Application Guide High Energy Cost Grant Program.pdf

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United States Department of Agriculture

Application Guide High Energy Cost

Energy Grant Program

Rural Utilities Service Electric Programs

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at (202) 720-2600 (voice and TDD).

To file a complaint of discrimination write, USDA, Director, Office of Civil Rights, Room 326- W, Whitten Building, 14th and Independence Avenue, SW, Washington, DC 20250-9410 or call (202) 720-5964 (voice or TDD). USDA is an equal opportunity provider and employer.

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Table of Contents Application Guide High Energy Cost Energy Grant Program

Overview

Definitions

Developing the Proposal

Before you start

Determining Eligibility

Am I an Eligible Applicant for a High Energy Cost Grant?

Is My Community Eligible for A High Energy Cost Grant?

Identifying the Area for the Grant

Determining Community Energy Costs

Is My Project Eligible for A High Energy Cost Grant?

Ineligible Grant Purposes

Ready to Proceed?

Preparing the Application Package

Application Checklist for the High Energy Cost Grant Program

How will my Application be evaluated?

Evaluation Criteria and Weights

Submitting the Application

How to Submit an Application Package

Deadline for Submission and Late Applications

Appendix A - Resources

Target Area Worksheets for the High Energy Cost Grant

Geographic, Population, Income, and Community Characteristics Worksheet

Community Energy Characteristics Worksheet

Examples of Eligible Projects for the High Energy Cost Grant Program

Appendix B

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Appendix C

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OVERVIEW

The High Energy Cost Grant Program and Bulk Fuel Grant Program were created by Congress in November 2000 under the Rural Electrification Act of 1936 (7 U.S.C. 918a).

The High Energy Cost Grant Program provides financial assistance for the improvement of energy generation, transmission, and distribution facilities serving rural communities with home energy costs that are over 275 percent of the national average. The Program is administered through the Electric Program of the Rural Utilities Service (RUS), an agency of USDA Rural Development.

USDA published a Notice of Funding Availability (NOSA) in the Federal Register on October 12, 2017, requesting applications under the High Energy Cost Grant Program. The NOSA sets out the eligibility and application requirements for these competitive grants.

This Application Guide is intended to be used along with the NOSA. RUS is making available a total of up to $10 million in Fiscal Year 2017 for competitive grants for the High Energy Cost Grant Program under this NOSA. The number of grants awarded will depend on the number of applications submitted, the amount of grant funds requested, the quality and competitiveness of applications submitted, and the availability of appropriated funds.

For High Energy Cost Grant the maximum amount for a grant request that will be considered for funding under this notice is $3,000,000. The minimum amount for a grant application is $100,000.

Eligibility for the High Energy Cost Grant Program

To be eligible to receive a grant under this program:

You must be an eligible applicant as defined in the next section;

The grant project must serve an eligible community that meets the criteria of having extremely high energy costs (high energy cost benchmarks are presented below);

The proposed project must improve energy generation, transmission, or distribution facilities serving an eligible community; and The administrative costs of the project must not exceed 4 percent of grant funds.

Who is an Eligible Applicant?

You are eligible to apply you are any of the following:

a legally-organized for-profit or nonprofit organization such as, but not limited to, a corporation, association, partnership (including a limited liability partnership), cooperative, or trust;

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a State or local government, or any agency or instrumentality of a State or local government, including a municipal utility or public power authority;

an Indian tribe, a tribally-owned entity, or an Alaska Native Corporation;

an individual or group of individuals, or any of the above entities located in a U.S. Territory or other area authorized by law to participate in programs of the Rural Utilities Service or the Rural Electrification Act of 1936.

Is my Community Eligible?

Your community qualifies as an eligible extremely high energy cost community if average home energy costs in the area to be served are at least 275 percent of the national average under one or more the high energy cost benchmarks shown below. Eligibility may be established using average annual household expenditures for individual fuels or for total energy, or average per unit cost for home energy.

Fuel Average annual household expenditures benchmark

Average per unit cost benchmark

Electricity $3,904 $0.345 per kilowatt-hour Natural gas $1,828 $27.69 per thousand cubic feet Fuel oil $2,903 $6.25 per gallon LPG/Propane $3,110 $5.64 per gallon Total household energy $5,546 $61.87 per million BTUs

What Kinds of Energy Projects Are Eligible?

Grants under this program may be used for the acquisition, construction, installation, repair, replacement, or improvement of energy generation, transmission, or distribution facilities in communities with extremely high energy costs. On-grid and off-grid renewable energy systems, and energy efficiency, and energy conservation projects are eligible.

