The Stimulus Package and Energy Projects, presentation at National Council for Public and Private Partnerships (4/09)

1. The Stimulus Package and
Energy Projects
Andrew Ratzkin
General Counsel, Burns and Roe Group
NCPPP Economic Stimulus Conference
April 7, 2009

2. Overview of Energy-Related Provisions of
Stimulus Package
• American Recovery and Reinvestment Act of 2009
(ARRA) signed into law February 17, 2009.
• Significant but not DREAM in 3 by itself.
• Relation to what’s coming next:
• Budget
• Energy Bill (transmission, renewables (inc. RPS), energy
efficiency, cyber security, CCS)
• Climate (presumably Cap & Trade)
• Energy provisions of ARRA focus primarily on
renewables, efficiency and transmission and
distribution.
• Fossil spending ($3.4B) focused on decarbonization
(CCS, EOR, etc.).
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3. Overview of Energy-Related Provisions of
Stimulus Package
• One of the largest spending bills ever: $787B (est.) in
spending and tax cuts.
• Approx. $63B relating to energy ($43B spending, $20B
tax cuts).
• Approx. $45B to DOE including loan guars and
borrowing auth., $6.3B of which flows down to States
as grants.
• Most of ARRA funds allocated to DOE relate to
renewables, energy efficiency, “smart grid” and electric
transmission.
• Approx. $10B relating to energy efficiency and climate
change administered by other federal agencies,
primarily DOD and GSA (>$4B each).
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4. Overview of Major Energy-Related Spending
Provisions of Stimulus Package
• “Smart Grid” – $4.5B
• Electric Transmission – $3.25B each to WAPA and BPA (borrowing authority—
avail. until 9/30/12)
• Renewable Energy and Transmission Loan Guars – $6B to underwrite $60B in
loans under the Innovative Technologies Loan Guarantee Program (inc.
biomass, hydrogen, wind, solar, hydro, advanced coal, CCS, pollution control)
• State Energy Grants – $6.3B (energy efficiency and conservation (formula)
block grants, State energy programs) (50% by 9/30/10, rest by 9/30/11)
• Energy Efficiency Improvements in Federal Buildings – $4.5B (GSA)
• Low-Income Weatherization – $5B
• DOD Energy Efficiency Projects – $>4B (SecDef expenditure plan reported to
Cong. 3/19). See www.defenselink.mil/recovery/.
• Public Transit Energy Efficiency – $100M
• Transportation Electrification - $400M DOE grants
• R&D Relating to Energy Efficiency, Renewables and Climate Change - $3.4B to
DOE Fossil Energy R&D Program; $2.5B for DOE energy efficiency and
renewable research, development, demo and deployment activities (inc.
$800M for biomass and $400M for geothermal); $1.6B for DOE Office of
Science.
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5. Overview of Energy-Related Provisions of
Stimulus Package—DOE Funds from ARRA
Energy Efficiency & Renewable Energy $16.8B
Weatherization - $5.0B
State Energy Program - $3.1B
Advanced Batteries Mfg - $2.0B
Energy Efficiency & Renewable Energy - $6.7B
Environmental Management (EM) $6.0B
Smart Grid & related programs $4.5B
Fossil Energy R&D $3.4B
Science $1.6B
ARPA-E $0.4B
____________________________________________________________
DOE Total (excluding loan programs) $32.7B
Innovative Technologies Loan Guarantees $6.0B*
DOE Power Admin Borrowing Authority $6.5B
(WAPA & BPA: $3.25B each)
*$6B is allocated to underwrite up to $60B in loans for Renewable Energy and
T&D projects (inc. biomass, hydrogen, wind, solar, hydro, advanced coal, CCS,
pollution control)
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6. Energy-Related Tax Provisions of Stimulus
Package: $20B (est.) over 10 yrs
• PTC and ITC: PTC in-service date extended for 3 yrs (2013; wind 2012)
for most renewables; marine, hydro 2 yrs. May elect ITC in lieu of PTC
(temp.).
• Treas. Dept. Grant Program: In recognition of current earnings
environment, receipt of grants allowed in lieu of claiming PTC or ITC for
projects in service by or commenced in 2009 or 2010.
• Modification of Energy Tax Credits: Eliminates basis reduction for
purposes of computing energy credit under IRC § 48.
• Clean Renewable Energy Bonds: Addl $1.6B above current levels
authorized to finance renewables projects for govtl bodies, pub. power
providers, electric cooperatives.
• Qualified Energy Conservation Bonds: Addl $2.4 6B authorized.
• Advanced Energy ITC: New 30% ITC for facilities mfg advanced energy
property (renewables, energy storage, energy conservation, efficient
T&D, CCS, plug-in vehicles). Treas/DOE cert. required.
• Tax Credits for Nonbusiness Energy Property (inc. energy efficiency
improvements to existing homes). 30% credit through 2010.
• Tax Credits for Alternate Fuel Pumps.
• Tax Credits for Electric Vehicles.
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7. Common Denominators in Funding Categories
• Jobs and support of economic recovery
• Progress toward energy independence
• Progress toward decarbonization
• Note: Programs and guidelines in development
and policy goals are broad.
• A project potentially may have eligibility under
more than one program (program descriptions
frequently overlap): e.g., direct federal, State
block grants and SEP, tax incentives, financial
instruments (CREBs, loan guarantees, etc.).
