A state investigation into the financial practices of the now-defunct Maine Green Energy Alliance has revealed examples of poor accounting and oversight, but no instances of missing money or inappropriate spending, according to people familiar with the probe.

The findings come three months after a legislative committee asked for an examination of how the alliance spent roughly $500,000 of a $1.1 million federal grant meant to expand home energy audits and weatherization through community organizing and education.

The alliance was phased out after falling far short of its goals, signing up only 50 homes. The remaining money was shifted to a successful rebate program that helped owners insulate their homes.

But questions raised in media reports about the origins of the alliance, its spending and hiring practices and apparent links to the Democratic Party led to legislative scrutiny and an investigation by the Office of Program Evaluation and Government Accountability.

The nonpartisan office does independent performance audits for the Legislature. Its findings are set to be presented to the Legislature’s Government Oversight Committee on Aug. 16.

The report has not been released publicly, but officials who have seen a recent draft or were briefed on it say the accountability office found inadequate financial controls and documentation, but no wrongdoing.

“They didn’t find a snake in the grass or issues that raised a red flag,” said Rep. Stacey Fitts, a Republican who is House chairman of the Energy, Utilities and Technology Committee, which asked for the probe.

In February, Fitts’ committee grilled alliance officials, as well as top management and the board chairman of Efficiency Maine Trust, the quasi-state agency that oversees weatherization efforts and was administering the federal grant.

The controversy cast a shadow over efforts by the year-old trust, which uses a surcharge on electricity bills to run programs that lower energy costs for homeowners and businesses. It will have a $20 million budget in 2012.

The trust hopes the report will show that it acted responsibly in shutting down the Maine Green Energy Alliance after becoming aware of performance problems, and that it has learned lessons about better oversight.

“I think it’s fair to say that we could have kept a closer eye on them,” Adam Lee, the trust’s chairman, said of the energy alliance. “But the report says over and over there’s no evidence of fraud or malfeasance. It does seem to chalk a lot of the problems up to inexperience.”

Michael Stoddard, the trust’s executive director, declined to discuss the findings but made this statement:

“We are satisfied that the board of trustees and the staff jumped on this situation quickly, and within six months had brought the project to a close and redirected the funds to a better program. We shut down a three-year grant after six months.”

Problems with the energy alliance were highlighted in February in a story by the Maine Center for Public Interest Reporting. Among other things, the story questioned the influence of Thomas Federle, who was counsel to Gov. John Baldacci, in obtaining the federal grant, and the subsequent hiring of several staffers with Democratic ties.

The Maine Republican Party charged that the alliance offered preferential treatment to key Democratic lawmakers, and that some workers may have engaged in political action, such as campaigning for legislative seats, while on the job.

It’s not clear how deeply the accountability office examined the political allegations. Fitts said he understands that while there was an appearance of improper conduct, no inappropriate actions were uncovered. Lee, a Democrat, said the hiring practices may have seemed questionable to some, but were not unusual.

“In many organizations, people tend to hire those who are like-minded and those they know,” he said.

Federle said he was unable to comment on the findings.

The committee didn’t specifically ask the Office of Program Evaluation and Government Accountability to examine the political charges. It asked it to explore three areas:

• How federal grant money was used.

• Whether the money was administered in keeping with requirements and laws.

• Whether all of the money has been properly accounted for.

The alliance was reimbursed by Efficiency Maine Trust for expenses, an accounting procedure meant to provide oversight. The alliance’s staff kept receipts, and its spending appeared to be legitimate, the draft report apparently indicates, but the purposes for spending weren’t always well documented or authorized.

The matter also was reviewed by the federal Department of Energy, which awarded the grant.

Federal officials came to Maine in June to review programs run by Efficiency Maine Trust, which has a $30 million federal award. No outstanding problems or concerns were noted, according to a letter sent after the visit. The letter does note the termination of the Maine Green Energy Alliance grant. It reads:

“Efficiency Maine conducted a thorough review of the recipient activities, expenditures and personnel actions, and did not find any indication of a misuse of federal funds by MGEA. Invoice reviews were also conducted, and costs were determined allowable per (Office of Management and Budget) circulars and DOE financial assistance regulations. The sub-award was closed out in January, 2011.”

With the state report pending and the Legislature adjourned, it’s too soon to know how Efficiency Maine Trust’s reputation will fare. The trust has completed the first year of a three-year plan to drastically cut Maine’s dependence on petroleum. To gain support, the trust is circulating a summary sheet with legislators and policy makers that shows how its programs will cut energy bills by $24.5 million next year, and create 2,750 jobs.

But this spring the trust failed to persuade lawmakers to increase the surcharge on electricity bills or extend a charge to heating oil, to fund more aggressive weatherization programs. Some lawmakers and Gov. Paul LePage oppose any programs that add to energy rates. Others simply don’t want the government involved in efficiency programs, preferring to let energy prices and market forces drive consumers’ action.

Fitts said that even if the trust can move beyond the public relations dustup caused by the Maine Green Energy Alliance, it will face a challenge to win broad support in the Legislature.

“They are still going to have to sell themselves,” Fitts said.

 

Staff Writer Tux Turkel can be contacted at 791-6462 or at: tturkel@pressherald.com