records management. The OOE has indicated that on-site monitoring visits have now been conducted at every recipient location. The new leadership team has developed and implemented risk assessment tools that are being utilized for all new recipients, and has begun to provide staff members with grant monitoring training. In addition, the OOE has developed an ata-glance process for ranking projects into three different categories: Red, Yellow and Green. Green identifies those grant projects that have been successfully completed and have met or exceeded the proposed accomplishments and objectives of the program; have complied with all applicable requirements and regulations relating to the program and maximized the use of public dollars. Yellow identifies those grant projects currently underway and being carried out in accordance with the program requirements and regulations. Red identifies projects that had to be terminated or are under scrutiny. These are the projects that failed to comply with the requirements applicable to the recipient s grant agreement (noncompliance), or failed to comply with the program objectives and/or the laws, rules Office of Inspector General Page 5

8 and regulations applicable to the source of funding. This at-a-glance process will track the progress of grant recipients and, if closely monitored, can be an effective tool in identifying issues early in the grant process. In addition to the above stated color-coded criterion, the OOE should consider enhancing their designation of projects as Green to include an analysis of projected versus actual investment returns. This will assist in their assurance that the use of public funds is being maximized. The OOE should also consider adding to the Yellow designation those projects that are generally meeting program requirements, but are behind schedule for completing the project. associated with each individual grant and program investment returns. These enhancements will help to safeguard taxpayer dollars by ensuring the contractually stipulated goals are being reached, that potential issues will be identified early, and that fraud will be reduced through early detection. The OOE has made progress since moving to the Department, but the following opportunities exist to enhance its programs. All grant agreements must include clear and measurable goals to be achieved by the recipient so that progress can be closely tracked. Grant managers must have the appropriate level of training and ensure that all required documentation is collected and maintained in the grant files. It is essential that risk assessments be performed prior to the awarding of funds. This will help to identify potential issues that may require a higher level of oversight and allow program management the opportunity to judiciously reallocate funds to other recipients, if needed. On-site monitoring is essential and must be conducted at a frequency commensurate with the level of risk associated with each recipient. Both risk assessments and on-site monitoring not only serve to provide valuable information and to validate progress, but also serve as an early warning tool for potential indicators of fraud. Finally, the OOE must ensure compliance with all of its Policies and Procedures, and should identify, collect and measure data Office of Inspector General Page 6

9 Objectives, Scope and Methodology The objectives of this audit were to evaluate the performance of the OOE in administering its programs and the effectiveness of those programs. This evaluation was accomplished by determining: The level of oversight the OOE provided grant recipients; Whether the grant funds were used in accordance with the recipient s 5 stated objectives; Whether there was any evidence of misuse, abuse or fraudulent activities; The Return on Investment derived from funding the energy initiatives; and How the State of Florida compared to other states for expending American Recovery and Reinvestment Act (ARRA) funds. Grant Scope and Methodology This audit was conducted over an eightmonth period and included a review of 176 agreements executed or active between January 1, 2009 and March 31, 2012, and selected actions through May 16, These agreements included both state and ARRA funded grant agreements, totaling $158,404,619. Summary of Grants Reviewed Number of Grants Amount Awarded Percent Expended Program State Funded Energy Initiatives 26 $44,768,368 47% Federal Non- ARRA Energy Initiatives 6 6,185,124 98% State Energy Program 98 78,184,588 42% Energy Efficiency and Conservation Block Grants 44 28,106,968 36% Energy Assurance Grant Program 2 1,159,571 33% TOTAL 176 $158,404,619 44% 5 For purposes of this report, a recipient is any organization awarded grant funds from the OOE. Rebates Scope and Methodology The OIG reviewed the approved rebates for the following three ARRA funded rebate programs that occurred between July 1, 2008 and November 30, 2010: ENERGY STAR Appliances - 113,890 rebates and bonuses; ENERGY STAR HVACs - 4,268 rebates; and Solar Energy System Incentives Program (Solar Rebates) - 8,720 rebates 6. We randomly selected 1,465 (1%) of the ENERGY STAR Appliance rebates and recycling bonuses, 220 (5%) of the ENERGY STAR HVAC rebates and 175 (2%) of the Solar rebates to determine: Compliance with Florida Statutes and Florida Administrative Code requirements; Adequacy of the documentation maintained by the OOE; Accuracy of the rebate amount approved and reimbursed; and Adequacy of the review performed by the OOE staff and documentation of that review. Energy Savings and Efficiencies (Return on Investment) Recipients provided estimated energy savings or efficiency data (i.e., return on investment) as part of the application process. The recipient was required to report all realized energy savings or efficiencies on each progress report submitted to the OOE. The OIG obtained the estimated return on investment reflected in the grant application and compared it to the actual return on investment reported by the recipient in the progress reports. 6 The 8,720 is representative of the population from which the OIG selected rebates for testing. Office of Inspector General Page 7

10 COMPARISON OF FLORIDA S OOE TO ENERGY OFFICES OF OTHER STATES The OIG compared the awarded and expended amounts for the State of Florida s ARRA funded energy initiatives to nine other states: California ~ Georgia ~ Illinois Michigan ~ New York ~ North Carolina Ohio ~ Pennsylvania ~ Texas The awarded and expended amount comparison included the State Energy Programs, Energy Efficiency and Conservation Block Grant Programs, ENERGY STAR Appliance Rebate Program, and the Energy Assurance Grant Program. To perform the comparison, the OIG contacted the nine states, the DOE, other governmental agencies, and obtained data from the state s website. Office of Inspector General Page 8

11 Office of Energy HISTORY The Florida Legislature originally created the OOE on July 1, Since 1975, the OOE has been housed in several state agencies, including the Department of Administration (currently known as the Department of Management Services), the Department of Community Affairs (currently known as the Department of Economic Opportunity), the Department of Environmental Protection and the Executive Office of the Governor. During 2005, the state began to focus on the following energy goals: Increasing Florida s energy independence; Decreasing its dependence on fossil fuel; and Creating a clean energy economy within the state. To accomplish these goals, the Legislature and the Executive Office of the Governor created two separate bodies, the Florida Energy Commission (FEC) and the Governor s Action Team on Energy and Climate Change, to advise them on the issues and develop a plan to implement the policy actions recommended. As a result of the FEC and the Governor s Action Team recommendations, House Bill 7135 was passed unanimously in 2008 by the Florida Legislature. The bill created the Florida Energy and Climate Commission (FECC) and consolidated staff from three different offices to create the Governor s Energy Office (GEO) housed in the Executive Office of the Governor. On July 1, 2008, the GEO was formed and began working on policy and grants related to energy issues. The GEO s responsibilities and functions increased over time from emphasizing energy conservation and reducing the demand for petroleum allocation, to advising on energy policy and administering both state and federal grant programs. On July 1, 2011, the GEO was transferred to the Department and was established as the OOE. The OOE s organizational chart is shown below. Office of Inspector General Page 9

12 The OOE is the primary organization for state energy and climate change programs and policies. The OOE holds a variety of responsibilities, including administering financial incentive programs; administering the provisions of the Florida Energy and Climate Protection Act; representing Florida in the Southern States Energy Compact; performing or coordinating the functions of any federal energy programs delegated to the state; and consulting with the Commissioner of Agriculture to draft recommendations for submission to the Governor and the Legislature. The OOE also works with other state entities, including the Florida Public Service Commission and the Florida Energy Systems Consortium, to develop state energy and climate change policies and programs. The OOE has historically received funding from state appropriations or federal grants to promote renewable energy and energy efficiency technologies. As of May 16, 2012, ARRA funds are expected to expire on November 22, 2012, for the Energy Efficiency Conservation Block Grant Program, and September 30, 2013, for the State Energy Program (SEP). To determine if the recipient s policies, processes and procedures for management, accounting, procurement and property control systems are in place; To determine if costs reimbursed are allowable, reasonable, traceable and allocable under grant terms and conditions, regulations and OMB Circulars; To identify administrative, programmatic, financial and technical problems that may have a negative impact on the project but when corrected will result in improved program management or efficiency; To determine if there is a need for training and technical assistance to strengthen and improve the recipient s program operations; To assess the recipient s monitoring of their sub-recipients for compliance with applicable regulations and policies; and To minimize opportunities for fraud, waste and mismanagement. Throughout the grant management process, the OOE will inform recipients of any deficiencies identified and communicate with them via a written monitoring report, verbal discussion or through . The OOE may require the recipient to perform and document any corrective actions taken. PROGRAM RESPONSIBILITY The OOE is responsible for managing the day-to-day operations of all grant-supported activities to ensure compliance with applicable federal and state requirements. The OOE s grant management objectives 7 are: To ensure that funds are expended in a timely manner for the purpose for which they were made available; 7 Source: OOE s Policy and Procedures for Grant Management, dated April 30, Office of Inspector General Page 10

