In early June, staff members presented the KCC commissioners with their plan for spending approximately $5.7 million allocated to Kansas under the Energy Efficiency and Conservation Block Grant (EECBG) program.

The Energy Office must meet a final grant deadline of June 25, and their proposal is not yet finalized. Ideally everything will sail thru and the Energy Office will be able to provide communities with grant info beginning in October 2009. Awards may be made as early as December 2009, depending on when and how the Department of Energy (DOE) makes the funds available.

Eligible applicants pretty much include all Kansas cities and small towns who did not qualify for their own direct allocation under ARRA. Dollars will be likely be allocated on a first-come, first-serve basis.

The Energy Office is going to structure more than half of the EEBCG grants in service of its extremely successful Facilities Conservation Improvement Program (FCIP). The goal is to help cities and counties reduce their greenhouse gas emissions by increasing their energy conservation, efficiency, and savings.

How FCIP works: Public agencies (state, municipalities, counties, and schools) work with an Energy Service Company (ESCO) to come up with energy savings plans for their facilities. The ESCO provides an industrial grade audit (IGA), which usually costs $10,000 up front.

According to the website, the "ESCO will identify and evaluate energy-saving opportunities and then recommend a package of improvements to be paid for through savings. The ESCO will guarantee that savings meet or exceed annual payments to cover all project costs—usually over a contract term between ten and fifteen years. If savings don’t materialize, the ESCO pays the difference, not you."

One of the few problems with the FCIP program - participation is in effect contingent on whether or not an ESCO wants to work with you. Most of them don't like to work on projects that cost less than $400,000. However, if you are a small town, you might have much smaller projects.

Another issue - there are up-front costs (such as the IGA), which sometimes discourage participants. Also, the FCIP requirements are also fairly strict on what can and cannot be included as an energy savings, such as windows, skylights, etc. Some of those improvements might not meet FCIP's 30-year payback criteria as required by the state.

The State Energy Office intends to use ARRA EEBCG funds ($5,756,100 total) to overcome these obstacles, so more Kansas cities and counties can participate in the benefits of the FCIP program.

The proposal to DOE will be to create three major categories of grants:

1. FCIP Incentive Grants ($1.2 million for an est. 30 projects) - These funds will offer a rebate in the amount of up to four times the IGA fee, in order to offset the up-front capital costs of participating in the FCIP program, up to a maximum of $60K per applicant.

2. Energy Savings Project Grants ($2 million for an est. 17 projects)

a. Applicants can apply for a grant of up to $150K to finance energy conservation measures identified in the audit, but that fail to meet the state's thirty-year payback criteria

b. Applicants too small to get an ESCO interested in their project can apply for grants up to $150K to carry out energy savings projects.

3. Transportation Grants ($2,556,100 for an est. 95 vehicles) - This grant category has nothing to do with the FCIP program - rather, it will award one hybrid front wheel drive vehicle to each of the 95 counties who did NOT qualify for a direct ARRA allocation. Maximum award is $28K.

On (3), commissioners raised the issue of where the hybrid vehicles are manufactured, and stated a preference for vehicles with contacts to U.S. manufacturing, and Kansas if possible.

Revisions to the proposal are pending.

--- Maril Hazlett, www.climateandenergy.org