Budget would bust up state's green-energy agency

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CORRECTION

An Associated Press story on Page 4B Thursday about the State Energy Office, reported erroneously that Gov. Mike Easley and the state House want to cut the office staff. Budget proposals from both would maintain the Energy Office's full staff but provide state funding for only about half of the positions and rely on federal funds to cover the rest.

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Fuel from crops, super-efficient light bulbs, solar power and tax credits for homes that save energy -- they're among dozens of ideas casting a green hue on debate at the General Assembly this year.

But one of the biggest questions is how or even whether to keep the state agency charged with helping government, industry, universities and the public put those ideas into action.

The Senate budget tentatively approved Wednesday would dismantle the State Energy Office, splitting its functions between two other agencies. Gov. Mike Easley and House Speaker Joe Hackney want a smaller, but still separate office.

The proposals come at the same time the legislature is considering more than 40 bills related to energy conservation, renewable fuels, green business development, and the like.

"Go figure -- it's the energy session, and so far we haven't saved the State Energy Office," Hackney, a Democrat from Orange County said. But, he added, "We're a long time from finished here."

House and Senate budget-writers will spend the coming weeks working out differences in their spending plans to reach a final proposal for the biennium that starts July 1.

The disagreement over the Energy Office is based on funding and efficiency. First, the federal money that has fueled the office for 20 years -- from a court settlement for petroleum company overcharges in the 1970s -- has run out.

At the same time, critics question whether other agencies can do, or are doing, the same work. But State Auditor Leslie Merritt told Energy Office director Larry Shirley in a May 9 letter that his staff terminated an audit of the agency because it found no appreciable overlap.

Shirley believes a single agency is essential to creating "a comprehensive, cohesive state energy policy" while advising and sometimes directly helping government, industry and consumers to save energy and money through about 50 programs it administers across North Carolina.

Over the past 15 years, he said, the office's advice has saved state government $62 million in energy costs, while helping private businesses realize $170 million in efficiency savings.

"There is a very strong role that our office can play, and I would say to some extent we've been laying the groundwork for this with energy efficiency programs we've been running for the state," he said. "We're kind of showing people how to do this and how to go forward."

Competing proposals

The State Energy Office, part of the Department of Administration, has an annual budget of $7.3 million that funds 16 staff positions and offices in Raleigh and Asheville, as well as its programs.

The office is knee-deep in ongoing programs that are just now reaching fruition, including making state buildings more energy efficient and a requirement that agencies decrease their petroleum use by 2009, Shirley said.

Easley's budget cuts the staff to eight, offering $1.3 million in state funding for staff and grants.

The House proposes spending $600,000 to finance six staff positions and $10 million in energy-related grants.

The Senate proposal cuts six jobs and puts seven under the state Office of Construction, also part of the Administration Department. Another three would administer the office's federal research grants program from within the Department of Environment and Natural Resources.

All of the jobs would be federally funded, while $2 million in state money is earmarked for grants. A new deputy secretary of administration would oversee the state's energy policy.