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8. Funding Example: SEP Block Grants
The goals established for the State Energy
Program (SEP) ($3.1B) are:
1. Increase energy efficiency to reduce
energy costs and consumption for
consumers, businesses and government.
2. Reduce reliance on imported energy.
3. Improve the reliability of electricity and fuel
supply and the delivery of energy services.
4. Reduce the impacts of energy production
and use on the environment.
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9. The Stimulus Package and Energy Projects
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10. SEP Block Grant Example: New York State
• Recovery and Reinvestment Cabinet established.
• http://recovery.ny.gov/
• $18B (as of February) submitted as shovel-ready chasing $4B
(total federal stimulus infrastructure and energy support to NYS).
• Process:
• Submit online
• Referred to appropriate state agency—Hurdle 1
• Agency ranks and returns to Cabinet—Hurdle 2
• Ultimate selections for state application decided by Cabinet—Hurdle 3
• DOE to select among project submitted by States—Hurdle 4
• Done?
• Positioning and sponsors
• States have until May 12 to apply for SEP grants, but States’
internal queues already forming.
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11. The Stimulus Package and Energy Projects
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12. The Stimulus Package and Energy Projects
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13. Other States
• Funding decisions and processes vary by State.
• Common requirements established by federal
funding sources (such as enhanced project
information reporting).
• Common concerns about meeting deadlines
and spending fast enough: contract
management depth, developing RFPs, etc.
• (Even federal government concerns about own
staffing; plans to rehire contract officers out of
retirement.)
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14. The Stimulus Package and Energy Projects
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15. The Stimulus Package and Energy Projects
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16. Funding Example: Smart Grid
• $4.5B to DOE for smart grid and related (Smart Grid Matching
Grants and ARRA Smart Grid Demonstration Projects).
• Another instance of broadly defined program
• NARUC/FERC collaborative proposing funding criteria, including:
• Interoperability in absence of approved standards
• Cyber security and reliability
• Stranded investment/ability to upgrade
• Sharing of information at DOE Smart Grid Clearinghouse
• Recommends funding a range of technologies, such as sensors on
T&D equipment, digital communications in substations, and
communications equipment not limited to AMI (advanced metering
infrastructure or “smart metering”), e.g., programmable
thermostats, smart appliances and other end-user technologies.
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17. The Stimulus Package and Energy Projects
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19. The Stimulus Package and Energy Projects
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20. More Application Logistics/Requirements
• Because of transparency goals, enhanced information
and requirements for all recipients (contracts, grants,
cooperative agreement, loan guarantees, tax
incentives).
• DOE announcement of comprehensive reorganization
of grant and loan guarantee award process; at same
time DOE has announced enhanced oversight and
reaffirmed due diligence measures on all loan
guarantee issuances.
• For contractors, FAR plus.
• Recipient information will be published on government
websites.
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21. More Logistics/Requirements
• Agencies required to publish contract pre-solicitation and award notices
beyond FAR Part 5 requirements. https://www.fbo.gov
• More detailed guidance coming from OMB.
http://www.recovery.gov/?q=node/317
• Recipients (whether of grant, loan or contract) required to submit
extensive reporting, including:
• Total funds received
• Total obligated and expended
• Detailed projects/activity list and description
• Detailed information on subcontracts or subgrants
• More detailed guidance coming from OMB
• Reports will be made public
• For contracting, fixed price preferred per FAR Part 16, though OMB
recognizes per FAR 9.103 that selection based solely on price can produce
a false economy.
• New reporting requirements will be developed as new standard term and
condition as per ARRA Section 1512.
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22. Additional Resources
Overviews of ARRA
• American Recovery and Reinvestment Act of 2009, official text:
• http://frwebgate.access.gpo.gov/cgi-
bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf
• House Speaker’s summary:
• http://www.speaker.gov/newsroom/legislation?id=0273
• National Conference of State Legislatures’ summary:
• http://74.125.47.132/search?q=cache:x75TrJzEWXcJ:www.ncsl.org/st
atefed/2009economicstimulus.htm+stimulus+ARRA+summary&cd=7
&hl=en&ct=clnk&gl=us
• Associated General Contractors’ summary:
• http://www.agc.org/cs/rebuild_americas_future
• DOE ARRA programs: http://www.energy.gov/recovery/
• DOD ARRA programs: http://www.defenselink.mil/recovery/
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23. Additional Resources
Application Process
• Registration and applications for ARRA funding programs:
http://www.grants.gov.
• Central Contractor Registration: http://www.ccr.gov.
• Loan guarantee program: www.lgprogram.energy.gov/apply.html;
opportunity and funding allocation notices published at:
GovLoans.gov.
• Link to State ARRA websites:
http://www.recovery.gov/?q=content/state-recovery-page
• State-by-State breakdown of DOE grant funding of state-level
energy programs and weatherization assistance.
http://www.energy.gov/recovery/documents/DOE_Formula_Block_Grant_
Allocation_03302009.xls
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24. The Stimulus Package and Energy Projects
About Burns and Roe
Burns and Roe is a comprehensive engineering,
procurement, construction, operations and maintenance
company providing services to private and governmental
clients worldwide, primarily in the power and energy
sectors. The firm's professional services extend from
project inception to operations and maintenance.
For more information, see www.roe.com.
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25. The Stimulus Package and Energy Projects
Contact:
Andrew Ratzkin
Burns and Roe Group, Inc.
201-265-2000
aratzkin@roe.com
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