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Audit Examines NC Energy Office

Federal funds are set to expire, while the 1975 law creating the office may not reflect current needs

A major source of funding for the State Energy Office, which is responsible for promoting energy efficiency and alternative fuels, will disappear next year if the General Assembly continues allocations at the present levels, the State Auditor’s Office said in an audit released Friday.

Over the last four years, 86 percent of the funding for the Energy Office came from federal Petroleum Violation Escrow funds, but the final payment from those funds is scheduled for 2005. As of May 2004, the Energy Office had $10 million in a trust account set up for those funds, but that money will be gone by next year if spending continues at present levels, auditors found.

State legislators requested a performance audit of the Energy Policy Council and the State Energy Office, which were created in 1975. The Energy Office is funding 80 energy projects, with an estimated total cost of $9.8 million through 2005. The Council and Energy Office are responsible for promoting energy efficiency, renewable energy sources, alternative fuels, and alternative-fuel vehicles. It also makes energy policy recommendations to state officials and plans for energy emergencies during natural disasters and supply disruptions.

Auditors found that the Council and the Energy Office generally are meeting the intent of the legislation, but the council has failed to submit a mandated annual comprehensive report to the governor and the General Assembly. In addition, a number of state agencies has failed to submit required energy plans and information to the Energy Office.

Auditors said that the legislation which created the Council and Energy Office has not undergone a major revision since 1975 and that it may no longer reflect the state’s energy landscape or needs. They also recommended that the Energy Office do a better job of maintaining centralized files for each grant project and monitoring projects that it finances.

“These programs were established in the 1970s in the wake of the national energy crisis,” State Auditor Ralph Campbell said in releasing the audit. “With a major source of federal funding expiring next year, it clearly is time for the state to evaluate its energy policies and needs for the future.”

The report is available online. Copies of the report may be obtained at the office’s web site. Printed copies of the report can be obtained by filing a request under the Audits section of the web site or by calling the Office of the State Auditor at 919-807-7500.