Feb. 23 (Bloomberg) -- President Barack Obama all but endorsed Xcel Energy Inc.’s project to upgrade its power distribution network. In Denver last week to sign the $787 billion federal stimulus package, Obama touted the company’s effort in nearby Boulder, which he said is “on pace to be the world’s first smart-grid city.”

Even with the president’s nod, Xcel faces a fight if it wants some of the $4.5 billion of government aid allotted for high-technology power systems.

“There’s going to be competition for that money,” said William Gausman, a senior vice president at Washington-based Pepco Holdings Inc., which is deploying its own smart grid across the District of Columbia and three states.

The battle for bucks marks the second round of lobbying over the biggest spending bill since World War II. Local governments, businesses and special interests that fought to convince Congress to fund their programs are moving the battleground to federal and state agencies that will decide who gets money for infrastructure, environment, education and other programs.

“This is a lobbyist’s delight,” said Steve Ellis, vice president of Taxpayers for Common Sense, a government watchdog group in Washington.

“Normally they lobby to get something into the bill and then they’re done,” Ellis said in an interview. “Now they get paid to make their project get funded.”

Getting Funded

Competition will be keen. Cisco Systems Inc. and IBM Corp. have been enlisted to lobby for a smart-grid project in Austin, Texas. PG&E Corp. is touting its current effort to install 9.3 million high-tech utility meters in California.

Besides Department of Energy grants, cities and counties are seeking part of $1 billion in water-reclamation funds from the Interior Department. The Environmental Protection Agency got $900 million to clean up pollution. Schools have a shot at more than $34 billion for academic and building grants from the Department of Education.

Congress designed the economic recovery plan with little detail, a strategy that helped the bill avoid fights over funding for lawmakers’ pet projects, or earmarks.

Members of Congress, for example, usually specify which projects the Army Corps of Engineers may fund every year, a list that adds several hundred lines to legislation.

The stimulus plan almost doubles the agency’s $5 billion annual budget in just 163 lines. The Corps is allowed to spend the new money on existing projects with few other strings attached.

‘Going Bonkers’

“Everybody who lobbies for Corps projects is going to be going bonkers,” Ellis said.

One of those lobbyists, Howard Marlowe, has been e-mailing clients at 2 a.m. and fielding calls from clients who want part of the money. Marlowe, president of Marlowe & Co., a Washington lobbying firm, is still examining the 1,073-page bill for new spending and grant opportunities.

“Now is the hard part, because we have to figure out who has control over the different pots of money,” Marlowe said in an interview. “Anything that is new is definitely wide-open territory, in terms of opportunity to at least make your case and influence their decisions.”

As Marlowe seeks funding for clients’ programs, the Sierra Club has the opposite challenge -- searching the states for local programs that can take advantage of billions of dollars in energy-efficiency and job-training grants.

Scott Elkins, the environmental group’s Minneapolis-based director for climate issues, said many such programs are so small that they’ll need outside help to attract federal aid.

“A lot of them are shriveled, but they still exist,” Elkins said.

Help Wanted

The recovery plan’s scope is so large that even the federal agencies charged with distributing the money need help. The Office of Management and Budget on Feb. 19 sent out 62 pages of criteria for implementing the recovery program. Some department heads, including Energy Secretary Steven Chu, are adding employees who will be devoted to stimulus spending.

“What keeps me awake at night is how we are going to spend it,” White House energy and climate coordinator Carol Browner said on Feb. 17. “It’s a lot of money, it’s an important amount of money, and it’s really, really essential that we spend it well.”

Energy and technology companies racing to set the standards for the nation’s next-generation energy grid have no shortage of ideas. A smart grid aims to lower energy costs and prevent outages with power lines and systems that would permit two-way communication between energy providers. It also will capture and store power from intermittent sources such as wind and move energy from remote sources to where it is needed.

Lofty Price

Development of new power systems comes with a lofty price. Minneapolis-based Xcel estimates that it will cost $100 million to connect 45,000 customers to its Boulder network. Austin’s Pecan Street Project, which intends to reach nine times as many customers, has no price tag yet. PG&E plans to spend $1.7 billion to install 9.3 million high-tech meters, and Pepco wants to install four times as many.

Because no one has built a smart grid yet, no one is sure how it will work or what technologies will win out. The stimulus package is giving companies a national stage on which to tout their ideas and get a leg up on the competition.

“To the extent that high-tech stuff is shovel-ready, we are shovel-ready,” said Jim Marston, regional director of the Environmental Defense Fund, a partner in the Austin project. He said Cisco, IBM and Sematech, a semiconductor-industry research group, are working to help the project win stimulus money.

“They’re folks who know how to get federal dollars and are getting us people to help make the case,” Marston said in an interview. “They give us bona fides. This is real and not just some pie in the sky.”

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net.

Last Updated: February 23, 2009 00:01 EST