You asked for a summary of the energy and telecommunications provisions of the recently adopted federal stimulus bill (H. R. 1).

SUMMARY

The bill provides $ 20 billion in federal tax incentives for energy efficiency and renewable energy. Among other things, it extends and expands tax credits for purchases such as new furnaces, energy-efficient windows and doors, or insulation. It extends the production tax credit for electricity derived from renewable resources. It provides a tax credit of up to $ 7,500 for families that purchase plug-in hybrid vehicles.  

The bill appropriates over $ 17. 5 billion for existing and new energy programs that are directly relevant to Connecticut. It provides $ 3. 1 billion for the Department of Energy's (DOE) State Energy Program, which provides grants and funding to state energy offices.  The funding is conditioned on governors' assurances regarding utility rate regulatory policies, building code requirements, and prioritizing existing state programs in accordance with the bill. The bill provides $ 3. 2 billion in new funding to help local governments implement energy efficiency programs. It appropriates $ 5 billion for weatherization of low-income family homes and expands eligibility for this program. It provides $ 4 billion for public housing capital projects and $ 2. 25 billion for building owners who receive project-based assistance under the Department of Housing and Urban Development's (HUD) Section 8 program. This funding can be used for energy efficiency and part of the funding is targeted for this purpose. The bill also has $ 300 million in funding for the federal Energy Star Program and for matching grants for state rebates to consumers who buy energy efficient Energy Star products to replace old appliances.

The bill increases, by $ 4 billion, the national authorization of two types of bonds that states and municipalities can issue to finance renewable energy and energy efficiency projects. These bonds carry a low interest rate as the bondholder receives federal tax credits in lieu of interest.

Among the bill's energy technology provisions are $ 6 billion for the Innovative Technology and Loan Guarantee Program, which supports the commercial use of advanced technologies to reduce emissions of air pollutants and greenhouse gases. The bill also provides $ 400 million for the Advanced Research Projects Agency-Energy program and $ 500 million for research, labor exchange, and job training projects to prepare workers for careers in energy efficiency and renewable energy industries (“green jobs”). It also appropriates $ 800 million to the DOE for projects related to biomass and $ 400 million for geothermal activities and projects.

The bill contains a number of energy provisions that do not affect Connecticut, e. g. , $ 10 billion for the Western Area Power Administration, which provides electricity in a number of western states. It also has several provisions that only apply to the federal government, such as $ 300 million to the armed forces for energy efficiency research and development.

With regard to telecommunications, the bill provides $ 7 billion for extending broadband services to unserved and underserved rural and urban communities across the country. It also appropriates $ 650 million for the program that provides coupons for people buying converter boxes to enable them to receive digital television.

This report provides cites to sections of the bill making statutory changes; most of the appropriations to DOE are found in Title IV and most of the appropriations to HUD are in Title X11. Much of the information in this report is taken from a summary of H. R. 1 prepared by the National Conference of State Legislatures, which has summaries of various provisions of the bill on its website, www. ncsl. org. Additional information is taken from www. dsireusa. org, which describes federal and state incentives for energy efficiency and renewable energy.

ENERGY PROVISIONS

Tax Provisions

The bill provides $ 20 billion in tax incentives for energy efficiency and renewable energy. Among other things, it extends the income tax credit for improvements in home energy efficiency, extends the production tax credit for electricity derived from renewable resources, and establishes a new investment tax credit for investments in advanced energy manufacturing facilities.

In addition, the bill allows businesses eligible for the production tax credit or the existing investment tax credit for new renewable energy facilities to receive a federal grant instead of taking the credit (Sec. 1603). (This benefits companies that do not have federal tax liability. ) The grant equals 30% of the expenditures for fuel cells, solar systems, and small wind systems, and 10% for other qualified renewable and cogeneration systems. Taxpayers may not use more than one of these incentives. The grant is not included in the taxpayer's gross income.  Similarly, the bill allows taxpayers who are eligible for the production tax credit to take the investment tax credit instead.

Income Tax Credits (Sec. 1121). It extends through 2010 the 30% income tax credit for energy efficiency improvements in the building envelope of existing homes (e. g. , insulation and energy efficient windows) and for the purchase of high-efficiency heating, cooling, and water-heating equipment. To be eligible, furnaces and related equipment must meet specified efficiency standards, e. g. , natural gas furnaces must have an annual fuel utilization efficiency rate of at least 95. The improvements or equipment must serve a dwelling that is owned and used by the taxpayer as a primary residence. The maximum amount of homeowner credit for all improvements combined is $ 1,500 for purchases during the two year period of 2009 and 2010. Further information about these and other federal energy tax credits is available at www. dsireusa. org

Production Tax Credits (Sec. 1101). The bill extends the production tax credit for electricity derived from wind through 2012 and for electricity from biomass, geothermal, hydropower, landfill gas, waste-to-energy, and marine facilities through 2013. The credit is 2. 1¢ per kilowatt-hour for wind, geothermal, and closed-loop biomass systems and 1. 0¢ per kilowatt-hour for other eligible technologies. Generally the credit applies to the first ten years of the system's operation.