13 Energy Initiatives Grants issued by the OOE are awarded for specific energy efficiency and conservation programs or projects. These grants may fulfill a wide variety of energy efficiency and conservation purposes, including but not limited to: Demonstration, commercialization, research and development projects relating to renewable energy technologies; Development and implementation of energy efficiency and conservation strategies; and Eligible building/facility improvements and equipment purchases and upgrades. The current energy programs administered by the OOE include: State Funded Energy Initiatives; Federal Energy Initiatives (Non-ARRA Funded); and American Recovery and Reinvestment Act (ARRA) Funded Energy Initiatives. The OIG analyzed existing data in an effort to identify the return on investment (ROI) for the energy initiatives. Projected ROI was submitted by the recipient as part of the grant application process. Recipients of ARRA funds were required to submit progress reports that included ROI data to the OOE as stipulated in the recipient s agreement and as mandated by the DOE. The OIG used the applications and progress reports maintained by the OOE to obtain the projected and actual ROI, respectively. In some instances, actual ROI data was available even though the recipient had not received a reimbursement for expenditures. This could be due to several reasons, including the possibility that the recipient had not yet submitted a reimbursement request or the recipient was utilizing matching funds to proceed with the project. For the purposes of this report, ROI is comprised of emission reductions, energy cost savings, energy savings, job creation and project completion. A description of the energy initiatives and the associated ROI is described in the following sections. STATE FUNDED ENERGY INITIATIVES During the OIG audit period, the OOE administered 26 state agreements, with awards totaling $44,768,368. As of May 16, 2012, the expenditures totaled $20,963,505 (47%), with 7 projects ongoing, 7 completed, and 12 terminated. According to the OOE, the majority of these grants were funded under the Renewable Energy and Energy-Efficient Technologies Grant Program (REET). In accordance with Section , Florida Statutes, REET was designed to stimulate capital investment in the state and promote the utilization of renewable energy technologies. REET provided renewable energy matching grants for demonstration, commercialization, research and development projects relating to renewable energy technologies and renewable energy resources (e.g., hydrogen, biomass, solar energy, geothermal energy, wind energy, ocean energy, waste heat and hydroelectric power). Funds were available to Florida municipalities and county governments, established for-profit companies licensed to do business in Florida, universities and colleges in Florida, utilities located and operating within Florida, not-for-profit organizations, and State of Florida agencies. Eligible proposals were evaluated based on a number of criteria, including cost share percentage, economic development Office of Inspector General Page 11

14 potential, energy efficiency and how the project fosters public awareness of renewable energy technologies. According to the OOE, many of these grants were for research and development and therefore did not directly report emission reductions, energy savings, energy cost savings or job creation and retention data. Returns for these types of initiatives are measured by the fulfillment of the stated contractual objectives (i.e., project deliverables). The following table lists the 26 state funded energy initiatives. State Funded Energy Initiatives Funding and Expenditures by Recipient RECIPIENT AWARDED EXPENDED AS OF 5/16/12 1 NPE Florida, LLC $2,500,000 $2,250,000 2 Mustang Vaccum Systems** 2,008,300 1,799,401 3 Highlands Ethanol LLC and Verenium Biofuels Corp. 2,500,000 1,282,039 Florida Thoroughbred Breeders & Owners Assoc 4 (OEE) 2,500,000 1,187,170 5 Florida Crystals 195,000 82,422 6 Aquantis 1,069, ,426 7 Rivian Automative Inc 2,000,000 2,000,000 8 BPAmerica Production 1,290, ,456 9 FLSEREF 1,921, , Allsolar Service 320,623 38, Orange County 2,500, , Progress Energy 123,868 20, Lynx 2,500,000 2,496, Marc Rutenberg Homes 2,166,104 1,233, UF Power Module* 2,464,703 2,365, FIU Bagesee* 990, , Citrus Energy* 2,500,000 84, FBEC* 2,500, , Vecenergy* 2,500, Florida Power* 2,500, , Exceed Corporation* 990, ARI Green Energy, Inc.*/** 2,500, , USFBOT* 1,422,364 20, Willard & Kelsey* Southeast Renewable Fuels, LLC* 2,500,000 2,250, Highlands EnviroFuels* 305,000 0 * Terminated or in process of termination. **OIG conducted an on-site visit. TOTAL $44,768,368 $20,963,505 Office of Inspector General Page 12

15 All 26 executed agreements contained defined objectives and desirable outcomes. The OIG reviewed two completed projects and determined that each recipient met the objectives and outcomes as outlined in their agreement. The OIG summarized the following two projects based on final reports submitted by the recipients to the OOE. The LYNX GREEN Bio-Fleet Project was awarded a $2.5 million State of Florida REET grant. The objectives of this project were to develop a regional biodiesel conversion program for alternate fuels and green strategies, reduce the Central Florida Regional Transportation Authority s traditional diesel-based fossil fuels by 20% and enhance the state s overall economic competitiveness. According to the LYNX s final report, in March 2010, LYNX became the first public transportation system in the United States to build, own and operate a biodiesel fueling facility. LYNX replaced 20% of its Ultra Low Sulfur Diesel fuel with biofuel, reduced emissions by 25% and provided a framework for other government and transit agencies throughout the nation to provide similar, renewable fueling alternatives to the nation s fossil fuel supply. The Photovoltaic Demonstration and Research Facility and Family Learning Center (Orange County) was awarded a $2.5 million State of Florida REET grant. The objective of the project was to provide a location for visitors and residents of Orange County to learn about solar technology and sustainability. The goals were to foster a better understanding of renewable energy technologies through demonstration, research, and education; and to stimulate market demand and economic development in Florida. In addition, the project was to: Construct a 1-MW photovoltaic (PV) demonstration facility located at the Orange County Convention Center (OCCC); Establish a Research and Development effort, augmenting the PV system with four smaller (10 kw) experimental PV systems, consisting of new innovative PV technologies to investigate electrical storage for peak demand saving; Design and manage a Climate Change Education Center (CCEC) inside the OCCC, to inform convention visitors, area businesses and the public of the environmental, health, and economic benefits of renewable energy and energy efficiency, as well as ways to reduce greenhouse gas emissions; Undertake a statewide marketing effort, using various medias, advertising the facility as a family attraction; and Create economic development programs focusing on job creation and attracting capital investment in Florida by renewable energy industries. According to Orange County s final report, as of February 2011, almost 2,700,000 kwh of solar energy has been produced from the entire system. The system has played an integral part in reducing greenhouse gas emissions in Orange County, preventing the release of over 6 million pounds of carbon dioxide, 1,300 pounds of nitrogen oxide and over 24,000 pounds of sulfur oxide into the air. FEDERAL ENERGY INITIATIVES (NON-ARRA FUNDED) During the OIG review period, the OOE administered six federal (non-arra funded) agreements with awards totaling $6,185,124. As of May 16, 2012, expenditures totaled $6,044,176 with 2 projects ongoing and 4 completed. The following table lists the six federal (non- ARRA) funded energy initiatives. Office of Inspector General Page 13