How to Apply

You must submit a grant application package prepared according to the directions contained in the NOSA to apply for a grant under these programs. The completed grant application consists of your narrative grant proposal with supporting documentation and all required forms and certifications. You must submit a complete application package

6 | P a g e consisting of three sets: one complete application marked “Original” with original signatures signed in ink on all forms and certifications and two complete copies marked “Copy 1” and “Copy 2”. All required forms listed in Appendix B of this Application Guide must be included. Grant applications may be submitted on paper directly to the Electric Programs at the address shown below or electronically through Grants.gov (http://www.grants.gov).

Deadline: December 11, 2017 at midnight Eastern Standard Time (EST).

IMPORTANT: The Deadline for applications is 60 days after publication of the NOSA in the Federal Register.

Paper application packages must be postmarked and mailed through the United States Postal Service or shipped through an overnight commercial delivery service by the application deadline of December 11, 2017, or hand delivered to the Electric Programs headquarters in Washington, DC by 4:00 pm EST, December 11, 2017. The Agency will accept all applications postmarked or delivered to us by this deadline. Late applications will not be considered.

Electronic Applications must be submitted to Grants.gov according to the instructions on that website on or before midnight (DST) December 11, 2014. Late or incomplete electronic applications though Grants.gov will not be accepted by USDA.

Registration Requirements All Applicants

Organizational entities that wish to submit either a paper or electronic application must provide a Data Universal Number System (DUNS) number on their SF 424 "Application for Federal Assistance”. If you do not already have a DUNS number or wish to confirm an existing DUNS number you may do so online at http://fedgov.dnb.com/webform or by calling 1-866-705-5711 (US Only). Federal grant applicants may obtain a DUNS number free of charge. More information on obtaining a DUNS number is available in the Applicants section of Grants.gov.

Organizational Applicants and sole proprietorships are also required to register with the System for Award Management (SAM), formerly the Central Contractor Registry (CCR).

Applicants may register for the SAM at https://www.sam.gov/. Completing the SAM registration process takes up to five business days, and applicants are strongly encouraged to begin the process well in advance of the application deadline specified in the NOSA.

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Individuals wishing to submit a grant application, using Grants.gov, are required to complete this one time registration process. Neither a DUNS number nor registration with the System for Award Management (SAM, formerly CCR) is necessary for applicants who are individuals (other than sole proprietorships).

Where to Submit Your Application

Paper Applications

A completed application package with original signatures and two copies must be delivered by prepaid United States Mail, overnight delivery service, or by hand to the Electric Programs in Washington, DC at the following address:

Rural Utilities Service, Electric Programs United States Department of Agriculture 1400 Independence Avenue, SW, STOP 1560 Room 5165-South Building Washington, D.C. 20250-1560

Mark the outside of the Envelope: "Attention: High Energy Cost Community Grant Program."

Applicants are advised that regular mail deliveries to USDA, especially of oversized packages and envelopes, continue to be delayed because of increased security screening requirements for Federal buildings. Applicants are advised to consider using Express Mail or a commercial overnight delivery service instead of regular mail. Applicants wishing to hand deliver or use courier services for delivery directly to the Electric Programs headquarters should contact the Agency representative in advance to arrange for building access. USDA advises applicants that because of intensified security procedures at government facilities, any electronic media included in an application package may be damaged during security screening. If an applicant wishes to submit such materials, they should contact the Agency representative for additional information

Electronic Submission of Applications

Applicants may complete and submit applications electronically through Grants.gov, the online Federal grants portal at http://www.Grants.gov. Applicants should be aware that before they can submit an application through Grants.gov, they must successfully complete several pre-registration steps with Grants.gov, including obtaining a DUNS number if needed, and registration with the System for Award Management before completing organization registration with Grants.gov. The Electric Programs will not accept applications directly online, by email or fax.

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Evaluation of Applications and Notification of Grant Awards

All timely and complete applications will be screened for eligibility and then reviewed and ranked by a rating panel composed of Agency employees according to the evaluation criteria set out in the NOSA. The Administrator will award grants based on rank order.

The Agency will notify you in writing whether you have been selected as a finalist for award. All applications must be complete; incomplete applications will not be considered under this NOSA. An actual award will only be effective on the Administrator’s approval of the Grant Agreement.

Application Guide

This Application Guide should be used with the NOSA published in the Federal Register to prepare your application. This guide provides additional information to help you determine whether your community is eligible under the program and how to complete your application package. The guide includes examples of eligible projects and suggested sources for obtaining the energy and population data that you will need to determine eligibility and support your application for the High Energy Cost Grant Program. All the required Federal forms and certifications are included in the Appendices.

IMPORTANT: If there are any differences between this guide and the requirements in the NOSA, the NOSA provisions will govern.

Copies of the NOSA and required forms are also accessible on the internet through Grants.gov, or the RUS Electric Programs website at https://www.rd.usda.gov/programs-services/high-energy-cost-grants or may be requested from the Agency Contact below.

