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Energy program shuts after questions about politics, effectiveness

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Energy program shuts after questions about politics, effectiveness

HALLOWELL — A lawyer who was once Gov. John Baldacci’s counsel set up a "green" nonprofit organization that got a three-year, $3 million no-bid contract in 2010 through a state agency with the help of the governor.

That contract, designed to help Maine residents sign up for energy audits and retrofits, is not coming close to delivering on the results it promised.

Late Friday, the state agency that awarded the contract and the group founded by the Hallowell lawyer jointly announced the program was being shut down and the unspent money returned to the state agency, Efficiency Maine Trust.

That announcement came shortly after the Maine Center for Public Interest Reporting completed interviews on an expose of the program.

The center had interviewed the lawyer, Thomas Federle, a former counsel to ex-Gov. John Baldacci, and officials of the state agency overseeing the program between Friday, Jan. 21 and Wednesday. The next day, the board of Federle’s group, the Maine Green Energy Alliance, voted to end the grant and return unused funds to the state agency.

On Friday night at 10:30, the state agency and the alliance sent out a joint press release announcing that decision.

The center has spent weeks examining documents, e-mail and grant proposals related to the contract and a “green” nonprofit set up by Federle.

Among the center’s findings were that the state agency that awarded the contract, Efficiency Maine, was requested by a top Baldacci aide to include Federle’s group in a larger grant proposal to the federal Department of Energy, despite misgivings by some agency officials.

Federle says that politics and influence played no part in his organization getting included in the state’s grant and subsequently getting the award.

“I don’t think that had any direct bearing on the Maine Green Energy Alliance getting the grant,” Federle said.

“We had worked like dogs to be partners in that application,” he said. “We won the day on it, people agreed we added value.”

The center also found that, almost six months into its first year of the contract, the alliance had signed up only 50 households for energy retrofits, but had promised in its contract to have 1,000 signed up in 12 months.

At that rate, the alliance itself said it would cost $2,700 per household just to get homeowners to the point of signing up for a retrofit, which then can cost thousands of dollars.

Interviewed on Thursday about the center’s findings, Adam Lee, the board chairman of Efficiency Maine, said, “We are looking very, very carefully at what they’re doing because we have a fiscal responsibility to make sure the money is being spent efficiently.”

That same day – and just a few days before the next meeting of the board – the alliance board killed the project.

Its press release said that the alliance board had voted on Thursday “to wind down the activities of MGEA under a contract with the Efficiency Maine Trust.”

The press release quotes the executive director of Efficiency Maine, Michael Stoddard: “MGEA’s decision to end its project is a hard one, but it is the right one ...”

The money that the alliance will return to state agency will be used for rebates to Maine homeowners who are retrofitting their homes through a program run directly by Efficiency Maine.

The press release states that the rebate program was running out of money and the unspent funds from the alliance that are being returned will fund more than 1,000 “home energy savings programs.”

The release does not specify how much of the contract will be returned. The Efficiency Maine trust had approved funding up to $1.25 million for the first year of the $3 million, three-year contract, although the final contract was for $1.1 million. As of the last accounting given to the Center, the Alliance had spent $356,000.

Governor’s staffer intervenes

Federle worked as chief legal counsel for Baldacci from June 2005 to December 2006. In October 2008, Federle and Michael Mahoney, who succeeded him as Baldacci’s top lawyer, joined forces to open a law and lobbying firm in Hallowell.

In late summer of 2009, Federle was asked to work with a task force formed by Baldacci to forge a solution to the longstanding conflict over a trash incinerator in Biddeford, owned by Casella Waste Systems.

Federle said he was asked to handle regulatory and financing issues to upgrade the incinerator to provide low-cost heat and power to consumers; construct a recycling facility in Westbrook, and offer weatherization services to local residents.

A “huge challenge,” said Federle, was “how are we going to pay for all of this?”

Enter the federal government.