16 Federal Non ARRA Energy Initiatives Funding and Expenditures by Recipient RECIPIENT AWARDED EXPENDED AS OF 5/16/12 1 Ford Shuttle Bus $2,000,000 $2,000,000 2 Chevron HZ Station 2,320,600 2,320,600 3 University of Central Florida (FSEC)* 55,495 55,495 University of Central Florida* 535, ,876 4 Florida Solar 552, ,000 5 University of Central Florida (FSEC) 226, ,108 6 University of Central Florida (FSEC) 495, ,098 TOTAL $6,185,124 $6,044,176 *Funding combined for same energy initiative. Funding for these initiatives was for a solar rebate and educational program, and research and development projects for renewable energy technologies in Florida. One of the projects is highlighted below. The Hydrogen Energy Station for Hydrogen-Powered Shuttle Buses (Chevron HZ Station) was a federal research and development grant. The Chevron HZ Station s objective was to test supply and demand optimization and provide an opportunity to fuel internal combustion engines. All $2.3 million of the grant award was expended on the project, and according to the final report, the project resulted in a significant advancement toward the commercial readiness of a hydrogen infrastructure. The final report further stated that through the design, construction, operation, and decommissioning of the hydrogen station between 2006 and 2010, the following goals were achieved: The operations team achieved its goal of incident-free operations (no lost time accidents); The hydrogen program demonstrated the technical capability to support a U.S. car penetration portfolio that contains up to 10% hydrogen fuel cell vehicles; and 1,634 fills of 22,764 kilograms of hydrogen were conducted at the station. ARRA FUNDED ENERGY INITIATIVES In February of 2009, the Federal Government announced that through the American Recovery and Reinvestment Act of 2009 (ARRA), it would provide $275 billion 8 in contracts, grants and loans to states and U.S. territories in order to: Preserve and create jobs and promote economic recovery; Assist those most impacted by the recession; Provide investments needed to increase economic efficiency by spurring technological advances in science and health; Invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits; and Stabilize state and local government budgets in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases. Approximately $11 billion 9 was awarded to the State of Florida with $1 billion 10 for energy and environmental initiatives. In 8 See Appendix A: ARRA Funding by State/Territory. 9 Ibid. 10 Source: Recovery.gov website, May 15, Office of Inspector General Page 14

17 February 2009, the Federal Government announced that through the ARRA, the State of Florida OOE would receive approximately $176 million 11 in stimulus money. The DOE is responsible for overseeing and managing the allocation of ARRA funded energy initiatives with the core focus of: Stimulating the creation or increased retention of jobs; Saving energy (i.e., kwh, therms, gallons, BTUs); Increasing energy generation from renewable sources; and Reducing greenhouse gas emission. The DOE encouraged states to use their ARRA funding not only to support current energy efficiency and renewable energy projects, but also to seed sustainable programs and put in place long-term funding mechanisms such as revolving loans and energy savings performance contracting that will provide lasting benefits and lead to long-term market transformation. States were to expand existing programs, or to create new programs consistent with SEP regulations, and not to supplant or replace existing state programs or other funding. Of the $1 billion awarded to the State of Florida for energy and environmental initiatives, the OOE administers approximately $176 million for the following energy programs: 12 State Energy Program (SEP): $126 million was awarded to fund energy efficiency and renewable energy projects and rebates. Energy Efficiency and Conservation Block Grant (EECBG): $30.4 million to be used for reduction of fossil fuel emissions; reduction of total energy use of eligible entities; and improvement of energy efficiency in the building, transportation, and other appropriate sectors. Energy Assurance Grant Program: $1.881 million to be used to strengthen and expand the State s energy assurance planning and resiliency efforts by incorporating response actions for new energy portfolios and Smart Grid applications and to build in house energy assurance expertise. ENERGY STAR Appliance and HVAC Rebate Programs: $ million 13 to be used for establishing and administering state ENERGY STAR Rebate programs. The programs provided incentives to Florida residents to purchase ENERGY STAR appliances and HVACS. The OOE has awarded 144 grants and reimbursed $43,221,164 (40%) of the $107,451,127 awarded to recipients. The OOE also issued 129,333 rebates, totaling $61,173,765, for the following programs: ENERGY STAR Appliance Rebates; ENERGY STAR HVAC Rebates; Solar Rebates; and Plug-in Hybrid Electric Vehicle Conversion Rebates. 11 See Appendix B: ARRA Funding of Energy Initiatives by State/Territory. 12 Program funding includes awards to grant recipients, vendor payments and administrative cost. 13 $15,047,717 was used for ENERGY STAR Appliance rebates and the remaining $2,537,283 million was reallocated to assist funding of the ENERGY STAR HVAC Rebate program. Office of Inspector General Page 15

18 Grants Awarded by Month The OOE began awarding grants in February 2010, awarding the last of the 144 original grants in June The chart above lists the number of grants awarded by month, with June 2011 representing the highest single month for awards. Based on reports received by the OOE, the State of Florida has benefited from the investment of ARRA funds. The reports, submitted by state agencies, local governments, profit and non-profit organizations, indicate that the rebates and grants awarded have led to emission reduction, energy savings, energy cost savings and job creation and retention. This was achieved through the development of energy efficient strategies and procurement of energy efficient systems, such as: Retrofitting buildings with energy efficient HVACs; Installing energy efficient lighting; Purchasing alternative fuel vehicles; Using biofuels and compressed natural gas to reduce fossil fuel consumption, and Purchasing residential ENERGY STAR appliances and HVACs. As of May 11, 2012, four projects have been completed, 20 agreements were terminated, and 120 agreements are still in progress. In addition, recipients have begun to report return on investment (ROI) data for 50 projects (35%). The OIG obtained, where available, both projected and actual emission reductions, energy cost savings and energy savings for each ARRA project. However, the following challenges prevented the OIG from being able to attest to the accuracy of the projected and actual ROI data presented in this report. The OOE did maintain the recipient s applications and progress reports which included ROI data. However, the system used by the OOE for summarizing data does not allow for a determination of ROI at the recipient level. The ROI estimates contained in the recipient s application were not always clearly defined. As such, the OIG found it difficult to delineate some of the stated goals. Office of Inspector General Page 16

19 The OOE did not independently verify ROI data reported by recipients. In addition, the OIG captured the actual ROI data in total because the number of months reported by recipients varied. It should also be noted that a low number of recipients reported actual ROI data. For those that did report, the reporting period was limited. The following sections describe the various ARRA funded programs 14 and the return on investment achieved. STATE ENERGY PROGRAM GRANTS The State Energy Program (SEP) was established to award $126 million for energy efficiency and renewable energy projects. The funding was divided 15 among the following grant programs: Florida Clean Energy Grant $12,648,491 Clean Energy Florida Renewable Energy, Efficiency and Conservation Grant Compressed Natural Gas Fleet Fueling Facilities Grant Florida Energy Opportunity Fund Solar for Schools and Shelters Grant E85/B20 16 Public, Private Fueling Grant Shovel Ready Energy Project Grants $11,886,989 $1,506,250 $36,089,000 $10,000,000 $957,933 $5,095, Source: ARRA program descriptions taken from OOE documentation. 15 The funds listed only reflect the amount awarded to recipients and does not include rebate payments, vendor contracts and administrative costs. 16 E85 is an abbreviation for Ethanol 85%, a mixture composed of 85% ethanol and 15% of gasoline. B20 is an abbreviation for Biodiesel 20% a mixture composed of 20% of biodiesel with 80% of diesel. Florida Clean Energy Grant The Florida Clean Energy Grant is a competitive grant intended to fund energy efficiency and renewable energy projects and activities. Eligible applicants are Florida based entities such as municipalities and county governments, school districts, licensed for-profit companies, universities and colleges, utility companies, not-forprofit organizations, and State of Florida agencies. Funds are awarded on a cost reimbursement basis. The purpose of the grant is: To provide funding for energy efficiency programs, equipment, and market transformation activities that increase the adoption of energy efficient technology and practices in Florida; To provide funding for renewable energy programs, equipment installations, and market transformation activities that increase the generation of energy from renewable resources and consumer demand for renewable energy technology in Florida; and To maximize annual energy savings, cost savings, and carbon emission reductions. Under the Florida Clean Energy Grant, the OOE executed 33 of the 144 (23%) ARRA agreements (31 ongoing and 2 terminated). The recipients were awarded $12,648,491, of which $1,248,354 (10%) was expended. Since the execution of the agreements, 10 recipients have reported ROI data to the OOE. The following table lists the 33 executed ARRA agreements and their respective awarded and expended amounts. The table also identifies the 10 recipients that have reported partial ROI data to the OOE, while the remainder has not achieved sufficient progress to report ROI data. Office of Inspector General Page 17