For More Information:

Electric Programs, Rural Utilities Service United States Department of Agriculture, STOP 1560 1400 Independence Avenue, SW, Room 5165-S Washington, DC 20250-1560 Telephone: 202-720-9545 Fax: 202-690-0717 Email: mailto:energy.grants@wdc.usda.gov

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DEFINITIONS

As used in this Guide and the Notice of Funding Availability:

Agency means the Rural Utilities Service (RUS) of the United States Department of Agriculture.

Application Guide means the Application Guide prepared by RUS for the high energy cost grant program or bulk fuel grant program containing detailed instructions for preparing grant applications, and copies of required forms, questionnaires, and model certifications.

Area means the geographic area to be served by the grant.

Community means the unit or units of local government in which the area is located.

Extremely high energy costs means community average residential energy costs that meet or exceed one or more home energy cost benchmarks established by the Administrator at 275 percent of the national average residential energy expenditures as reported by the Energy Information Administration (EIA) of the United States Department of Energy.

Fuel means coal, oil, gasoline, and other petroleum products, and any other material that can be burned to make energy.

Home energy means any energy source or fuel used by a household for purposes other than transportation, including electricity, natural gas, fuel oil, kerosene, liquefied petroleum gas (propane), other petroleum products, wood and other biomass fuels, coal, wind, and solar energy. Fuels used for subsistence activities in remote rural areas are also included.

High energy cost benchmarks means the criteria established by the Administrator for eligibility as an extremely high energy cost community. Home energy cost benchmarks are calculated for total annual household energy expenditures; total annual expenditures for individual fuels; annual average per unit energy costs for primary home energy sources and are set at 275 percent of the relevant national average household energy expenditures.

Indian Tribe means a Federally recognized Tribe as defined under section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b) to include ‘‘* * * any Indian Tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act [43 U.S.C. 1601 et seq.], that is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.’’

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Person means any natural person, firm, corporation, association, or other legal entity, and includes Indian Tribes and Tribal entities.

Primary home energy source means the energy source that is used for space heating or cooling, water heating, cooking, and lighting. A household or community may have more than one primary home energy source.

RE Act means the Rural Electrification Act of 1936

State entity means an agency, department, or instrumentality, or political subdivision of any of the several States of the United States or the District of Columbia, exclusive of local governments.

State rural development initiative means a rural economic development program funded by or carried out in cooperation with a State agency or Indian Tribe.

Surface transportation means transportation by road, rail, or pipeline.

Tribal entity means a legal entity that is owned, controlled, sanctioned, or chartered by the recognized governing body of an Indian Tribe.

DEVELOPING THE PROPOSAL

Before you start

Read the Notice of Funding Availability (NOSA) published in the Federal Register on October 12, 2017 and become familiar with its requirements. The NOSA is available on the internet at http://www.grants.gov/ or on the RUS Electric Programs website at https://www.rd.usda.gov/programs-services/high-energy-cost-grants

This Application Guide MUST be used with the NOSA. If there are any differences in interpretation of this Application Guide and the NOSA, the NOSA takes precedence over information contained in this Application Guide. If there are any differences between the NOSA and USDA regulations, the regulations take precedence over the information contained in the NOSA and this guide. Program regulations are published in 7 CFR Part 1709. Your application will be rejected if it does not include the information, forms, and certifications required in the NOSA and if you do not include information to support your eligibility.

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DETERMINING ELIGIBILITY

Am I an Eligible Applicant for a High Energy Cost Grant?

Eligibility for these grants is established by law and regulation. As provided in program regulations eligible applicants include “persons, States, political subdivisions of States, and other entities organized under the laws of States” (7 CFR §1709.3).

You are eligible to apply for a grant under this program if you are any of the following:

a for-profit or nonprofit organization such as, but not limited to, a corporation, association, partnership (including a limited liability partnership), cooperative, trust or other entity organized under State law;

a sole proprietorship;

a State or local government, or any agency or instrumentality of a State or local government, including a municipal utility or public power authority;

an Indian tribe, a tribally-owned entity, or an Alaska Native Corporation; or an individual or group of individuals.

Entities or persons located in U.S. Territories, possessions or other areas authorized to receive the services and programs of the Rural Utilities Service or the Rural Electrification Act of 1936, as amended, are also eligible under this program.

In addition, you, the Applicant, must demonstrate the legal authority and capacity to enter into a binding grant agreement with the Federal Government at the time of the award and to carry out the proposed grant funded project according to its terms to be an eligible applicant. Your application must include information and/or documentation supporting your eligibility, legal existence, and capacity to enter into a grant agreement

If you have any questions as to whether you may be an eligible applicant or what additional information you must submit to establish your capability to contract with the Federal Government, please contact the Agency.

