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Has your Township Considered Pursuing an Energy Grant? Federal and State Aid is Potentially Available

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Ronald D. Richards Jr. & Zachary W. Behler
Foster Swift Municipal Law News: MTA Special Edition
January 2009

Today’s headlines are often filled with news about this challenging economic climate and ushering in a new era of moving toward more energy efficient programs. Beyond those headlines, there is potentially good news directly relevant to townships. Below, we quickly summarize the highlights of some governmental programs – both federal and state – that are aimed at providing financial assistance to help pursue energy efficiency. And the best part: local governmental units like townships are potential recipients.

A. Federal Energy Efficiency and Conservation Block Grants

In December 2007, the federal government enacted the Energy Independence and Security Act (EISA). Although the law is lengthy, one aspect of it is potentially appealing to townships.  The EISA created a multi-billion dollar Energy Efficiency and Conservation Block Grant program. The program is intended to provide grants for innovative practices to achieve energy efficiency and lower energy use. Its aim is to fund local initiatives, such as building and home energy conservation practices, energy audits, building retrofits to increase energy efficiency, “smart growth” planning and zoning, and alternative energy programs.

Much of the available funding is to go to large cities – but the EISA specifically carves out a specified percentage of the overall funding to go to other local governments – such as townships.  Although the exact details of the program’s funding are unclear at the moment, there has been tremendous pressure on President Obama’s administration to provide the funding for the current 2009 fiscal year of the federal government.  Once funded, the program may be a useful tool for local governments to pursue energy efficiency programs.

B. Michigan Energy Efficiency Grants

The State of Michigan has likewise enacted programs to encourage energy efficiency programs at the local level. The Customer Choice and Electricity Reliability Act of 2001 (commonly called 2000 Public Act 141) authorized the creation of the Low Income Energy Efficiency Fund, which the Michigan Public Service Commission (Commission) administers via grants to qualifying organizations. That Fund’s purposes include providing protection for low-income customers, as well as promote energy efficiency by all customer classes.

To carry out the program, the Commission periodically invites proposals from organizations for these grants. Nonprofit, public, and private organizations are eligible to submit proposals, and grants are awarded from that Fund. In May of 2008, for example, the Commission issued an order approving nearly $6.5 million in Michigan energy efficiency grants to 14 organizations.  Among the recipients of grants in the past include the following:

  • Charter Township of Delta received $50,000 for a recycling and eco-awareness campaign involving local high school students.
  • City of Taylor Department of Public Works received nearly $50,000 to install solar panels, a bio-diesel generator, chip boiler, and wind turbine; and to create a program to educate the public about the units.
  • Kalamazoo Valley Community College received $6,000, which after installing a wind turbine on its campus in Texas Township, it will use to purchase equipment to allow students to study that alternative energy source.

C. Net Metering: Another Potential Option

On October 6, 2008, Governor Granholm signed Senate Bill 213 into law (Public Act 295). Among other things, Act 295 includes a provision directing the Michigan Public Service Commission (Commission) to establish a statewide Net Metering program no later March 2009. “Net metering” is an accounting mechanism whereby retail electric utility customers – such as a township – who generate a portion or all of their own retail electricity needs are billed by their electric utility for only their net energy consumption during each billing period. Net energy consumption during a billing period is defined as the amount of energy the utility delivers to the customer and the customer uses minus the amount of energy that the customer generates and delivers back to the utility.

Under the Net Metering program, for example, a township could connect a “qualified generation device” – such as a wind turbine, solar panels, or hydro power system – to an electric utility’s grid. The township then uses the device to operate its township hall. If the device generates more energy than the building needs, then the electric utility will buy the excess energy from the township and the cost of that buy-back appears as a credit on the township’s next utility bill.

The Commission is currently in the process of creating rules to administer the program. However, under Act 295, the program will definitely have certain limits, such as these:

  • for devices under 20 kw, the utility will pay the cost of connecting the device to the electricity grid. But for larger devices, that connection cost falls to the device’s owner.
  • the program is limited to 1% of the total amount of electricity in the state. This means that if you are interested in putting in qualified generation device, be sure to act quickly before the program’s limits are reached.

Foster Swift has a team of attorneys who are intimately familiar with the various energy efficiency financial assistance programs that are out there, the process used to submit requests, and the procedures used to receive awards.  If you have questions as to these matters, Foster Swift’s team would be glad to help.