20 Florida Clean Energy Grant Funding and Expenditures by Recipient and Reporting of ROI RECIPIENT AWARDED EXPENDED AS OF 3/31/12 REPORTED ROI AS OF 3/19/ Friends of Florida $150,000 $111,517 No 2 Boca Raton Museum of Art 386,894 7,695 Yes 3 Broward College 490,439 0 No 4 Broward County 500,000 0 No 5 Canaveral Port Authority 325,000 0 Yes 6 City of Freeport** 461, ,030 No 7 City of Palmetto 287,760 0 Yes 8 City of Seminole 316,000 0 No 9 City of Williston 231,650 14,159 No 10 City of Winter Park** 325,000 0 No 11 First Coast Tech. College 423,200 0 No Florida Department of Agriculture and 12 Consumer Services 499,738 0 Yes 13 Florida State College at Jacksonville 500,000 0 No 14 Florida Atlantic University 500,000 0 Yes 15 Greater Lake Worth Chamber of Commerce 341,000 0 No 16 H. Lee Moffitt Cancer Center** 355,000 0 No 17 Jewish Federation of South Palm Beach County 397, ,484 Yes 18 Lee County Port Authority 500,000 0 No 19 Leon County 481,517 0 Yes 20 Leon County School Board 209,820 1,232 No 21 Philharmonic Center for the Arts 500, ,324 No 22 Pioneer Growers Cooperative 500, ,000 No 23 School Board of Marion County 289,305 0 No 24 Seminole State College of Florida 500,000 0 No 25 St. Johns County 394,000 0 Yes 26 St. Johns County Housing 475,880 0 Yes 27 St. Lucie County 300,000 19,913 Yes 28 Town of Cutler Bay 152,800 0 No 29 University of Florida Board of Trustees 499,114 0 No 30 Utility Board of Key West 434,010 0 No 31 Village of Royal Palm Beach 248,445 0 No 32 USCJO, Inc.* 500,000 0 No 33 Girl Scouts of West Central Florida* 172,014 0 No TOTAL $12,648,491 $1,248,354 * Terminated or in process of termination. The funding for terminated projects has been, or will be, reallocated to other projects. **OIG conducted an on-site visit. Office of Inspector General Page 18

21 Clean Energy Projected and Actual ROI Reported As of March 19, 2012 # of Recipients Reported ROI Reporting ROI Projected Actual Projected Actual Emissions Reductions Criteria air pollutants reduced (tons) 1, Greenhouse gases reduced (CO2 equivalents) (metric tons) 911, Energy Cost Savings Dollars Saved $7,494,009 $ Energy Savings Reduction in natural gas consumption (thousand cu ft) 47, Reduction in electricity consumption (btu's) 125,755, Reduction in electricity consumption (megawatt hours) 771, Reduction in electricity demand (megawatts) 20, Reduction in fuel oil consumption (gallons) 65, Reduction in gasoline consumption (gallons) 2,765, Jobs Number of Workers (total jobs) 1, The table above shows the recipients projected and actual ROI reported, as well as the number of recipients reporting, as of March 19, Florida Renewable Energy, Efficiency and Conservation Grants The Florida Renewable Energy, Efficiency and Conservation Grant (FREEC) was established to accommodate the excess of qualified EECBG applications received by the OOE. This competitive grant was intended to provide supplemental funding to support local government energy efficiency and renewable energy projects and activities that met SEP criteria and were not funded under the EECBG program. The purpose of the program was: To provide funding for energy efficiency programs, equipment, and market transformation activities that increase the adoption of energy efficient technology and practices in Florida; To provide funding for renewable energy programs, equipment installations, and market transformation activities that increase the generation of energy from renewable resources and consumer demand for renewable energy technology in Florida; and To maximize annual energy savings, cost savings, and carbon emission reductions. The FREEC Grant accounted for 35 of the 144 (24%) executed ARRA agreements, with awards totaling $11,886,989. As of March 31, 2012, expenditures totaled $1,072,603 (9%) with 34 projects ongoing and 1 terminated. Since the execution of the recipient s agreement, 12 recipients have reported ROI data to the OOE. The following table lists the 35 executed agreements and their respective awarded and expended amounts. The table also identifies the 12 recipients that have reported partial ROI data to the OOE, while the remainder has not achieved sufficient progress to report ROI data. Office of Inspector General Page 19

22 Clean Energy FREEC Funding and Expenditures by Recipient and Reporting of ROI RECIPIENT AWARDED EXPENDED AS OF 3/31/12 REPORTED ROI AS OF 3/19/12 1 City of Atlantic Beach $234,789 $6,593 No 2 City of Bunnell 99,235 0 No 3 City of Coleman 240,000 21,600 No 4 City of Deland** 1,240,000 34,863 Yes 5 City of Gretna 110,000 0 No 6 City of Lake Mary 235,000 0 Yes 7 City of Lake Wales** 200, ,494 Yes 8 City of Lighthouse Point 250, ,998 Yes 9 City of Marianna 242,000 0 No 10 City of Noma** 250,000 13,680 No 11 City of Palmetto 249,837 64,378 No 12 City of Satellite Beach 196,738 0 No 13 City of South Pasadena 211,800 17,730 No 14 City of St. Augustine 250,000 0 No 15 City of St. Pete Beach** 250, ,000 Yes 16 City of Sweetwater 250,000 0 No 17 City of Treasure Island 148,231 0 No 18 City of Venice 665,000 33,135 Yes 19 City of Vernon 250,000 11,520 No 20 City of Williston 250,000 24,750 No 21 City of Winter Park** 360,207 0 No 22 City of Zephyrhills 250,000 17,474 No 23 Franklin County 500,000 0 Yes 24 Lafayette County 250,000 0 No 25 Liberty County 250,000 0 No 26 Monroe County 2,687,288 43,650 Yes 27 Okeechobee County 94,880 0 Yes 28 Suwannee County 109,408 0 No 29 Town of Ebro 215,000 0 No 30 Town of Hypoluxo 245,000 0 Yes 31 Town of Ponce de Leon 250,000 69,693 No 32 Town of Wausau 250,000 22,995 No 33 Town of Welaka 102,576 11,450 Yes 34 Town of Westville** 250,000 86,600 Yes 35 Town of Eatonville*/ ** 250,000 0 No TOTAL $11,886,989 $1,072,603 * Terminated or in process of termination. The funding for terminated projects has been, or will be, reallocated to other projects. ** The OIG conducted an on-site visit. Office of Inspector General Page 20