Individuals are eligible grant applicants under this program. However, any proposed grant project must provide community benefits and not be for the sole benefit of you or your household. As a practical matter, because this program addresses community energy needs and to facilitate compliance with Federal grant requirements, individuals will likely find it preferable to establish an independent legal entity, such as a corporation to actually carry out the grant project if they are selected.

Individuals or other applicants who intend to form a new, separate legal entity to carry out the grant project should indicate their intent in their applications. The new entity must be in existence and legally competent to enter into a grant agreement with the Federal

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Government under appropriate State and Federal laws before a final grant award can be made. It does not have to be in existence when you submit an application.

Is My Community Eligible for A High Energy Cost Grant?

The grant project must benefit communities with extremely high energy costs. The RE Act defines an extremely high energy cost community as one in which “the average residential expenditure for home energy is at least 275 percent of the national average residential expenditure for home energy” as determined by the Energy Information Administration (EIA) using the most recent data available (7 U.S.C. 918a).

To qualify, average annual household expenditures for all energy must meet one or more of the High Energy Cost Benchmarks published in the NOSA and shown in Table 1.

To establish community eligibility:

You must clearly define the geographic areas that will be included in the grant’s area, and You must demonstrate that each of the communities in the proposed area meets one or more of the high energy cost benchmarks.

Identifying the Area for the Grant

You must identify and describe the areas and communities to be served by the proposal and include this information in the application. Box A herein includes Internet information resources that may be helpful in assembling information on your community and home energy costs.

The area may consist of all or part of one or more counties, cities, towns, villages or unincorporated areas. An area may include localities in more than one State. The smallest area that may be designated as an area is a 2010 Census block. Using Census blocks allows applicants and the Agency to locate the area easily and to determine its population.

Identify the area and all communities in the area by county, name of city, town, village or other incorporated unit of local government, and any Census Designated Places (CDPs) in unincorporated areas. We are requesting that applicants provide Census 2010 population figures for their proposed areas, including population of all cities, towns, villages, and CDPs in the area. If your proposed area includes rural unincorporated areas, consult the census maps at the U.S. Census Bureau website to determine if any part of the area includes any CDPs. For unincorporated areas that are outside of cities towns and CDPs, applicants may report population estimates based on total population of included census tracts/blocks or by reporting the county population outside of places.

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For unincorporated areas that are not CDPs, provide a project name description that allows reviewers to identify the approximate location of the area. These areas may be identified by Census blocks or by zip code. You must include community identification and Census 2010 population information in your project description in the narrative proposal.

Appendix A contains a worksheet that may be helpful for collecting and presenting community information in table form.

Census Information Online. To obtain Census-related information from the Internet, go to the Census “United States Census 2010, It’s in our hands” at http://2010.census.gov/2010census/.

On the website, you can determine the boundaries of any CDPs and Census blocks in your area by going to the 2010 Census Interactive Population Map http://2010.census.gov/2010census/popmap/ . Type in your area on the map and then click on the geographic level that you are seeking.

In addition to population figures, the 2010 Census data also can provide current information on household size, housing units, and major heating fuels in your local community that can serve as a credible source for estimated energy use or expenditures.

Determining Community Energy Costs

After identifying the area, the next step is determining whether the area is eligible. Your area will qualify as an extremely high energy cost community if you establish that it has home energy costs that exceed 275% of the national average under one or more high energy cost benchmarks. The NOSA gives you several options for demonstrating eligibility based on local community energy characteristics.

The statutory definition of an extremely high energy cost community sets a very high threshold for eligibility. Based on available published information on residential energy costs, USDA anticipates that only those communities with the highest energy costs across the country will qualify under this standard.

The Agency has calculated high energy cost benchmarks based on national average home energy expenditures. The benchmarks are shown in Table 1. Communities must meet at least one of the benchmarks to qualify as an eligible beneficiary of a grant under this program. These benchmarks are calculated from EIA’s estimates of national average residential energy expenditures.

Your application must demonstrate that each community in the proposed area meets or exceeds one or more of these high energy cost benchmarks to be eligible for assistance under this program. You must investigate and provide credible, documented local energy cost information in your application to support your eligibility under this program. The

14 | P a g e information resources in Box A may be useful in developing information on community energy costs for your application.

Appendix A includes a worksheet that may be helpful in collecting and presenting this community energy information in tabular form. Appendix A also includes several examples of eligible projects and community eligibility determinations.

