Advance EPact eNewsletter

EPAct 2005 Opportunities Await You...

Tax deductions offered through EPAct 2005 are currently available on qualifying lighting technologies placed into service between January 1, 2006 and December 31, 2007...so don't let the unprecedented opportunity to benefit from a lighting upgrade while taking advantage of government-sponsored financial incentives pass you by!

For more details on the commercial building tax deduction, consult the following existing as well as new and noteworthy resources:

EPAct 2005 Resources:

• For up-to-the-minute information on EPAct 2005 and related tax incentives, continue to visit www.efficientbuildings.org, www.energytaxincentives.org, or the NEMA website.

• Coming soon! A website devoted solely to providing information on lighting upgrade activities and related EPAct 2005 tax deduction opportunities . An offshoot of www.efficientbuildings.org, the dedicated site is scheduled to be launched in mid-April 2006 and can be accessed at www.lightingtaxdeduction.org (or.com).

EPAct Update From the Hill

As the major trade association for the electrical products industry, the Rosslyn, VA-based National Electrical Manufacturers Association (NEMA) was a key contributor to and driver behind the passage of EPAct 2005. Along with the organization they established and sponsor, the Commercial Building Tax Deduction (CBTD) Coalition, NEMA continues to lobby on behalf of the smooth and effective implementation of EPAct 2005 and its tax deduction opportunities.

The following is an update on NEMA's March 2006 lobbying and promotional activities and the status of EPAct tax provisions:

NEMA has continued to press the Internal Revenue Service to issue its official rulings on undefined technical details related to EPAct tax deduction eligibility and accounting. Issuance of these rulings has been delayed pending the IRS' receipt of a technical report from the Department of Energy working in conjunction with a national laboratory. Until the IRS publishes its rulings, however, NEMA is urging end users to move ahead with upgrade activities using the existing interim rules, good judgment, and thorough documentation.
As a result of NEMA's recent lobby activities, Senators Feinstein and Snowe officially introduced S. 2401 in March. This bill proposes extension of the commercial building tax deduction from 2007 to 2010. Development of this proposal was based on NEMA's argument that the nation's body of commercial buildings cannot feasibly initiate and complete all of the upgrades required to maximize energy savings and take full advantage of tax deduction opportunities in the two-year period currently allowed for this process.
NEMA and the CBTD Coalition have been working diligently to help promote awareness of EPAct 2005 and the availability of commercial tax deductions. Recent activities include:
- Coordination of an EPACT Commercial Buildings Energy Efficiency Tax Incentives Workshop sponsored by the Maryland Energy Administration. The event will be held on April 26th at the University of Maryland Inn & Conference Center and representatives from all of the mid-Atlantic states will be in attendance. For more information on this or other regional events, visit the CBTD Coalition or TIAP websites.
- Outreach to state utilities and public utility commissions to engage them in promoting awareness of the tax deduction opportunities to their customers. Information on how end users can take advantage of the tax provisions may appear as utility bill stuffers in the near future.
- Update of the www.efficientbuildings.org website with important new Frequently Asked Questions on the topics of bi-level switching and luminaire power.

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EPAct FAQs

Confused about the tax provisions within EPAct 2005? Following are answers to some of the marketplace's most popular questions surrounding EPAct 2005 tax deduction opportunities:

Question:: Is the $.60 per square foot tax deduction offered on qualified lighting upgrades an all-or-nothing opportunity?
Answer:: Not at all. While lighting upgrades alone are eligible for a total $.60 per square foot tax deduction (out of a total $1.80 per square foot deduction opportunity) if they result in a 40% or greater improvement in energy efficiency over ASHRAE 90.1-2001 standards, lighting efficiency improvements of even 25% over the standard will merit a tax deduction. These tax deductions are offered on a sliding scale for improvements between 25% and 40% over ASHRAE standards, with the major milestones shown below:

Improvement Over ASHRAE 90.1-2001 standards	EPAct Tax Deduction Opportunity
25% 30% 35% 40%	$.30 per square foot $.40 per square foot $.50 per square foot $.60 per square foot

Question:: Following a successful and eligible upgrade, who is the recipient of the tax deduction?
Answer:
: In the instance of a privately-owned business or building, the owner or party who paid to have the building constructed or renovated would be the recipient of the tax deduction. In the case of a government or other publically-owned facility, language within the Act (H.R. 6) specifies that the tax deduction will be extended to the party primarily responsible for designing the property and/or the upgrade. The market is still awaiting clarification and definition on this from the Federal government.
Question:: As there may be varying definitions of bi-level switching based on the state of residence, is there one standard definition for purposes of EPAct 2005 tax deduction eligibility?
Answer:: Some state regulations define bi-level switching in a particular way for their own jurisdictions. These are specific applications of a more general approach. Bilevel switching is defined as manual or automatic control (or a combination thereof) that provides two levels of lighting power in a space (not including off). A space is defined as an area enclosed by four or more floor to ceiling walls. Dimming or switching would satisfy this definition. Of course, besides satisfying the tax deduction requirements, an installation would also have to satisfy whatever the regulations are for the jurisdiction, which may, but typically don't, require bi-level switching.