23 Clean Energy - FREEC Projected and Actual ROI Reported As of March 19, 2012 # of Recipients Reported ROI Reporting ROI Projected Actual Projected Actual Emissions Reductions Greenhouse gases reduced (CO2 equivalents) (metric tons) 13, , Energy Cost Savings Dollars Saved $3,308,118 $1, Energy Savings Reduction in natural gas consumption (thousand cu ft) 69, , Reduction in electricity consumption (btu's) 507, Reduction in electricity consumption (megawatt hours) 102, , Reduction in electricity demand (megawatts) 7, Reduction in fuel oil consumption (gallons) 9, Reduction in gasoline consumption (gallons) 25, Jobs Number of Workers (total jobs) The table above shows the recipients projected and actual ROI reported, as well as the number of recipients reporting, as of March 19, Compressed Natural Gas Fleet Fueling Facilities The Compressed Natural Gas Fleet (CNG) Fueling Facilities grant is a competitive match and cost reimbursement grant intended to increase the availability of CNG fueling facilities in Florida. The specific grant goals include: Reducing the greenhouse gas emissions through increased deployment of CNG vehicles and fueling infrastructure; Reducing petroleum use in the transportation sector; and Stimulating additional public/private sector investment in CNG vehicles and refueling infrastructure. By pursuing the expansion of biofuels within the state, Florida could increase its energy security, decrease its dependence on foreign oil, protect the state s environment and reduce greenhouse gas emissions. Grant funds may be used to purchase equipment associated with the installation, improvement, renovation, or replacement of CNG infrastructure. Specific examples of eligible equipment under this grant include compression systems, storage and dispensing equipment, and card payment systems. In accordance with the DOE guidance, applicants were specifically prohibited from using grant funds for permitting and construction. Eligible applicants under this grant include Florida municipalities and county governments, Florida school districts, established for-profit companies licensed to do business in Florida, universities and colleges in Florida, not-for- Office of Inspector General Page 21

24 profit organizations, and State of Florida agencies. Public and non-profit entities are eligible for a grant of up to 50% of the cost of equipment associated with the installation of CNG fueling infrastructure up to a maximum of $500,000. For-profit entities are eligible for a matching grant of up to 25% of the cost of equipment associated with the installation of CNG fueling infrastructure up to a maximum of $500,000. CNG Fleet Fueling Facilities accounted for 5 of the 144 (3%) executed ARRA agreements with awards totaling $1,506,250. As of March 31, 2012, expenditures totaled $246,250 (16%), with 2 projects ongoing, 1 completed and 2 terminated. Since the execution of the recipient s agreement, three recipients have reported ROI data to the OOE. The table below lists the five executed agreements and their respective awarded and expended amounts. The table also identifies the three recipients that have reported partial ROI data to the OOE, while the remainder has not achieved sufficient progress to report ROI data. Compressed Natural Gas (CNG) Funding and Expenditures by Recipient and Reporting of ROI RECIPIENT AWARDED EXPENDED AS OF 3/31/12 ROI REPORTED AS OF 3/19/12 1 City of Clearwater $450,000 $0 Yes 2 Okaloosa Gas District 21,250 21,250 Yes 3 Wise Gas 500, ,000 Yes 4 Broward County* 500,000 0 No 5 City of Hollywood* 35,000 0 No TOTAL $1,506,250 $246,250 *Terminated or in process of termination. The funding for terminated projects has been, or will be, reallocated to other projects. Office of Inspector General Page 22

25 Compressed Natural Gas (CNG) Grant Projected and Actual ROI Reported As of March 19, 2012 # of Recipients Reported ROI Reporting ROI Projected Actual Projected Actual Emissions Reductions Greenhouse gases reduced (CO2 equivalents) (metric tons) 3, Energy Cost Savings Dollars Saved $8,588 $0 1 0 Energy Savings Reduction in electricity consumption (btu's) 49, Reduction in gasoline consumption (gallons) 984, , Jobs Number of Workers (total jobs) The table above shows the recipients projected and actual ROI reported, as well as the number of recipients reporting, as of March 19, The one CNG project completed to date is the Okaloosa Gas District, which received an award amount of $21,250. The project objective was to: Upgrade the compressed natural gas station with new equipment from Wise Gas, Inc.; Reduce petroleum consumption, greenhouse gas emission and fuel cost; Create green jobs; Stimulate additional public/private sector investment in CNG vehicles and refueling infrastructure; and Reduce overall fleet fuel cost by 20%. According to the Okaloosa Gas District s final report, a slow-fill compressed natural gas compressor was installed, tested and is operational. Two CNG Honda Civics were purchased and displaced two gasoline powered vehicles. These CNG vehicles will reduce over 1,500 gallons of gasoline per year, and are on pace to reduce greenhouse gases by seven metric tons per year. Okaloosa Gas plans to add more vehicles in the future. The company also retained two jobs, and contributed to six indirect jobs. Office of Inspector General Page 23

26 Okaloosa Gas District Projected and Actual ROI Reported As of March 19, 2012 Projected Actual Emissions Reductions Greenhouse gases reduced (CO2 equivalents) (metric tons) Energy Cost Savings Dollars Saved $8, $0 Energy Savings Reduction in gasoline consumption (gallons) 7, , Jobs Number of Workers (total jobs) direct/6 indirect The table above shows the projected and actual ROI for the Okaloosa Gas District. The OIG captured ROI data in total (i.e., did not determine the number of months being reported). Based upon their final reports, the projected energy reductions and savings were not realized for the Okaloosa Gas District project, as they did not meet their goals related to reducing emissions and energy consumption. For example, the projected goals for reducing gasoline consumption and greenhouse gases were 7,040 gallons and 21 metric tons, respectively. The actual reported reduction in gasoline was 3,000 gallons with greenhouse gases being reduced by 8.7 metric tons. Florida Energy Opportunity Fund The Florida Energy Opportunity Fund (Fund) is a direct investment grant created to promote the adoption of energy efficient and renewable energy products and technologies in Florida. The recipient, Florida Opportunity Fund, Inc. (FOF), is a not-forprofit corporation who administers the Fund. The FOF contracts with an investment firm, Florida First Partners, to manage the investments 17. The FOF is governed and staffed by Enterprise Florida, Inc. The primary purposes of the Fund are to increase the availability of capital in Florida through both loan and equity investment instruments, help Florida businesses, and promote the adoption of commercialized clean energy technology. Fund investments must comport to the State Energy Program statute, which requires that funds be used primarily for: Improvement of facility and equipment, with energy efficient and renewable energy products; Acquisition or demonstration of renewable energy products; and Improvement of existing production, manufacturing, assembly or distribution processes to reduce consumption or increase the efficient use of energy in such processes. The Fund was awarded $36,089,000, and as of March 31, 2012, has expended $26,099,234 (72%). The FOF has entered into investment agreements with four companies totaling $14,290,000, but the companies have not achieved sufficient progress to report a return on investment. 17 The OIG conducted an on-site visit to Florida First Partners. Office of Inspector General Page 24

27 Florida Energy Opportunity Fund Recipients of Investment Funds As of May 9, 2012 COMPANY INITIAL INVESTMENT OPTION TO COMMIT* TOTAL POSSIBLE Mustang Vacuum Systems** $5,000,000 $0 $5,000,000 Fracture, LLC 530, ,000 1,000,000 LS9, Inc. 4,500,000 1,500,000 6,000,000 Florida Biofuels** 2,290, ,290,000 TOTAL $12,320,000 $1,970,000 $14,290,000 * FOF has an option to invest $1,970,000, of the $14,290,000. FOF is holding these funds until the option is exercised. ** The OIG conducted an on-site visit. The table above lists the executed investment agreements and the amount invested. The FOF and First Florida Partners are in discussions with various companies to invest the remaining $22,400,000. The OIG conducted an on-site visit at one of the perspective companies. Solar for Schools and Shelters This grant was awarded to only one recipient, the Florida Solar Energy Center. The grant was awarded $10,000,000 and as of March 31, 2012, has expended $909,049 (9%). The grant supports the installation of photovoltaic systems with battery back-ups on strategically located schools and emergency shelters throughout the state. Approximately 90 co-located schools and emergency shelters will be selected, and the installation of 10 kw and larger solar systems with data loggers on each site will soon be underway. The grant will include operation and maintenance workshops for energy and facilities managers and administer education orientation workshops for teachers, along with achieving four primary objectives: Creating or saving green collar jobs by hiring solar contractors to install solar systems; Providing power for critical needs during power outages and times of disaster; Educating future generations about solar energy technologies; and Reducing greenhouse gas emissions. As of March 16, 2012, the Florida Solar Energy Center has completed 19 projects and is in various stages of completion on the remaining 71 projects. E85 and B20 Public, Private Fueling Facilities Grant The objective of this grant is to increase the availability of E85 and B20 fuels to consumers at retail stations throughout Florida by providing a grant to fuel station owners to install E85 or B20 tanks and pumps at their facilities. By pursuing the expansion of biofuels within the state, Florida will increase energy security, decrease dependence on foreign oil, protect the state s environment and reduce greenhouse gas emissions. Office of Inspector General Page 25

