Energy Projects Division

The Energy Projects Division is responsible for administering the federally-funded State Energy Program created under the Energy Policy Conservation Act of 1975. The program allows the state to use its discretion in providing energy efficiency services. The Energy Office must submit an annual plan to the U.S. Department of Energy for review and approval.

In general, agency staff operate the program directly. Occasionally, the agency may work closely with outside contractors hired to perform specific projects. The Division is also responsible for preparing the Nebraska Energy Statistics, the agency's Annual Report and the Nebraska Energy Quarterly newsletter.

State Energy Program

Since the inception of the State Energy Program, the federal government has granted funds on an 80/20 matching basis to the states. In mid-1998, Nebraska received $304,800 in federal funds which were matched with $60,960 in state severance tax funds.

Beginning in 1996, the U.S. Department of Energy began offering discretionary, competitive grants to the states for work in selected areas. In mid-1998, the Energy Office received $157,000 for multi-year efforts to promote geothermal heat pumps for schools, test a blend of ethanol and diesel in Omaha buses and help reduce energy costs in Army National Guard facilities. In-kind contributions and cost sharing by the agency's partners will add $134,000 to the projects. (More information on these grants appears on pages 2-6).

In 1998-1999, State Energy Program activities included:

Education and Information Services

Education and information services are needed by consumers to make sound energy decisions.

To support this need, the agency published and distributed the Nebraska Energy Quarterly newsletter to thousands of Nebraskans. The Quarterly highlights a variety of energy efficiency projects and topics. Two mandated state activities, production of an Annual Report and compiling Nebraska Energy Statistics, were also maintained. During the reporting period, the Quarterly and Statistics were also available on the agency's web site. The agency also actively promoted the use of Internet-based information services developed by the U.S. Department of Energy and others.

Energy Shortage Management and Emergency Preparedness

As part of the agency's energy shortage and emergency activities, the Energy Office routinely monitors fuel supplies and potential disruptions. Monitoring is more intense during times when seasonal demands are high because of sudden weather changes. Contingency plans developed in prior years provide the structure for any necessary energy emergency activities.

Special Projects

Beginning in 1996, the federal Energy Department began competitions for state activities in selected areas. Since that first competition, the Energy Office has garnered a total of $1.39 million: $370,000 for three 1996 projects - Climate Wise, Rebuild Nebraska and Energy Guard; $355,510 for two 1997 projects - Rebuild Nebraska and Building Codes; $550,000 for three 1998 projects - financing incentives for new home construction, Rebuild Otoe County and Home Energy Rating System; and $157,300 for three projects in 1999 - training for the installation of geothermal heat pumps in Nebraska schools, operating several Omaha buses on a 15 percent ethanol/80 percent diesel blended fuel and hiring staff to make energy saving improvements in Army National Guard buildings.

Some of the special projects are multi-year and complement one another.

The specific activities for each project are summarized in this section.

 
 
Nebraska Energy Settlement Fund
A Summary of Exxon, Stripper Well and Diamond Shamrock
Oil Overcharge Funds as of June 30, 1999