NOTE: A community may include identifiable portions of larger utility service territories, or sub-units of local governments that are not otherwise eligible, as long as the area itself is characterized by extremely high energy costs

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Box A - Information Resources

U.S. Census Bureau Population Information

Census Bureau Home Page

American FactFinder -- get population data, locate census blocks, and create Reference Maps, Thematic Maps, and Custom Tables containing Census 2010 Census Tract data:

http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml

EIA Residential Energy Information

EIA Residential Energy Information -http://www.eia.doe.gov/emeu/consumption/index.html

EIA Residential Energy Consumption and Expenditure Surveys 2009 Data and Reports, Summary Statistics http://www.eia.gov/consumption/residential/data/2009/

Electricity

Retail Sales and Average Revenues per Kilowatt-Hour by Sector, State, and Utility --http://www.eia.doe.gov/cneaf/electricity/esr/esr_sum.html

Natural Gas

Natural Gas Prices by Sector, Nationwide and by State:

U.S. Total Natural Gas Consumer Prices http://tonto.eia.doe.gov/dnav/ng/ng_pri_top.asp

Natural Gas Data http://www.eia.doe.gov/oil_gas/natural_gas/info_glance/natural_gas.html

Fuel Oil

Annual Residential Heating Oil Prices by State http://tonto.eia.doe.gov/dnav/pet/pet_sum_mkt_dcu_nus_a.htm

Propane

Propane Prices by Sales Type and State

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United States Department of Agriculture

Rural Utilities Service, Electric Programs Homepage https://www.rd.usda.gov/programs-services/all-programs/electric-programs

Rural Development Homepage http://www.rd.usda.gov

Economic Research Service -- State and County Unemployment and Median Income https://www.ers.usda.gov/data-products/county-level-data-sets/

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Table 1 - Annual Average Per Unit Residential Energy Costs

Annual Average Per Unit Residential Energy Costs

Energy Information Administration, United States Department of Energy, 2009 Residential Energy.

Consumption Survey--Detailed Tables, available at:

http://www.eia.gov/consumption/residential/data/2009/

The RUS benchmarks calculations include adjustments to reflect the uncertainties inherent in EIA’s statistical methodology for estimating home energy costs. The benchmarks are set based on the EIA’s lower range estimates using the specified EIA methods.

Fuel Average annual household expenditure (national average)

Extremely high energy cost annual expenditure benchmark (275% of national average)

Electricity

$1,420 per year $3,904 per year

Natural Gas $665 per year $1,828 per year

Fuel Oil $1,056 per year $2,903 per year

LPG/Propane $1,131 per year $3,110 per year

Total Household Energy Use $2, 017 per year

$5,546 per year

Fuel National Average

275% of national average per unit cost benchmark

Electricity $0.126 per kWh

$0.345 per kWh

Natural Gas $10.07 per thousand cubic feet

$27.69 per thousand cubic feet

Fuel Oil $2.27 per gallon

$6.25 per gallon

LPG/Propane $2.05 per gallon

$5.64 per gallon

Total Household Energy cost per BTUs $22.50 per million BTUs

$61.872 per million BTUs

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Demonstrating Eligibility Using Average Annual Household Expenditures

The annual expenditure benchmarks are set at 275 percent of the average yearly household cost for major commercial energy sources for the typical household in eligible extremely high energy cost communities. There are a variety of methods for establishing average community home energy costs. This section provides guidance in determining your community energy costs for eligibility purposes. In calculating annual home energy use, fuels used in subsistence activities in remote areas may be included, but other transportation fuel uses should be excluded.

Electricity. EIA estimates that the average annual household expenditure for electricity is $1,420 at an average price of about $0.126 per kWh. To qualify as an extremely high energy cost community under this benchmark, you must show that the community average annual residential electricity expenditure in your area exceeds the electricity expenditure benchmark of $3,904 per household or an average price of $0.345 per kilowatt hour.

For communities with commercial electric service, applicants may demonstrate eligibility using any one of three alternative approaches:

1. Actual average annual household expenditure data from the local electricity provider or regulatory authority; or

2. Average annual revenues per residential customer for the local electric utility as reported to or by the EIA, other government agencies, or commercial utility data sources; or

3. Estimated average annual household electricity expenditures based on available information on community housing characteristics, standardized residential energy consumption profiles, local energy cost data, and local climate conditions affecting energy use. (Applicants using this alternative should clearly explain the methodology and data sources used and why localized electric utility information is not available.)

Adjustments to historical community electricity costs are appropriate to account for variations in weather conditions, fuel prices, or unusual circumstances causing a substantial divergence of present or future residential electricity costs from historical patterns. If you are relying on adjusted data, be sure to include an explanation for why historical data has been adjusted and the methodology used.

Special note for rural communities in Alaska that receive Power Cost Equalization (PCE) payments for residential customers: The household annual expenditure for electricity should include the PCE credits to reflect the actual cost of providing electricity.