In September 2009, U. S. Energy Secretary Steven Chu announced a $454 million stimulus program called Retrofit Ramp-Up, that Chu said would “open new energy efficiency opportunities to whole neighborhoods, towns, and, eventually, entire states."

“When I read it, I couldn’t believe it, it looked like it was written for this task force,” Federle said.

But there was heavy competition for the federal money: The state also planned to apply for the grant.

The state’s proposal focused on making loans for residential upgrades.

In mid-November, Federle contacted John Brautigam, director of the energy programs at the state Public Utilities Commission about having Biddeford’s proposal adopted into the state’s.

Brautigam wasn’t convinced. The next day, he wrote an e-mail to Maine State Housing Agency head Dale McCormick:

“I am not seeing how their overall project fits with this,” Brautigam wrote, “but I see some connection with their idea of residential neighborhoods.”

Federle said the state “didn’t want a competing application.” He said he told state officials, “We have no intention of standing down.”

The DOE’s proposal deadline was Dec. 14. Over the next several weeks, staff at various state agencies debated the merits of including the Biddeford proposal versus the strength of one unified proposal.

Ian Burnes, a PUC program manager, reviewed Federle’s proposal and wrote in a Dec. 7 e-mail to state officials that “it seems too late to consider” the Westbrook recycling facility work “as part of our grant.” Burnes had also written in an earlier e-mail to Brautigam that the Westbrook facility “will eat the entire grant.”

Nevertheless, when the $75 million state grant proposal was sent off on Dec. 14 to the Department of Energy, it included $6.6 million for the Maine Green Energy Alliance.

Karin Tilberg, a staff member in Baldacci’s office, had intervened.

In a Dec. 11 e-mail from Brautigam to the Public Utilities Commissioners – Jack Cashman, Sharon Reishus and Vendean Vafiades (all Baldacci appointees) – Brautigam wrote:

“Yesterday we received a specific request from the Governor to find a way to include the Biddeford/MERC task force package in the proposal. ... Last night and this morning we have adjusted the $75 million proposal to include a sub-grant of $6.6 million to support the work recommend (sic) by the task force. We have been working closely with Tom Federle on this. ... Although it strays a bit from the core mission of building retrofits, I think this sub-grant will be fairly considered by the DOE.”

Tilberg said last week that she didn’t have a precise memory of the conversation.

“I am fairly certain I communicated with him in some manner about the desire to seek funding for this project if it had merit,” Tilberg said. But she said “it was not a hard ask.”

“I’m sure it was bigger for them than it was for me,” she continued. “In any message I made, any communication I had with Mr. Brautigam, it’s standard practice to make sure that the person understood that it would need to, that they could use their discretion and judgment that there was merit and justification for including it.”

Baldacci left office on Jan. 4 and has not established a public office and does not have a published telephone number. Attempts to reach him through the state Democratic party and his former spokesman and others were not successful.

Brautigam says he had already warmed to the idea of including the alliance proposal.

“I went from being sort of like kind of protective of our own concept to having an open mind about it, listening to different people’s input on what this concept could bring,” he said. “The governor’s request was certainly something we took very seriously. Obviously, when you work for state government, when the governor says you need to do something you pay attention.”

Federle then wrote the text for the governor’s letter of support for the entire state proposal, which was reviewed and approved by Tilberg.

The letter heaped praise on the alliance portion of the proposal, even though it represented less than 10 percent of the total amount requested.

There was only one problem: In January, the Biddeford project fell apart.

‘Greenwashing’

“The whole thing blew up,” said Sen. Barry Hobbins, who was a task force member. Biddeford Mayor Joanne Twomey had pulled out of the project, saying the entire plan was “putting lipstick on a pig,” and accusing the alliance of greenwashing what was essentially a project to get Casella stimulus money for its troublesome incinerator.

In late February, Sue Inches, of the State Planning Office, wrote Brautigam that she was getting questions about the grant. “I understand ... the Green Energy Alliance piece is falling apart and will be withdrawn from our proposal. ... We should touch base about this.”