Exxon

Stripper Well

Shamrock

Total

Total Received

$15,504,944

$15,073,967

$359,172

$30,938,083

Interest Earned

8,690,843

5,708,995

227,825

14,627,663

Total Funds Budgeted

$24,195,787

$20,782,962

$586,997

$45,565,746

Contracts

$4,018,016

$6,024,037

$0

$10,042,053

Program Development

103,692

0

6,434

110,126

Monitoring/Evaluation

361,527

0

0

361,527

Education

117,292

0

0

117,292

Load Management

50,039

0

0

50,039

Attorney General Legal Fees

0

299,327

0

299,327

Bank Wire Fees

0

98

0

98

Low Income Weatherization

4,022,371

3,848,193

0

7,870,564

Emergency Preparedness

45,907

0

0

45,907

Dollar & Energy Saving Loan Program

13,705,505

8,345,628

0

22,051,133

Loan Program Delivery

731,219

460,914

0

1,192,133

Special Projects

139,455

224,359

0

363,814

Designated Interest

801,340

876,744

0

1,678,084

Oil Overcharge Administration

0

384,199

571,377

955,576

Direct Restitution Project

0

0

9,186

9,186

Allocated to Low Income Programs

$0

$118,661

$0

$118,661

Allocated to Native American Programs

$0

$13,683

$0

$13,683

Uncommitted Balance

$99,424

$187,119

$0

$286,543

Source: Nebraska Energy Office

 

Figure 1


 


Oil Overcharge Contracts

Exxon
Category Allocated Funds Contracts Issued

Expenditures
Through June 30, 1999

Energy Education

$1,196,642

$1,196,642

$1,167,310

Financing Demonstrations

912,605

912,605

912,605

Agriculture

291,276

291,276

291,276

Feasibility Studies

187,993

187,993

187,993

Building Improvement Demonstration

729,499

729,499

729,499

Transportation

700,000

700,000

700,000

Load Management

50,039

50,039

50,039

Dollar and Energy Saving Loans

13,705,505

13,705,505

13,705,505

Low Income Weatherization

4,022,371

4,014,500

4,014,500

Total Exxon Contracts June 30, 1999

$21,795,930

$21,788,059

$21,758,727


Stripper Well
Category

Allocated Funds

Contracts Issued

Expenditures
Through June 30, 1999

Low Income Weatherization

$3,848,193

$2,859,584

$2,591,869

State Buildings Energy Team

124,210

124,210

124,210

Local Government Energy Management Circuit Rider

352,564

352,564

352,564

Public Transportation

790,540

790,540

790,540

Energy Related Biotechnology, Solar
and Conservation Outreach

2,000,000

2,000,000

1,871,183

Greenhouse Project

400,000

400,000

400,000

Innovative Energy Grants

55,768

55,768

50,768

Dollar and Energy Saving Loans

8,345,628

8,345,628

8,345,628

Indian Tribal Governments

77,000

77,000

68,472

University of Nebraska Building Weatherization

497,136

497,136

497,136

Nebraska State College System

1,494,959

1,494,959

1,494,959

Curtis Weatherization

231,861

231,861

231,861

Total Stripper Well Contracts June 30, 1999

$18,217,859

$17,229,250

$16,819,190

Source: Nebraska Energy Office

 

Figure 3

 

Oil Overcharge Funds

 

Since 1982, Nebraska has received oil overcharge funds (sometimes referred to as Petroleum Violation Escrow Funds) as a result of various court actions against oil companies that overcharged their customers during the period of federal price controls from 1973 to 1981. Since direct compensation to injured consumers seemed unrealistic, the courts ordered the money recovered from lawsuits be distributed to the states to fund programs that provide indirect restitution to injured energy consumers. States were directed to use the money, within parameters established by the courts and federal regulators, to fund energy assistance and efficiency programs.

The agency manages projects financed by oil overcharge funds through three program divisions - Energy Projects, Financing and Weatherization.

The Nebraska Energy Settlement Fund

The Nebraska Energy Settlement Fund was established by the Legislature for money paid to Nebraska from overcharge cases. Since 1986, Nebraska has received $44.88 million, including interest: $23.99 million in Exxon funds, $20.31 million in Stripper Well funds and $.58 million in Diamond Shamrock funds (see figures 1 and 3 for specifics on how the funds have been used).

Oil Overcharge Projects From Previous Years

Activity this year for each oil overcharge project financed by the Nebraska Energy Settlement Fund, reviewed by the Legislature and approved by the U.S. Department of Energy is described on this page and those that follow in this section.

