Paula Gant The numbers behind the American Recovery and Reinvestment Act (ARRA)

The money authorized in the economic stimulus – officially called the American Recovery and Reinvestment Act (ARRA) – is far from a collection of pocket change. Any way you look at it, a $787 billion dollar jolt of spending will have widespread, deep impact on a variety of interests. Yes, it’s big deal.

090302arra01

U.S. President Barack Obama signs the ARRA into law on February 17, 2009 in Denver, Colorado. Vice President Joe Biden stands behind him.

For those working in the business of energy distribution, funds that have been tagged for energy efficiency provide a vital infusion of capital in an area that has great potential for lowering economic burdens on consumers, reducing greenhouse gas emissions, and reducing American dependence on foreign fuels. Three ARRA appropriations in particular present great opportunities for natural gas utilities to partner with state and local governments to change the way homes and buildings use energy in the coming years:

  • State Energy Efficiency Programs: $3.1 billion for state energy efficiency programs will be conditioned on governors providing assurances that consideration be being given to important reforms that support advances in the efficiency of energy use. These include progress in implementing rate policies- such as revenue decoupling – that will help align the business interests of energy distribution companies with the interests of American consumers and the Obama administration. States must also adopt the highest residential and commercial codes in effect and guarantee they’ll get the funds moving quickly by prioritizing existing energy efficiency programs.
  • Weatherization Assistance: $5 billion will augment the currently funded Weatherization Assistance Program, which helps American homeowners to retain more of the energy they pay for – for some this means a few dollars saved on their energy bill, for others it means the difference between a warm or a cold place to call home. In the natural gas industry alone, we’ve seen impressive gains in this area: the average home uses 32 percent less natural gas now than it did in 1980. Since about a third of these gains were realized as a result of tighter building shells and better insulation, the $5 billion that has been appropriated for this purpose (22 times the budget of the last appropriation) could have a truly remarkable impact on energy use and carbon emissions in this country.
  • State Energy Efficiency and Conservation Block Grants: ARRA authorizes the appropriation of $3.2 billion for these grants. While they have great potential (a few billion dollars worth of it), this type of grant has yet to be defined. The funding of this line item is also a good example of the sea change that has moved to encompass “energy efficiency and conservation” in past years: funds for this program were authorized in the Energy Independence and Security Act (EISA) of 2007 but had not – until now -been appropriated under any previous congress.

The magnitude of these funds and the pace planned for putting them into action represents a challenge for the existing systems in place to allocate and implement energy efficiency programs.  The effectiveness of this influx of funding will require collaborative efforts between state and local governments, utilities, consumer groups and service providers.  Rapid transfer of best practices from existing to new programs will be important as well.

Targeting economies of scale to get the most out of these programs will be necessary. In short, we will need to heed President Obama’s charge to his administration regarding implementation of these policies:  Think Bold.

AGA members are engaged, to do just that. To track overall progress on ARRA implementation, check online at recovery.gov.  For useful resources for natural gas utilities, regulators and service providers, see our website.

This entry was posted in energy and tagged . Bookmark the permalink.