Additional Actions Would Strengthen California’s Internal Controls for Implementing the Home Energy Rebates Programs

July 20, 2026

Additional Actions Would Strengthen California's Internal Controls for Implementing the Home Energy Rebates Programs

The Inflation Reduction Act of 2022 allocated $8.8 billion to the Department of Energy for the purpose of issuing grants to states, U.S. territories, and Indian Tribes for distribution to the public in the form of home energy rebates. The Department's Office of State and Community Energy Programs is responsible for oversight and guidance of the $581.5 million of grants awarded to the California State Energy Office (CASEO).

We initiated this inspection to assess CASEO's internal controls to administer its Home Energy Rebates programs under the Inflation Reduction Act of 2022.

We found that CASEO had not fully established, documented, and maintained an effective system of internal controls over the Federal award. Specifically, CASEO did not: (1) have a written policy for monitoring and assessing contractor performance; (2) document risk assessments that identified, analyzed, and responded to potential risks that could prevent the rebate programs from achieving their stated objectives; (3) ensure that a subcontractor had fully developed and documented program policies and procedures before approving the reservation of funds for proposed projects; and (4) use the U.S. Department of Treasury's Do Not Pay system to verify that recipients were not ineligible to receive Federal funds.

A fully established internal controls system helps protect Department funds and meet program objectives. Further, without well-documented policies and procedures, continuity of operations for the programs could be at risk when personnel normally assigned to complete those procedures are unavailable.

To address the issues identified in this report, we made two recommendations that, if fully implemented, should help strengthen CASEO's internal controls to implement the Home Energy Rebates programs.

• DOE-OIG-26-42.pdf (1.33 MB)