Dollar and Energy Saving Loans

Exxon funds totaling $13.71 million plus $8.35 million in Stripper Well, $.18 million in Amoco, $.01 million in Coline, $.08 million in National Helium and $.17 million in Vickers funds (amounts include interest earnings) have capitalized the Dollar and Energy Saving Loan Program, which provides low-interest loans to Nebraskans to finance home, building, transportation and system improvements. More than 320 participating lenders provide six percent interest rate financing for up to fifteen years on loans for energy saving improvements.

Some energy-saving improvements require an energy audit before a borrower may secure financing. These improvements may be financed for up to five, ten or fifteen years depending on the type of improvement, its cost and the amount of energy saved. Loans for energy audits are available directly from the Energy Office at no interest.

Applicants may obtain appropriate forms from the Energy Office, participating lenders, utilities or equipment dealers. After obtaining bids, applicants then submit loan forms to participating lenders at one of more than 600 sites across the state. Once a lender approves the loan application, a commitment agreement is submitted to the Energy Office for review. On final approval from the agency, the lender notifies the applicant to proceed with the energy improvement.

1998-1999 Highlights

By mid-1999, the Energy Office had financed more than 15,500 Dollar and Energy Saving projects (see figure 5). The loans first became available in mid-1990. During the reporting period, the agency surpassed two milestones of note:

Since the loan program began more than eight years ago, 15,565 projects totaling $107,859,000 have been financed. More than $47.05 million in oil overcharge funds (including interest and loan payments) have leveraged in excess of $50.58 million from the state's private lenders. These projects also leveraged an additional $12.2 million spent on non-energy related improvements to the properties. Loans have financed projects in all of the state's 93 counties. Each year about 1,700 loans are available for financing new projects worth in excess of $10 million. The average amount of a loan is $6,483. For reporting and other purposes, the agency "categorizes" loans into one of 11 types. The summary of the major categories follows: 

  • Residential Improvements.
    Nearly 92 percent of all the energy efficiency projects financed are made in the homes of Nebraskans. Slightly less than 70 percent of all loan funds have financed typical home improvements such as replacing or installing furnaces, air conditioners and heat pumps, replacing windows and doors and insulating walls and ceilings. Typically these improvements have a lifetime of 20 years and longer and will continue to pay benefits in the form of lower energy bills for the homeowners for decades to come. By mid 1999, the Energy Office and lenders had teamed to finance 14,289 projects totaling $73 million. An additional $4.2 million worth of improvements were made on these projects.
  • Small Business Improvements. More than 9.6 percent of the low interest financing - $10.4 million - has been used to make improvements in 667 buildings and systems in small businesses in the state. About one-third of the financing has been used to replace furnaces and air conditioners. Much like home energy-saving projects, insulation and replacement doors and windows are high on the list of typical improvements made by business owners.
  • Mortgage Loans. The Energy Office began financing new home construction in 1996. To date, the agency and lenders have financed 105 new homes that surpass the 1995 Model Energy Code by up to 30 percent. In financing these projects, the agency offers inducements in the form of interest rate reductions - from 1/4 to 1 percent - to encourage future homeowners and their builders to construct very, very energy efficient homes. The maximum mortgage amount is $250,000. The Energy Office and lenders have financed $13.2 million in new home construction, and the lenders and homeowners have financed an additional $2.6 million on the same 105 projects. Currently, 12.2 percent of all loan funds have been used for new home mortgages. The weatherization mortgages, described in greater detail on page 10, are also included in this loan category.
  • Agricultural Improvements. Coming in a close fourth in use of these funds, are loans for agricultural equipment and systems. More than 6.6 percent of all loan funds have financed typical agricultural projects such as low-pressure irrigation systems, replacing irrigation pumps and motors, making well modifications and replacing grain dryers. Since 1990, the Energy Office and lenders have issued 422 loans totaling nearly $7.1 million for agricultural projects. On average, agricultural loans exceed $16,000.
  • Other Types of Improvements. The other categories of loans - local governments, state buildings, rural nursing homes, Climate Wise, Rebuild Nebraska, telecommunications and alternate fuels - collectively account for about 3.8 percent of all loan funds.
  • Impacts. A 1997 evaluation of the impact of Dollar and Energy Saving Loans found the projects have created the equivalent of 1,416 jobs between 1990 and 1996, primarily among heating and cooling contractors and remodeling industries all across the state. Savings earned by Nebraskans who used the loans to finance improvements in their homes came in two ways: savings from reductions in energy use and savings from lowered financing costs. Between 1990 and 1997, the dollars saved by Nebraskans from reduced energy use total $16.9 million and the savings from the reduced financing costs total $15.86 million.
  • Number of Loans. As illustrated in figure 4, the number of loans issued each year can vary markedly. Many factors - demand, availability of funds, addition of new funds, speed of loan repayments and limitations within some categories - can significantly affect loan volume in any given period. The precipitous decline from 1990 to 1993 was, in great part, due to the large initial demand for loans depleting the loan pool. As repayments have replenished the loan pool, the number of loans made increased from that low point, rebounding to more than 2,000 in 1994-1995.
  • Low-Income Weatherization Assistance Program