Investment Tax Credits (Secs. 1302 and 1103). The bill establishes a new manufacturing investment tax credit for investment in advanced energy facilities, such as those that manufacture components for the production of renewable energy, advanced battery technology, and other innovative green technologies.   Up to $ 2. 3 billion in credits can be allocated. It removes the $ 2,000 cap for solar thermal and geothermal systems and the $ 4,000 cap on small wind systems under the the existing investment tax credit for renewable energy systems,

Alternative Fuel Incentives (Secs. 1123 and 1141 to 1144). The bill expands tax benefits for alternative fuel vehicles and fueling equipment. Among other things, it provides a tax credit of up to $ 7,500 for consumers who purchase plug-in hybrid vehicles.  

Appropriations

State Energy Program (Sec. 410). The bill appropriates $ 3. 1 billion for the State Energy Program, which provides grants and other funding to state energy offices for energy efficiency and renewable energy programs. The normal matching requirements under the program do not apply to the funding provided by the bill.

The bill requires that, as a condition of receiving these grants, the governor notify the Secretary of Energy that the state meets certain conditions regarding utility regulatory policies, building codes, and the prioritization of existing state programs. Specifically, the bill requires the governor to certify that the applicable state regulatory authority will seek to implement appropriate proceedings for each electric and gas utility over which it has ratemaking jurisdiction to ensure that utility financial incentives are aligned with helping their customers use energy more efficiently and that provide timely cost recovery and a timely earnings opportunity for utilities associated with cost-effective measurable and verifiable efficiency savings. In Connecticut, existing law imposes similar “decoupling” requirements on the Department of Public Utility Control.

The governor must also certify that the state, or the units of local government that adopt building codes, will implement:

1. a building energy code for residential buildings that meets or exceeds the most recently published International Energy Conservation Code, or achieves equivalent or greater energy savings;

2. a building energy code for commercial buildings that meets or exceeds the ANSI/ASHRAE/IESNA standard 90. 1-2007, or achieves equivalent or greater energy savings; and

3. a plan for achieving compliance with these codes within 8 years of the bill's enactment in at least 90% of new and renovated residential and commercial building space, with the plan including training and enforcement components.

It is unclear to what extent the current State Building Code meets these requirements.

The bill also requires states, to the extent practicable, to give priority to:

1. extending existing efficiency programs, including energy efficiency retrofits of buildings and industrial facilities that are funded by the state or through utility rates;

2. extending existing programs to support renewable energy projects and deployment activities; and

3. cooperative and joint activities between states to advance more efficient and effective use of the new funding to support these priorities.

Assistance for Municipalities. The bill appropriates $ 3. 2 billion for the Energy Efficiency and Conservation Block Grant program, of which $ 2. 8 billion must be allocated on a formula basis and $ 400 million must be awarded on a competitive basis to grant applicants.

The program seeks to decrease energy consumption and reduce fossil fuel emissions by increasing energy efficiency in the building, transportation, and other energy consuming sectors of the economy. The program is open to municipalities with a population of 35,000 or more. Part of the formula funding goes to state energy offices (in Connecticut, the Office of Policy and Management) for distribution to smaller municipalities. Program funds can be used for, among other things, conducting residential and commercial building energy audits; establishing loan, rebate, and incentive programs for energy efficiency improvements; providing grants to nonprofit organizations for energy efficiency retrofits; and developing programs to conserve energy in transportation. Additional information about this program is available at http: //apps1. eere. energy. gov/wip/block_grants. cfm.

Weatherization Assistance Program (Sec. 407). The bill appropriates $ 5 billion for Weatherization Assistance Program. The bill increases the maximum income a household can have and participate in the program from 150% to 200% of the federal poverty level. It increases the maximum amount of assistance per dwelling unit from $ 2,500 to $ 6,500.

This program helps low-income households reduce their energy bills by increasing their home's energy efficiency. DOE provides funding to states, which manage the day-to-day details of the program. Low-income families receive services from a network of about 970 local weatherization service providers, e. g. , community action agencies. Through this program, the providers install energy efficiency measures in the homes of qualifying homeowners free of charge. The measures include such things as caulking and weather stripping; furnace and cooling system tune-up, repair, and replacement; replacement of windows and doors; and building insulation. In Connecticut, the program is administered by the Department of Social Services, which contracts with community action agencies as part of the Connecticut Energy Assistance Program.

