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The flood of stimulus dollars earmarked for energy projects in Massachusetts is more like a trickle, yet the state is faring better than many of its neighbors in turning earmarks into real cash.
As of late November, the latest figures available, Massachusetts companies, service providers and state agencies had only received about 4.5 percent of the $388 million allocated by the U.S. Department of Energy, according to a department tally. California had received less than 2 percent of its $2.2 billion award and none of Rhode Island’s projects had been reimbursed by the federal government.
Yet despite the glaring contrast between promised funds and actual cash, state energy officials and business leaders say they have been pleased with the process of negotiating and meeting the terms of the awards, which range from a few hundred thousand dollars to hundreds of millions of dollars. They say the time and effort it takes to get the funds in the bank is indicative of a strong theme of the stimulus bill — there’s no such thing as free money.
“Massachusetts is uniquely positioned for this stimulus ... but the reality of getting the funding, of course, is challenging,” said Philip Giudice, commissioner of the Massachusetts Department of Energy Resources, which is charged with managing stimulus-backed projects in the State Energy Plan. The state was awarded its funding in February but did not receive final approval to begin spending until November.
“I would have loved to have gotten the money sooner, but I think it’s pretty neat that we’ve been able to mobilize our agency so quickly,” he added.
Company executives say the announcement of the grant award is just the first step in a detailed paper trail leading to the actual funding. Each grant is essentially a contract with terms and conditions that need to be negotiated and complied with in order to receive funding.
Sun Catalytix Corp., a Cambridge renewable fuels startup, was one of a handful of companies to receive funding — $4 million in this case — through the Advanced Research Projects Agency-Energy when the awards were announced in October. While the terms of the contract were not unreasonably onerous, it took time to organize the legal, accounting and related support to manage the award.
“For us I think it was more getting the process down and getting the company prepared. The next time we do it, it will be a much easier process,” said Amir Nashat, acting CEO of Sun Catalytix and a general partner at Polaris Venture Partners.
The company finalized its contract with the DOE Dec. 31 and has begun to add new executives and bill the energy department for its eligible purchases.
Companies that take stimulus money must provide detailed accounting and invoicing for qualifying expenses as well as comply with various rules, including prevailing wage laws and a so-called “Buy American” provision, included in the recovery act. Meeting the letter of the law requires some recalculation of processes for many service providers, even ones with long running relationships with the government.
“The biggest challenge has been instituting Davis-Bacon (prevailing wage laws), but we’ve been working with our vendor community on this and found solutions,” said John Wells, vice president of real estate and energy services for Action for Boston Community Development. ABCD has implemented the energy department’s low-income weatherization program in the city since its inception. Although “at one level this is just a continuation of what we’ve been doing,” Wells said there are also questions of whether the agency will have to adapt once again when the enhanced funding ends in March 2012.
Giudice of the state energy resources office said stimulus funds will be distributed more like a steady stream than the flood the public may have expected simply because the federal government is writing lump-sum checks. But he contends the approach allows the state and municipal governments to spread the wealth to multiple projects over several years.
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