Audit of the Hawai‘i State Energy Office

A Report to the Governor and the Legislature of the State of Hawai‘i

Hawaii State Auditor, Report No. 18-01, January, 2018

Auditor’s Summary

IN REPORT NO. 18-01, Audit of the Hawai‘i State Energy Office, we found that the Energy Office needs to better define its mission, role, and priorities within the State’s energy independence effort. For instance, the Energy Office could not provide us with documentation that clearly articulates its projects’ expected contributions to these goals, let alone the data that supports such accomplishments. We also found that the Energy Office’s strategic plan includes goals and targets that are unrealistic and may be impossible to achieve. Reporting on its more achievable strategic goals, such as “photovoltaic capacity per capita,” has been inconsistent.

Why did these problems occur? Federal stimulus funding through the American Recovery and Reinvestment Act and ambitious State clean energy goals energized the Energy Office, nearly doubling its staff from 20 in 2009 to 35 in 2012. These also helped remake the office from an organization whose major functions included outreach, information dissemination, and training to one that could pursue a wide variety of clean energy initiatives, including environmental studies, grid improvements, permitting facilitation, and support of alternative vehicles. However, the stimulus funding expired in 2012, and while the Energy Office has made some staffing adjustments, they have not been nearly enough.

Why do these problems matter? The Energy Office’s personnel costs now account for more than 90 percent of the office’s expenses. In FY2016, the Energy Office’s expenses exceeded its revenue by nearly $600,000 — decreasing the Energy Security Special Fund balance to $2.2 million. At its current rate of spending, the Energy Office is expected to substantially deplete the fund by FY2019. The Energy Office needs to better define its mission, role, and priorities in the State’s energy independence effort, and together with the governor and the Legislature determine if the State can afford to pay for this effort.

Lights Out?: Audit of the Hawai‘i State Energy Office…

In our audit, we encountered an organization at a crossroads: The Energy Office no longer has the funding to continue its current level of operations, it cannot clearly articulate how its efforts have contributed to its stated mandate, and it has no plans for aligning and re-sizing operations to match its broad responsibilities and current fiscal realities. …

Summary of Findings

1. The Energy Office’s specific contributions to advancing the State’s clean energy initiatives are unclear. It could not provide us with any documentation or other evidence to show a project’s expected contributions to the State’s clean energy goals, let alone the data that indicates the project’s progress toward those goals.

2. The Energy Office’s strategic plan was developed and adopted in 2012, after the office had rapidly expanded operations and while it was expending a significant but temporary infusion of Federal moneys. The plan and its 2014 and 2016 updates include goals and targets that are unrealistic and may be impossible to achieve.

3. An imminent financial shortfall will significantly impact the Energy Office operations. In FY2016, its expenses exceeded its revenue by nearly $600,000 – decreasing the Energy Security Special Fund balance to $2.2 million. At its current rate of spending, the Energy Office is expected to substantially deplete the fund by FY2019….

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