    A total of $7.87 million in oil overcharge funds ($4.02 million from Exxon and $3.85 million from Stripper Well) have been allocated to the Low-Income Weatherization Assistance Program to assist Nebraskans with residential weatherization to reduce energy use and costs. In 1998-1999, $139,124 in Stripper Well funds were spent through the program.

    The terms of the Stripper Well court order mandate that an equitable share of the funds be set aside for the state's low-income population. To date, $2,591,869 in Stripper Well funds have been spent.

    For more detailed information about the Low-Income Weatherization Assistance Program, see pages 9 and 10.

    Native American Tribal Governments

    The Stripper Well court order requires the state to provide an equitable share of oil overcharge funds to Native American tribal governments. Based on the number of Native Americans in the state, $77,000 have been set aside for eligible projects suggested by the tribal governments. No projects were undertaken in 1998-1999. A total of $8,528 remains for Native American projects.

    Planning, Monitoring and Evaluating Oil Overcharge Programs

    To comply with federal and court reporting regulations, $384,199 in Stripper Well and $450,000 in Exxon funds have been committed for planning, monitoring and evaluating programs funded with oil overcharge dollars. In 1998-1999, a total of $15,441 in Stripper Well funds were spent.

    Statewide Energy Education

    Starting in 1993, the Energy Office joined with the Nebraska Math and Science Initiative to further energy education in the state. The Initiative is a group of educators across the state and staff from the University of Nebraska-Lincoln working to improve science and math education.

    In 1994, the Energy Office committed $500,000 more in Exxon funds to match a $4.9 million grant to achieve excellence in elementary and secondary math and science education. Since this project began, more than 2,500 teachers have attended energy education workshops and 208 grants totaling $229,000 have been awarded for specific energy projects in schools across the state.

    During the reporting period, $48,432 was spent for teacher training and grants.

    The Initiative continued to operate the agency's energy education resource library and maximize use of the Internet for locating energy education resources. This project concluded in 1999.

    Other Energy Settlement Funds

    Not all oil overcharge funds are part of the Nebraska Energy Settlement Fund. Some of these funds have been held in escrow by the U.S. Department of Energy's Office of Hearings and Appeals. These funds are distributed to the states as payments are made by oil companies according to settlement agreements. According to the Department of Energy, all future oil overcharge funds received by the state will be classified as Stripper Well funds and not subject to review by the Office of Hearings and Appeals.

    The oil overcharge project financed with these funds is described below.

    Statewide Energy Information Service

    In 1992-1993, the Energy Office began to develop energy information services to assist consumers to make decisions resulting in the efficient and economic use of energy.

    Funded with $150,000 in Amoco funds, the agency developed a library collection and developed and distributed energy informational materials at a variety of events. This project concluded during this reporting period after all the funds were spent.

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