Brautigam shot back an e-mail saying, “Please do refer people to me and I will handle it. And please don’t tell people that the MEGEA proposal has fallen apart and will be withdrawn. Who told you that?”

In April the feds announced Maine had been awarded $30 million of the $75 million it requested. The feds had included the alliance in the grant.

Brautigam left his state job in early March, when the program he ran was officially reincarnated as “The Efficiency Maine Trust” and Portland attorney Michael Stoddard was hired to run it. So it was Stoddard’s job to figure out what to do about the alliance part of the grant.

It wasn’t an easy thing to do. Staff at Efficiency Maine had largely concluded that Federle and the alliance had no concrete plan at that point.

“Do they think they’re just free to design any program they want in 4 towns that they pick?” wrote Stoddard in a May 16 e-mail to Efficiency Maine staffer Andrew Meyer. “(A) Would that be a good thing? (B) Is that what we said in the proposal to DOE?”

Meyer responded that “I didn’t get the impression that they had a plan with players, roles, action items, or budget.”

Stoddard, in turn, got tough with Federle in a subsequent e-mail:

“What I am concerned about, generally, is that beyond the basic concept of working closely with towns/communities, you guys are making this up as you go along. ... And meanwhile, I immediately have to submit a revised proposal and budgets to reflect what you are going to do with a $3 million no bid sub-grant.”

Despite his reservations, Stoddard kept Federle and the alliance in the grant, cutting their take down to $3 million from the original $6.6 Million.

The plan was that the alliance would complement Efficiency Maine’s loan program by working with towns – Cumberland, Scarborough, Topsham, Yarmouth, Buckfield, Old Town, Hampden and Belfast – to get them to adopt the ordinances to participate in the program and by convincing homeowners to do upgrades.

The alliance, said Stoddard, would “hold customers’ hands through the process.”

But documents show that Stoddard still had some problems to deal with.

One was that members of his staff and the public were beginning to question why the alliance was getting so much money to do work that that the agency itself was already doing, as were other groups, including a effort of environmental and religious groups called “Green Sneakers.”

‘Awkward appearances’

In a presentation to staff, Meyer questioned the alliance’s qualifications, stressed the “awkward appearances” of hiring “Gov. Baldacci’s former counsel” and argued that the agency’s outreach money could be more effectively spent through a competitive bidding process.

Ann Goggins, chairwoman of Falmouth’s energy commission, said she told Stoddard she felt the alliance was diverting money that should be spent on winterizing homes.

“The MGEA didn’t seem to fill an essential role in getting it there," Goggins said. "It looked like it was an entity in search of money.”

Stoddard’s solution, written in an e-mail to staffers Meyer and Elizabeth Crabtree, was to have the alliance pay off critics such as the Sierra Club: “Confidentially, we’ve gotten them to put about $250k into their Year 1 budget which they will use for sub-granting to community organizing/outreach program. This should take Opportunity Maine and Sierra Club off our backs ...”

Sierra Club climate coordinator Joan Saxe would not comment when asked for an interview. After the story was released, executive committee member Becky Bartovics of North Haven said the club never received any money from the alliance.

In June, the Alliance hired Seth Murray as executive director. But Federle continued to represent it in public, for example at a late October board meeting of the Efficiency Maine Trust.

Stoddard then asked the Efficiency Maine Trust board – all Baldacci appointees – to authorize the no-bid contract with the alliance. The board insisted that the alliance be given a one-year contract of up to $1.25 million, with an option for the other two years and additional $2 million.

It’s that contract that the alliance will now abandon.

Is Lee concerned that it appears that political favoritism may have pushed the state to use taxpayers’ money unwisely?

He said that while he doesn’t believe politics was behind the state’s contract with Federle and the Maine Green Energy Alliance, “I think the way politics works often doesn’t look good from the outside.”

Naomi Schalit is executive director and senior reporter for the Maine Center for Public Interest Reporting, a nonprofit, nonpartisan journalism organization based in Hallowell. She can be reached at mainecenter@gmail.com or online at pinetreewatchdog.org.