Court freezes $33MM in stimulus funds for California energy efficiency program

Source: California Energy Commission

A $33 million statewide energy efficiency jobs program has been forced to stop after a Riverside County judge issued a temporary restraining order against the California Energy Commission. The judge, disregarding a looming federal deadline, also blocked the Energy Commission from spending the funding for any other purpose, including energy upgrades to residential, commercial or state buildings. The federal requirement for the state to encumber the funds is October 21. 

In a hearing this morning instigated by Western Riverside Council of Governments, a Riverside County Superior Court judge set a November 4, 2010 hearing date to consider if the Energy Commission is in contempt of court for canceling a solicitation that was rendered obsolete by changes in federal banking regulations. The Department of Energy awarded the Recovery Act money to the Energy Commission and encouraged the Commission to use it to set up financing systems that would make it cost-effective for homeowners to upgrade their homes so they use less electricity. 

"There is absolutely no basis for this order - this litigation centers on a solicitation that the Energy Commission has canceled," said Karen Douglas, California Energy Commission Chairman. "Western Riverside's lawsuit threatens to derail a comprehensive statewide jobs program by holding up $33 million in stimulus funds - funds that would benefit the entire state, including citizens of Riverside County." 

Late last year, the Energy Commission released a $30 million federal stimulus funded solicitation calling for proposals to create a Property Assessed Clean Energy or PACE program which would have financed energy efficiency and renewable energy systems for California residential and commercial consumers. Western Riverside submitted a $20 million PACE proposal but was disqualified because they ignored energy efficiency requirements in the guidelines and insisted that the funds should be spent only on installing solar panels. 

Western Riverside protested but was too late in filing their complaint to the Department of General Services (DGS). When DGS dismissed their complaint, Western Riverside sued DGS in Riverside County and a judge ordered DGS to hear their late protest. In addition, the judge also ordered the Energy Commission not to go forward with the winning contracts. 

On July 6, 2010, however, the Federal Housing Finance Authority effectively pulled the plug on all PACE programs nationwide (including Western Riverside) making the Energy Commission's $30 million financing award obsolete and soon afterward the financing solicitation and its five awards were canceled. 

The Energy Commission has the discretion and authority to cancel solicitations that will no longer achieve their intended objectives. In addition, the Energy Commission has the discretion and authority to determine how to best use the federal funds that it administers to meet state policy goals and the objectives of the Recovery Act.
Racing against the federal time clock so the remaining $33 million in federal funds were not forfeited, the Energy Commission created Energy Upgrade California, a new comprehensive, statewide energy efficiency and renewable energy building improvement program sponsored by the PUC, utilities and local governments. 

Western Riverside returned to the Riverside court, filed a motion for a restraining order to stop Energy Upgrade California, claiming the Energy Commission should be held in contempt for violating the order that DGS should hold a protest hearing on the now-canceled PACE solicitation. 

"Western Riverside deliberately refused to engage the Energy Commission in a public forum and ambushed us with a baseless, last-minute contempt charge," said Douglas. "This court order places us squarely in conflict with federal deadlines, at the expense of local governments across the state." 

Energy Upgrade California would provide energy efficiency, renewable energy generation and water efficiency information on rebates and incentives, outreach and marketing, and financing opportunities to all California's fifty-eight counties through an integrated web portal and a one-stop clearinghouse for financing options. 

"The misguided actions by Western Riverside will likely result in these Recovery Act dollars reverting to the federal government, thereby preventing the Energy Commission from launching a statewide, job creating energy efficiency program," said California Task Force Director Rick Rice. "Instead of working to put these Recovery Act dollars to good use, Western Riverside is choosing to put tens of millions of dollars at risk for local governments throughout the state that would otherwise be able to participate in this program."



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