28 The E85 and B20 Public, Private Fueling Facilities grant accounted for 20 of the 144 (14%) executed ARRA agreements with awards totaling $957,933. As of March 31, 2012, no funds have been expended, and 8 projects are ongoing and 12 have been terminated. Since the execution of the recipient agreements, none of the recipients have reported actual ROI data to the OOE, as shown in the table below. E85 and B20 Public, Private Fueling Facilities Grant Funding and Expenditures by Recipient and Reporting of ROI RECIPIENT AWARDED EXPENDED AS OF 3/31/12 ROI REPORTED AS OF 3/19/12 1 Benzena Capital Ent., Inc.* $39,978 $0 No 2 Benzena Capital Ent., Inc.* 49,996 0 No 3 BMAQ, LLC* 50,000 0 No 4 Dania Investment, Inc.* 50,000 0 No 5 Direct Fuel Management* 50,000 0 No 6 Fort Pierce Petroleum* 50,000 0 No 7 Greenwave Biodiesel 50,000 0 No 8 Johnson & Johnson (1) 45,000 0 No 9 Johnson & Johnson (2) 45,000 0 No 10 Mid State Energy (1) 45,000 0 No 11 Mid State Energy (2) 45,000 0 No 12 Petro-Walton, LLC* 50,000 0 No 13 Protec Fuel Management (1) 45,000 0 No 14 Protec Fuel Management (2) 45,000 0 No 15 Residuary Trust 49,986 0 No 16 South Point Petroleum* 50,000 0 No 17 Super Stop 101, Inc.* 47,973 0 No 18 Super Stop 407, Inc.* 50,000 0 No 19 Super Stop Petroleum, Inc. (1)* 50,000 0 No 20 Super Stop Petroleum, Inc. (2)* 50,000 0 No TOTAL $957,933 $0 *Terminated or in process of termination. The funding for terminated projects has been, or will be, reallocated to other projects. Office of Inspector General Page 26

29 Emissions Reductions E85 and B20 Public, Private Fueling Facilities Grant Projected ROI Reported As of March 19, 2012 ROI Reported # of Recipients Reporting Projected ROI Greenhouse gases reduced (CO2 equivalents) (metric tons) 1,252, Energy Savings Jobs Reduction in electricity consumption (btu's) 35, Reduction in gasoline consumption (gallons) 7,493, Number of Workers (total jobs) The table above shows the recipients projected ROI and the number of recipients that reported. Shovel Ready Energy Project Grants This grant leverages Florida s state energy grant initiatives to identify projects that can be expeditiously implemented through available SEP funding. The goal is to provide matching grants for competitivelyselected renewable energy and energy efficiency technology projects. The grant is designed to stimulate capital investment in the state and promote and enhance the statewide utilization of renewable energy technologies. originally submitted for a REET grant. Due to the limited REET funding, the OOE obtained approval from the DOE to award these grant applications utilizing SEP funds. Shovel Ready Energy Projects accounted for 3 of the 144 (2%) executed ARRA agreements and was awarded $5,095,925. As of March 31, 2012, expenditures totaled $3,114,480 (61%) with 2 projects ongoing and 1 terminated. Since the execution of the recipient agreements, none of the recipients have reported actual ROI data to the OOE. The table below lists the three executed agreements and their respective awarded and expended amounts. The Shovel Ready Grants Program was established to fund applications that were Shovel Ready Funding and Expenditures by Recipient and Reporting of ROI RECIPIENT AWARDED EXPENDED AS OF 3/31/12 ROI REPORTED AS OF 3/19/12 1 Clean Fuel LLC $2,500,000 $2,232,000 No 2 Lamar Advertising 2,500, ,555 No 3 Perry Energy* 95,925 95,925 No TOTAL $5,095,925 $3,114,480 *Terminated or in process of termination. The original award amount was $472,740. Office of Inspector General Page 27

30 The objective of the Clean Fuel LLC project is to install energy efficient retrofits and equipment upgrades to reduce the company s dependence on the energy grid and natural gas by at least 30%. The company s goal is to reduce energy costs by at least $500,000 per year. The company produces biodiesel fuel from waste vegetable oil, animal grease and brown grease. As of March 31, 2012, this project is ongoing. The objective of the Lamar Advertising project is to install solar and wind renewable energy systems on 500 separate billboard structures throughout the State of Florida. Each system will generate approximately 2000 watts of power for a total distributed system capacity of approximately 1MW. The excess electricity will be fed back into the grid. As of March 31, 2012, this project is ongoing. The Perry Energy grant was terminated by the OOE and, as of May 14, 2012, is being reviewed by the Department s Office of General Counsel. The OIG was unable to obtain projected ROI data for the Shovel Ready grants. As mentioned above, the Shovel Ready Grants Program was established to fund applications that were originally submitted for a REET grant. Since REET grants did not have the same ROI reporting requirements as ARRA funded grants, the applications did not contain sufficient ROI data. DOE Extension of SEP Program The grant agreement between the DOE and the OOE for ARRA SEP funds was originally scheduled to expire April 30, The DOE approved the OOE s request for a 17-month extension, and amended the expiration date to September 30, The OOE s extension request was granted to allow a limited number of recipients to complete their projects, to create a revolving loan fund, and to expand the Department s Better Building Initiative. The revolving loan fund will provide loans for energy efficiency improvements for rural small businesses (non-farms) and local governments. The revolving loan fund will also allow funding for demonstration projects of commercially available technologies and techniques in rural communities. The Department s Better Buildings Initiative is an expansion of the Department s existing ARRA grant. The initiative is intended to enhance the energy monitoring and management of equipment and related infrastructure so the Department can collect, analyze and compare energy consumption in Department-owned buildings. ENERGY EFFICIENCY AND CONSERVATION BLOCK GRANT The Energy Efficiency and Conservation Block Grant program (EECBG) was established to award $30.4 million to local governments that were not eligible for direct funding from the DOE. Recipients would use funding to reduce fossil fuel emissions, reduce total energy use of eligible entities, and improve the energy efficiency in buildings, transportation, and other appropriate sectors. Funding was divided 18 among the following grant programs: Competitive Local Government $ 19,220,824 Grants State Data Center Energy Grant $ 367, The funds listed only reflect the amounts awarded to recipients and does not include rebate payments, vendor contracts and administrative costs. Office of Inspector General Page 28