EIA information on residential electric revenues for electric systems in Alaska includes PCE payments in the residential revenues. For example, a local electric system reported average residential revenues per kilowatt hour of $0.45 cents which reflects a PCE payment for eligible loads of $0.23 per kWh. Because of the PCE payment the actual average cost to

19 | P a g e residential customers is reduced $0.22 per kilowatt hour. For purposes of determining eligibility, applicants should use the actual cost to serve of $0.45 cents per kWh, not the subsidized PCE rate.

Natural Gas. EIA estimates that the national average household expenditure for natural gas is $665 at a cost of about $10.07 per thousand cubic feet. To qualify as an extremely high energy cost community under this benchmark, you must show that the community average annual residential natural gas expenditure in your area exceeds the natural gas benchmark of $1,828 per household or an average price of $27.69 per thousand cubic feet.

Applicants may demonstrate eligibility using any one of three alternative approaches:

1. Actual average annual household expenditure data from the local natural gas distributor or regulatory authority; or

2. Average annual revenues per residential customer for the local natural gas utility as reported to or by the EIA, other government agencies, or commercial utility data sources; or

3. Estimated average annual household natural gas expenditures based on available information on community housing characteristics, standardized residential energy consumption profiles, local energy cost data, and local climate conditions affecting energy use. (Applicants using this alternative should clearly explain the methodology and data sources used and why localized natural gas utility information is not available.)

Adjustments to historical community household expenditures for natural gas are appropriate to account for variations in weather conditions, fuel prices, or unusual circumstances causing a substantial divergence of present or future residential energy costs from historical patterns. If you are relying on adjusted data, be sure to include an explanation for why historical data has been adjusted and the methodology used.

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Fuel Oil. According to EIA, the average household expenditure for fuel oil is $1,056 per year at approximately $2.27 per gallon. To qualify as an extremely high energy cost community under this benchmark, you must show that the community average annual residential fuel oil expenditure in your area exceeds the benchmark of $2,903 per household or an average price of $6.25 per gallon.

Applicants may demonstrate eligibility using any one of three alternative approaches:

Actual average annual household expenditure data from a local fuel oil distributor; or

Average annual household fuel oil expenditures based on data reports or surveys from EIA, other government agencies, private agencies, or commercial data sources; or

Estimated average annual household fuel oil expenditures based on available information on community housing characteristics, standardized residential energy consumption profiles, local energy cost data, and local climate conditions affecting energy use.

(Applicants using this alternative should clearly explain the methodology and data sources used and why localized fuel oil information is not available.)

Adjustments to historical community household expenditures for fuel oil are appropriate to account for variations in weather conditions, fuel prices, or unusual circumstances causing a substantial divergence of present or future residential energy costs from historical patterns. If you are relying on adjusted data, be sure to include an explanation for why historical data has been adjusted and the methodology used.

Special Note for communities that use kerosene, gasoline, or diesel as major household energy fuels: EIA does not report or calculate national average residential expenditures for kerosene, gasoline, or diesel as major household fuels and the Agency has not established benchmarks for those fuels. Applicants with communities that have substantial reliance on these fuels as household energy sources, may use the benchmark for fuel oil, or may include expenditures for these fuels in qualifying under total energy expenditures.

Propane/LPG. EIA estimates that the average annual residential expenditure on propane or liquefied petroleum gas (LPG) as a primary home energy source is $1,131 per year at approximately $2.05 per gallon. The extremely high energy cost benchmark for average annual expenditures for communities that use propane as a major home energy source is $3,110 per household or an average price of $5.64 per gallon.

Applicants may demonstrate eligibility using actual or estimated community average propane consumption and expenditures. Adjustments to actual prices for the effects of weather patterns or changes in propane prices are appropriate. Because there are few published sources for residential propane prices in rural areas, applicants must provide

21 | P a g e adequate documentation for actual or estimated local propane prices and the methodology they used to estimate average household expenditures.

Total Household Energy Use. EIA has estimated the national average household energy expenditure for all non-transportation energy sources is $2,017 per year at an average cost of $22.50 per million BTU. To qualify as an extremely high energy cost community under this benchmark, average annual residential energy expenditure (for all non-transportation uses) must exceed $5,546 per household or an average price of $61.87 per million BTU.

A community that does not meet the benchmarks for individual home energy sources may nevertheless qualify based on total expenditures for all home energy use. For example, a community with an average annual household fuel oil cost of $2,800 and an annual average household electricity cost of $2,800 would not qualify as an extremely high energy cost community under the benchmarks for fuel oil or electricity. However, the community is eligible under the program because the combined average total household energy expenditure of $5,600 exceeds the extremely high energy cost benchmark for average total annual household expenditures of $5,546.