Energy Efficiency in Assisted Housing. The bill provides $ 4 billion for the Public Housing Capital Fund. Of this amount, HUD must allocate $ 3 billion under its formula grant, but housing authorities that are designated as troubled are ineligible for this funding. Eligible housing authorities can use this funding for a variety of purposes, including increasing energy efficiency in federally-supported elderly and disabled units. HUD must allocate the remaining $ 1 billion by September 30, 2009, for priority investments, including investments that leverage private sector funding or financing for renovations and energy conservation retrofit investments. Under both provisions, the funding must supplement and not supplant state and local funds.

The bill provides an additional $ 2. 25 billion for project-based Section 8 units (units in privately-owned buildings that are subsidized by rental subsidies that are tied to the building). Of this amount, $ 2 billion can be used for a variety of purposes, including improving energy efficiency. The remaining $ 250 million must be used for grants or loans for energy retrofit and green investments in such housing. HUD can enter into agreements with the building owners in which they and the department share the savings produced by energy efficiency measures.

Advanced Technologies (Sec. 405, 406). The bill provides more than $ 30 billion for energy initiatives such as smart power grids, advanced battery technologies produced in the U. S. , and energy efficiency measures. The bill establishes the Smart Grid Investment Program to modernize the electricity grid to make it more efficient and reliable. It increases funding by $ 4. 5 billion for the Electricity Delivery and Energy Reliability program. This funding can be used to modernize the electric grid (including incorporating demand response equipment), improve security and reliability, and conduct research on energy storage.

The bill provides $ 500 million for loan guarantees for transmission and renewable energy projects that begin construction by September 30, 2011. These include projects that (1) generate electricity or thermal energy, and facilities that manufacture related components; (2) electric power transmission systems, including upgrading projects; and (3) biofuel projects that substantially reduce greenhouse gas emissions.

The bill appropriates $ 2 billion for grants to support the manufacturing (in the U. S. ) of advanced vehicle batteries and components.

Vehicles. The bill appropriates $ 300 million for the Alternative Fueled Vehicles Pilot Grant Program. This program helps state and local governments, among others, acquire fuel efficient vehicles, including hybrids, electric vehicles, commercially available plug-in hybrid vehicles, as well as related infrastructure. A total of 30 grants, based on geography, will be awarded on a competitive basis. This funding is available until September 30, 2011.

Bonding (Secs. 1111, 1112)

The bill increases, by $ 1. 6 billion, the authorization for clean renewable energy bonds (CREBs). Certain entities, notably states and municipalities, can use CREBs to finance renewable energy projects. The list of qualifying technologies is generally the same as that used for the production tax credit. The advantage of CREBs is that they are issued (theoretically) with a 0% interest rate. (In practice, the actual interest rate has been slightly higher. ) The issuer pays back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest.  Further information about CREBs is available at www. irs. gov/irb/2007-14_IRB/ar17. html

The bill increases, by $ 2. 4 billion, the authorization for qualified energy conservation bonds. These bonds operate like CREBs. Their proceeds can be used by states and municipalities for a wide range of energy projects and programs. These include energy efficiency capital expenditures in public buildings, renewable energy projects, research and development projects, several types of energy related demonstration projects,; and public energy efficiency education campaigns.

TELECOMMUNICATIONS PROVISIONS (SEC. 6000 ET SEQ. )

Broadband

The bill provides $ 7 billion for extending broadband services to unserved and underserved communities across the country. Specifically, the bill appropriates $ 4. 7 billion for National Technology and Information Administration's Broadband Technology Opportunities Program, to be available until September 30, 2010. Funding is provided to accelerate broadband deployment in unserved and underserved areas and to strategic institutions that are likely to create jobs or provide significant public benefits. Among other things, the program provides equipment and support services for (1) schools, libraries, healthcare providers, and higher education institutions to facilitate greater use of broadband service by or through these organizations; (2)) organizations and agencies that provide outreach and other services to facilitate greater use of broadband service by low-income, unemployed, aged, and other vulnerable populations; and (3) job-creating facilities located in state- or

federally-designated economic development areas. Of this amount, $ 350 million goes to establish the State Broadband Data and Development Grant program and for the development and maintenance of a national broadband inventory map. In addition, $ 200 million is for competitive grants for expanding public computer center capacity and $ 250 million is for competitive grants for innovative programs to encourage sustainable broadband adoption.

The bill also appropriates $ 2. 5 billion to the Department of Agriculture to provide grants, loans and loan guarantees for broadband infrastructure. At least 75% of the area to be served by a project receiving funds from such grants, loans or loan guarantees shall be in a rural area without sufficient access to high speed broadband service to facilitate rural economic development, as determined by the Secretary of Agriculture. It is unclear whether any parts of Connecticut will meet this criterion.

Digital TV Converter Boxes

In addition, the bill appropriates $ 650 million to implement and administer the digital-to-analog converter box coupon program, including additional coupons to meet new projected demands and consumer support, outreach, and administration. Of the amounts provided, up to $ 90 million may be used for education and outreach to vulnerable consumers, including one-on-one assistance for converter box installation.

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