31 Sunshine State Building Grant $7,624,674 Energy Code Compliance and Effectiveness Measurement $ 600,000 Grant Energy Code Training and $ 293,600 Education Grant Each of the programs is explained in detail below. Competitive Local Government Grants Competitive Local Government grants were energy efficiency and small scale renewable energy initiatives awarded to cities and counties. These local governments used the funds for establishing an energy efficiency and conservation strategy, upgrading outdoor sports lighting, installing solar powered LED street lighting, replacing inefficient indoor lighting with energy efficient lights, replacing old, inefficient HVAC systems with new, energy efficient models, installing solar thermal energy systems, and installing emergency back-up photovoltaic systems. The OOE made efforts to ensure that small, local governments also received funding under this program. The Competitive Local Government grants accounted for 39 of the 144 (27%) executed ARRA agreements with awards totaling $19,220,824. As of March 31, 2012, expenditures totaled $3,702,534 (19%), with 36 projects ongoing, 1 completed, and 2 terminated. Since the execution of the recipient agreements, 24 recipients have reported ROI data to the OOE. The following table lists the 39 executed agreements and their respective awarded and expended amounts. The table also identifies the 24 recipients that have reported partial ROI data to the OOE, while the remainder has not achieved sufficient progress to report ROI data. Competitive Local Government Grants Funding and Expenditures by Recipient and Reporting of ROI RECIPIENT AWARDED EXPENDED AS OF 3/31/12 ROI REPORTED AS OF 3/19/12 1 Broward County BOCC $1,236,129 $363,560 Yes 2 City of Avon Park 138,725 0 No 3 City of Bartow 645, ,330 Yes 4 City of Blountstown 1,200,000 0 Yes 5 City of Callaway 230,000 0 Yes 6 City of Cedar Key 245,740 79,036 No 7 City of Century 250, ,772 Yes 8 City of Chipley 250,000 0 No 9 City of Clewiston 250, ,086 Yes 10 City of Dania Beach* 250,000 0 No 11 City of Green Cove Springs 250,000 0 Yes 12 City of Inverness 107,000 0 Yes 13 City of Leesburg 1,240,000 0 No 14 City of Montverde 152, Yes 15 City of Mount Dora 249, ,083 Yes Office of Inspector General Page 29

32 Competitive Local Government Grants Funding and Expenditures by Recipient and Reporting of ROI (Continued) RECIPIENT AWARDED EXPENDED AS OF 3/31/12 ROI REPORTED AS OF 3/19/12 16 City of Mulberry 250, ,945 Yes 17 City of Naples 117,500 0 Yes 18 City of Newberry 128,830 50,260 No 19 City of Palatka 1,240, ,333 Yes 20 City of Parkland 164, ,588 No 21 City of Seminole 290,072 91,567 No 22 City of South Daytona 83,900 35,827 No 23 City of St. Augustine Beach 250,000 42,007 No 24 City of Starke 250,000 37,145 Yes 25 City of West Melbourne 250,000 0 Yes 26 Desoto County 250,000 0 No 27 Green Acres 76,594 18,665 Yes 28 Gulf County 250, ,550 No 29 Hardee County 250, ,529 Yes 30 Highlands County BOCC* 1,055, No 31 Leon County 1,172, ,435 Yes 32 Okeechobee County 782,125 0 Yes 33 Osceola County 2,362, ,007 Yes 34 St. Johns County 437, ,773 Yes 35 Town of Bay Harbor Island 33,000 0 No 36 Town of Juno Beach 143,500 92,663 Yes 37 Town of Lantana 1,238,300 0 No 38 Town of Palm Beach 250,000 21,494 Yes 39 Village of Palmetto Bay 1,200,000 0 Yes TOTAL $19,220,824 $3,702,534 * Terminated or in process of termination. The funding for terminated projects has been, or will be, reallocated to other projects. Office of Inspector General Page 30

33 Competitive Local Governments Grants Projected and Actual ROI Reported As of March 19, 2012 # of Recipients ROI Reported Reporting ROI Projected Actual Projected Actual Emissions Reductions Greenhouse gases reduced (CO2 equivalents) (metric tons) 337, , Energy Cost Savings Dollars Saved $16,787,160 $179, Energy Savings Reduction in natural gas consumption (thousand cu ft) 755,954 8, Reduction in electricity consumption (btu's) 27,941, , Reduction in electricity consumption (megawatt hours) 60,084 2, Reduction in electricity demand (megawatts) 60, Reduction in gasoline consumption (gallons) 1,939, Jobs Number of Workers (total jobs) The table above shows the recipients projected and actual ROI reported, as well as the number of recipients reporting, as of March 19, One project was completed under the Competitive Local Government Grant, Terramar Park Relight (City of Parkland), for an award amount of $164,500. The objectives of the project were to reduce the annual energy consumption and carbon dioxide emissions by procuring and installing energy efficient outdoor sports lighting. According to the City of Parkland s final report, energy costs were reduced by an average of $11,043 per year, resulting in an energy savings of approximately 18,000 kwh per year, and the project created or retained five jobs. The table below shows the projected and actual ROI for the City of Parkland. City of Parkland Projected and Actual ROI As of March 19, 2012 Projected Actual Emissions Reductions Greenhouse gases reduced (CO2 equivalents) Energy Cost Savings Dollars Saved $10, $11, Energy Savings Reduction in electricity consumption (btu's) Reduction in electricity consumption (megawatt hours) Jobs Number of Workers (total jobs) Office of Inspector General Page 31

34 State Data Center Energy Initiatives The State of Florida data centers provide mission-critical computing functions essential to the daily operation of nearly every state agency. The data centers consume large amounts of energy to run and maintain their computer systems, servers, and associated high-performance components. Furthermore, to protect these systems and their vital functions, data centers also employ energy-intensive air conditioning systems, fire suppression systems, redundant and backup power supplies, redundant Internet connections, and high-security systems. ARRA funds were used to implement an action plan for enhancing data center energy efficiency, which included demonstration and implementation of specific technologies such as virtualization, power and cooling systems, and the use of energy efficient hardware devices. All of the funding for the State Data Center grant has been expended and all projects completed. The grant accounted for 2 of the 144 executed agreements, totaling $367,870 in awards for the Northwood and Southwood Shared Resource Centers. The objectives of the two projects were to reduce annual power consumption within the data center by: Replacing and installing servers; Eliminating hot exhaust recirculation, reducing hot spots, stabilizing equipment air-intake temperatures, and eliminating air leaks in the rack with the data center through the purchase and installation of blanking panels; and Purchasing and installing scalable thermal enclosures that will allow for easy reconfiguration of rack space to accommodate varying equipment loads. The following table shows the projected and actual ROI reported by the two data centers for emissions reduction and energy savings, as of March 19, State Data Center Grant Projected and Actual ROI Reported As of March 19, 2012 # of Recipients ROI Reporting Reporting ROI Projected Actual Projected Actual Emissions Reductions Greenhouse gases reduced (CO2 equivalents) (metric tons) Energy Savings Reduction in electricity consumption (megawatt hours) 4, Office of Inspector General Page 32

35 Sunshine State Buildings Initiative The Sunshine State Buildings Initiative was designed to leverage recent analyses of energy use in state facilities to prioritize deployment of energy efficient and renewable technologies in state buildings. Projects include building and mechanical system updates and optimization, energy management systems and equipment control automation, high-efficiency heating, ventilation and air conditioning systems, high-efficiency lighting fixtures and lamps, and improvements in insulation. The Sunshine State Buildings Initiative accounted for 1 of the 144 executed agreements. The grant was awarded $7,624,674, and has expended $5,546,138 (73%), as of March 31, The grant is projected to reduce electricity consumption by 3,100-megawatt hours; however, no actual ROI has been reported for the Sunshine State Buildings Initiative. Energy Code Compliance and Effectiveness Measurement The Energy Code Compliance and Effectiveness Measurement grant is designed to strengthen Florida s Energy Code Program by identifying measures that can be used to track code effectiveness with more affordable and sustainable methods. The analysis derived from this initiative could provide the basis for understanding the market, construction practices and the impact of available technologies. Additionally, this program will be used in planning future Energy Code stringency increases. This grant accounted for 1 of the 144 executed agreements. The grant was awarded $600,000 and has expended $273,333 (46%), as of March 31, The returns for this grant are measured by the completion of the stated contractual objectives (i.e., project deliverables). The grant is ongoing. Energy Code Training and Education The Energy Code Training and Education grant is intended to leverage both state and federal funds for the Building Code Mitigation and Outreach Program to develop and implement a building energy conservation training program. This initiative will provide training to designers, contractors, code officials and other construction industry parties through existing programs at educational institutions throughout the state. It will also instruct trainers for the State Building Officials Association s education program and for education programs of construction industry associations. This grant accounted for 1 of the 144 executed agreements with an award amount of $293,600. As of March 31, 2012, $253,413 (86%) was expended for this initiative. The returns for this initiative are measured by the fulfillment of the stated contractual objectives (i.e., project deliverables). The grant is ongoing. ENERGY ASSURANCE GRANT PROGRAM The intent of the Energy Assurance Grant Program is to procure consulting services that will examine and strengthen Florida s energy assurance plans and policies. In addition, the funds will design an automated computer-based system to track the duration, response, restoration and recovery time of energy supply disruptions, and include the capability of mapping areas of the state experiencing outages. Funding will support the Florida Department of Law Enforcement and the Division of Emergency Management Office of Inspector General Page 33