Applicants should refer to the discussion above for guidance on energy expenditure and consumption information sources for individual energy sources used to determine total household energy use and expenditures.

Demonstrating Eligibility Using Per Unit Energy Costs

The per unit energy cost benchmarks reflect the average annual per unit cost for major commercial household energy sources in extremely high energy cost communities. To be eligible under this grant program, the average residential per unit cost for major commercial energy sources in the area or community must exceed at least one of the per unit energy cost benchmarks shown in Table 1. Applicants generally should use historical residential energy cost data where available. Estimates may be used if actual data is not available or does not adequately represent the costs of providing home energy services in the area.

Electricity. To be eligible under this benchmark, the average annual per unit cost of electricity must exceed $0.345 per kWh. There are a variety of acceptable measures that can be used to establish that community costs meet the eligibility benchmark. Common measures include the local utility’s standard residential per kWh rate or annual average revenues per kilowatt hour for residential customers. Sources of actual per unit costs include the local electric provider, Federal and State agencies, and commercial energy information services. Estimates may be used if actual information is not available, the area does not have on-grid electric service, or the historical price information is not an adequate reflection of the community home energy costs. The example projects in Appendix A provide examples where per unit electricity costs were estimated. As discussed for the

22 | P a g e total expenditure benchmarks above, adjustments to historical data are appropriate to account for differences in weather, fuel prices, or other circumstances.

Natural Gas. The average annual per unit cost of natural gas must exceed $27.69 per thousand cubic feet to be eligible under this benchmark. Acceptable sources for natural gas information and appropriate adjustments are the same as indicated in the above discussion of annual expenditures benchmarks.

Fuel Oil. The annual average per unit cost of residential fuel oil must exceed $6.25 per gallon to be eligible under this benchmark. Acceptable sources for fuel oil information and appropriate adjustments are the same as indicated in the above discussion of annual expenditures benchmarks

Propane/LPG. The average annual per unit cost of propane or LPG as a primary home energy source must exceed $5.64 per gallon to be eligible under this benchmark.

Acceptable sources for propane/LPG information and appropriate adjustments are the same as indicated in the above discussion of annual expenditures benchmarks

Total Household Energy. Communities may also qualify if the total annual average residential energy cost exceeds the benchmark of $61.87 per million BTU.1 This figure is 275 percent of the national average. To derive this estimate, you should determine the annual consumption and expenditures for common home energy services including space heating, cooling, water heating, water pumping, refrigeration and food preservation, cooking, lighting, appliances, and laundry. In many instances home energy services may be delivered differently in remote rural areas and the costs may not be reflected in a typical residential bill.

Where community energy consumption or energy cost data is incomplete or lacking, the applicant may substitute estimates based on engineering standards and available community, regional, or local data on energy expenditures, consumption, housing characteristics and population.

Per BTU expenditures are calculated by adding together total expenditures for all energy sources and dividing by average total home energy use on a BTU basis. Applicants should use the conversion factors in Box B to estimate home energy usage in BTUs in making these calculations.

1 NOTE: BTU is the abbreviation for British Thermal Unit, a standard energy measure. A BTU is the quantity of heat needed to raise the temperature of one pound of water 1 degree Fahrenheit at or near 39.2 degrees Fahrenheit. In estimating average household per unit energy cost on a BTU basis, different home energy sources are converted to a standard BTU basis.

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Box B

Converting Energy Fuel Units to British Thermal Units (BTUs)

In estimating total average household per unit energy costs, it is necessary to convert common home energy sources to a standard BTU basis.

A BTU (British Thermal Unit): is defined as the amount of energy required to increase the temperature of 1 pound of water by 1 degree Fahrenheit, at normal atmospheric pressure.

By expressing energy consumption in BTU, different energy sources can be compared and aggregated in common units.

Applicants should use the following EIA BTU conversion factors for residential energy use:

Energy Source BTU Equivalent Unit Electricity (delivered/on site) 3,412 kilowatt-hour Natural gas 1,027 cubic foot Fuel Oil No.1 135,000 gallon Kerosene 135,000 gallon Fuel Oil No.2 138,690 gallon LPG (propane) 91,330 gallon Wood 20,000,000 cord

Supporting Energy Cost Data

Your application must include information that demonstrates eligibility under the high energy cost benchmarks for your area. You must supply documentation or references for actual or estimated home energy expenditures or per unit energy costs that you are relying on to meet the eligibility benchmarks.

Historical residential energy cost or expenditure information from the local commercial energy providers are the preferred sources of information. However, in some cases, local commercial energy provider data may be unavailable or may not present an adequate measure of energy costs in the area. Other potential sources of home energy related information include Federal and State agencies, local community energy providers such as electric and natural gas utilities and fuel dealers, and commercial publications. Estimates are appropriate if these sources are not adequate as discussed below.