36 in an effort to develop a detailed Critical Energy Infrastructure and Key Assets Survey that includes Smart Grid elements. The Energy Assurance Grant Program accounted for 2 of the 144 executed ARRA agreements with awards totaling $1,159,571. As of March 31, 2012, $387,906 (33%) had been expended for the grant. The returns for this grant are measured by the fulfillment of the stated contractual objectives (i.e., project deliverables). The grants are ongoing. REBATE PROGRAMS ENERGY STAR APPLIANCE AND HVAC REBATE PROGRAMS ENERGY STAR is a joint program of the U.S. Environmental Protection Agency (EPA) and the DOE to help consumers save money and protect the environment through energy efficient products and practices. All appliances and products with the ENERGY STAR label meet strict energy-efficiency guidelines set by the EPA and the DOE. The OOE hired a third party vendor, American Express Travel Related Services, Inc. (American Express), who subcontracted with Ohana Companies LLC 19 (Ohana) to process both the ENERGY STAR Appliance and HVAC rebates. American Express also subcontracted with a vendor, GiftTracker, Inc., to disburse the rebate debit cards to approved applicants. ENERGY STAR Appliance Rebate Program The ENERGY STAR Appliance Rebate Program was designed to encourage consumers to save energy and water, to 19 Ohana is a rebate processing company subcontracted by American Express to process ENERGY STAR appliance and HVAC rebates. lower their monthly bills using a more efficient appliance, and to stimulate Florida s economy by encouraging consumers to purchase new ENERGY STAR appliances. The program offered rebates of a flat 20% of the retail, pretax price up to $1,500 per consumer for six major appliance categories purchased between April 16, 2010 and April 25, 2010: refrigerators, dishwashers, clothes washers, freezers, room air conditioners, and tank-less water heaters. In addition, as a stimulus for recycling the old appliances, Florida consumers were offered a $75 bonus, with proper recycling proof required. According to Ohana s report, 20 the total number of ENERGY STAR Appliance rebates and recycling bonuses issued was 64,224 and 49,666, respectively. 21 The total amount paid to Florida consumers for the rebates and recycling bonuses was $11,323,092 and $3,724,625, respectively. The program has expended all funding. The following table shows the percentage of appliances purchased by type: Percentage of Appliances Purchased by Type Refrigerators 39% Dishwashers 30% Clothes Washers 26% Freezers, Room A/C, Tank-less Water 5% Heaters Of the appliances that were purchased, 49,522 (77%) of the replaced appliances were recycled. Refrigerators were recycled in the greatest numbers at 38% of the total appliances recycled, followed by 20 Ohana Report, Florida ENERGY STAR Appliance Rebate. 21 There is a discrepancy of 177 rebates and 144 bonuses between the number approved by the OOE and the reports provided by Ohana. Office of Inspector General Page 34

37 dishwashers (32%) and clothes washers (26%). The remaining appliances accounted for the remaining 4%. Based on the appliances purchased, a conservative estimate of the amount of economic stimulus to the Florida economy is $51 million, which generated at least $3.6 million in tax revenues. Based on the energy and water savings calculator provided by the DOE, through participation in the ENERGY STAR Appliance Rebate program, Florida consumers are estimated to save 7,635,670 kwh per year off their electric bills. In addition, Florida consumers will save approximately 123 million gallons of water each year by replacing their dishwashers and clothes washers. ENERGY STAR HVAC Rebate Program The Florida ENERGY STAR HVAC Rebate program was designed to provide an incentive for Florida homeowners to upgrade their air conditioning systems to more energy efficient models, and raise the awareness of energy efficient air conditioning systems and duct leakage issues with older homes. According to Ohana s report, 22 the most frequent system purchased was central air conditioners (57%), followed by air source heat pumps (42%), and geothermal heat pumps at just under 1%. Based on the application receipt price of the 4,268 HVAC and geothermal systems purchased, the economic stimulus to the Florida economy was $26,745,889. In addition, assuming each Floridian only paid $300 per required duct test, $1.28 million was invested in green jobs through energy efficiency testing. According to Ohana s report, for every one dollar spent by the State of Florida on this rebate program, consumers invested approximately five dollars into the economy. Furthermore, based on the energy savings calculator provided by the DOE, through participation in the ENERGY STAR HVAC Rebate program, Florida consumers are estimated to save 4,312,367 kwh per year off their electric bills. The homeowner would receive a rebate from the State of Florida for $1,500 on HVACs purchased between August 30, 2010 and September 14, As an added incentive, because the HVAC system meets the Federal Energy Tax Credits criteria, the homeowner would also qualify for a tax credit off their 2010 income taxes. The total number of ENERGY STAR HVAC rebates issued to Florida consumers was 4,268, totaling $6,402,000. The program has expended all funding. 22 Ohana Report, Florida ENERGY STAR HVAC Rebate. Office of Inspector General Page 35

38 SOLAR REBATE PROGRAM The Legislature established the Solar Energy Systems Incentives Program in 2006 through the REET program. The program was designed to encourage residents and businesses to invest in solar energy technologies by providing rebates for the purchase and installation of solar energy systems in homes and businesses. The Legislature approved a total of $11 million in state dollars to fund the solar rebate program. The OOE received more qualified rebate requests than annual appropriated funding. To address the shortage, the Legislature approved the use of $39,394,048 in ARRA funds, which resulted in over 11,000 rebates issued. The rebate applied to solar photovoltaic systems and solar thermal systems for residential or commercial users. The photovoltaic rebates paid $4/watt, up to $20,000 for residential users, and up to $100,000 for commercial users (both profit and not-for-profit). The solar thermal rebates paid $500 per residential user, and $15/1,000 Btu, up to a maximum of $5,000, per commercial user. PLUG-IN HYBRID ELECTRIC VEHICLE CONVERSION REBATE PROGRAM This program was intended to increase the affordability of hybrid plug-in electric conversion kits within the state by creating the Electric Car Conversion Rebate. Both residential vehicle owners and commercial fleet owners who purchase a qualifying conversion kit, that converts the highwaycapable hybrid to a highway-capable plug-in hybrid, are eligible to apply for a one-time rebate. This application must be submitted within 12 months of the date of conversion. Cars with the conversion kits will be six times more fuel-efficient than standard gasoline cars; achieving roughly 100 miles per gallon (mpg). Conversion vehicles will also reduce oil consumption by up to 70 percent over conventional, gas-powered vehicles. 23 This rebate program, which began on May 21, 2010, and will end on November 30, 2012, was awarded $500,000. As of May 14, 2012, the OOE has expended $330,000 and issued 66 rebates. According to the 2011 OOE Annual Report, since July 1, 2011, the Department has completed its review of approximately 12,000 solar rebate applications and made payments to all the eligible applicants in less than 4 months time. Checks were mailed to all eligible applicants on October 7, Each eligible applicant received a payment for approximately 52 percent of their requested rebate amount, as directed by House Bill 15A. Since the inception of the program in 2006, 792 jobs were created or retained, and energy savings in excess of $58 million were realized. 23 Source: OOE website. Office of Inspector General Page 36