Use of estimated home energy costs. Where community data are incomplete or lacking or where community-wide data do not accurately reflect the costs of providing home energy

24 | P a g e services, you may substitute estimates based on available community energy data and engineering standards. The estimates should use available community, local, or regional data on energy expenditures, consumption, housing characteristics and population.

Estimates are appropriate where, for example, the area is without electric service. For example, engineering cost estimates reflecting the incremental costs of extending service could be used to establish eligibility for areas without grid-connected electric service.

Information to support high energy cost is subject to independent review by the Agency.

Applications that contain information that is not reasonably based on credible sources of information or sound estimates will be rejected. Where appropriate, the Agency may consult standard sources to confirm the reasonableness of information and estimates provided by applicants in determining eligibility, technical feasibility, and adequacy of proposed budget estimates.

Why alternative measures are appropriate. We concluded following our review of the EIA RECS data and the LIHEAP program information that eligibility criteria should provide several alternative measures of extremely high energy costs to accommodate the lack of a standardized national data base of local community energy consumption and price.

Reliance on total annual household energy expenditure alone does not provide an adequate measure of residential high energy costs in many rural communities. Total energy expenditures reflect the amounts and type of energy used, per unit costs of energy. These measures are in turn influenced by the size and condition of the housing units, family size and income, appliance use, climate, and annual weather variations. For example, on average lower income families tend to spend less on energy on a per household basis than upper income families because they tend to live in smaller homes with fewer energy consuming appliances, and have less disposable income. However, lower income families spend a much higher portion of their total family income on energy than upper income families. On average, families that live in regions with both high heating and high cooling demand tend to have higher energy bills than those in more moderate climate zones.

Reliance on historical commercial household energy expenditures or per unit energy costs alone in determining eligibility could ignore one of the most adverse impacts of extremely high energy costs in rural communities. Rural consumers, particularly those with low or modest incomes, may limit or do without commercial energy sources either because of the extremely high cost or its limited availability. Examples include homes without on-grid or any electric service; homes dependent on firewood for heating and homes left unheated or uncooled because of the expense or lack of service.

Use of average “out-of-pocket” household energy cost data may also yield a misleading picture of extremely high energy costs in some rural areas where some or all of home energy expenditures are not paid directly by the residential consumers. These include communities where some or all residential energy costs are paid by the landlord or housing

25 | P a g e service, or through heating or energy assistance payments, or by welfare or other community programs. For example, some Native American communities have a single electric meter, and service to all connected homes is paid for by the tribe directly to the electric utility. In some extremely high energy cost communities in Alaska, as a further example, critical household energy services such bathing, laundry, and food storage are provided and paid for through shared community facilities rather than by individual households. In these localities, household commercial energy expenditures would not capture the costs of all home energy uses. In such cases, it would be appropriate for applicants to estimate the equivalent localized costs of providing home energy services comparable to national or regional usage standards using available local data.

Is My Project Eligible for A High Energy Cost Grant?

Grants under this program may be used for the acquisition, construction, installation, repair, replacement, or improvement of energy generation, transmission, and distribution facilities in communities with extremely high energy costs.

Examples of eligible activities include:

Acquisition, construction, replacement, repair, or improvement of:

Electric generation, transmission, and distribution facilities, equipment, and materials, including associated and supporting activities; land or right of way acquisition, engineering and professional expenses, permitting costs;

Natural gas distribution or storage facilities and associated equipment and activities serving residential customers or community use;

Petroleum product storage and handling facilities serving residential or community use; Renewable energy facilities used for on-grid or off-grid electric power generation, water or space heating, or process heating and power (renewable energy sources include solar, wind, hydropower, or biomass technologies); or Backup up or emergency power generation or energy storage equipment, included distributed generation installed on consumer premises.

Implementation of energy efficiency, energy conservation measures such as weatherization of residences and community facilities, energy-efficient or energy saving appliances and devices as part of a coordinated demand management or energy conservation program.

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The above examples are illustrative and are not meant to limit the projects that you may propose in your application. An activity that meets the objectives of providing or improving energy service or reducing the costs of energy services to eligible communities is an acceptable grant purpose.

Ineligible Grant Purposes

Certain activities and expenses cannot be financed out of grant funds. You may not use grant funds for: preparation of the grant application, payment of utility bills, fuel purchases, routine maintenance or other routine operating costs, or purchase of equipment, structures, or real estate not directly associated with provision of community energy services. In general, grant funds may not be used to support projects that primarily benefit areas outside of eligible communities. However, grant funds may be used to finance an eligible community’s proportionate share of a larger energy project. Grant-funded projects must provide community benefits and not for the primary benefit of a single household or business.2

This grant program is not…