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Leading with Lighting

The following real-life case study helps demonstrate how the Montgomery Park commercial tenant-lease building in Baltimore, Maryland improved its lighting quality and bottom line by pursuing a lighting upgrade:

Baltimore's Montgomery Park commercial facility recently took on a celebrated tenant – the Maryland Department of the Environment (MDE) – as well as a celebrated cause when it's management team agreed to pursue green building design within the 1.3 million square-foot structure's vintage architecture. To maximize energy efficiency and best utilize the 1920's-era facility's wealth of windows and natural daylight, management opted for a daylight harvesting system using photocell technology. In this scenario, a sensor essentially sends a signal to the building's lights, telling them how much dimming to engage based on available daylight levels.

“Continuous dimming with daylight trackers was an effective and affordable approach at Montgomery Park,” confirms property developer Sam Himmelrich, Jr. “The system works, it's straightforward and simple for end users to operate, and it minimizes energy use and maintenance requirements.” In the open areas where it's installed, Montgomery Park's daylight harvesting system is up to 20% more energy-efficient than standard upgrade designs.

A model of green design and energy-efficient lighting control, Montgomery Park stands as a testament to the optimal balance of nature and technology.

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News You Can Use

Electricity Rates Up 6.2% in 2005
According to mid-March 2006 data from the U.S. Energy Information Administration, the nation's average electricity rates in the year 2005 were 6.2% higher than they were in 2004, due largely to such factors as higher world oil prices and extreme weather conditions (including hurricanes Katrina and Rita). Electric kWh rates in the Commercial sector experienced the largest year-to-year increase, rising by 6.4% between 2004 and 2005, while electric rates in the Industrial and Residential sectors rose by 5.7% and 5.2% respectively during that period.

Average Retail Price of Electricity to Ultimate Customers
by End-Use Sector, 2005 vs. 2004 (Source: EIA)

Figure 5: Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, Year-to-Date through November 2005 and 2004

Electricity Usage Forecasted to Rise Significantly: According to the Energy Information Administration's just-released Annual Energy Outlook 2006 :

Electricity sales to the nation's commercial, industrial, and residential users are expected to increase by 50% between 2004 and 2030, from 3,567 billion kWh in 2004 to 5,341 billion kWh in 2030.
Electricity demand in the commercial sector is expected to lead this drive, growing by an estimated 75% during the upcoming quarter-century, with new telecommunications technologies and medical imaging equipment to be among the leading contributors to the growth in electricity demand.
In the residential sector, however, personal computers are expected to become far more energy-efficient over time, while industrial users are expected to help offset their growing needs for electricity through their rapid embracement of on-site generation.

Did You Know? The U.S. Department of Energy estimates that up to a third of the nation's electricity requirements could be met through “demand-side management” measures – activities that reduce energy consumption or modify patterns of usage (such as the installation of energy-efficient lighting products).

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Product Spotlight

Capitalize on EPAct Opportunities with Advance's Powerful New
e-Vision® Mini 39-Watt Electronic HID Ballasts for Metal Halide Lamps

Ideal for a variety of downlighting, track lighting, and accent lighting applications, Advance's powerful new e-Vision^® Mini 39-Watt electronic HID ballast for ceramic metal halide lamps offers retailers and other end users unprecedented design freedom as well as exciting new opportunities for significant cost reductions.

Operating on a line voltage of 120V at 50/60 Hz, the Mini 39-Watt ballast measures up to 30% smaller than comparable 20-Watt products while driving lamps nearly twice the wattage. Lasting two-three times longer than halogen and up to five times longer than incandescent alternatives, use of the Mini 39-Watt ballast minimizes re-lamping requirements and significantly reduces product and maintenance costs. The ballast's electronic circuitry ensures superior lamp wattage regulation and power control over lamp life, while its low-profile housing enables the sleek Mini 39-Watt ballast to blend easily into modern fixture designs, enhancing design flexibility and visual aesthetics. In addition, the product helps end users take full advantage of EPAct 2005 tax deduction opportunities by delivering the lighting power densities currently mandated by ASHRAE 90.1-2001 energy standards.

High-performing and energy-efficient, Advance's e-Vision Mini Electronic Ballast for 39-Watt ceramic metal halide lamps brings the comprehensive benefits of electronic HID technology to a broader range of market applications than ever before and offers a new and breakthrough approach to retail, institutional, and commercial lighting.

Visit our website literature page for details on our e-Vision Mini 39-Watt ballast.

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Customer Spotlight

Rob Colgan
Executive Director of Marketing for the National Electrical Contractors Association (NECA) and Chairman of the National Lighting Bureau (NLB)

On the impact that EPAct 2005 commercial tax deductions
will have on lighting upgrade activity.

"Through the availability of the new EPAct 2005 commercial tax deduction opportunities, end users have more reason than ever to take actions that were in their best financial interests anyway. Lighting upgrades make tremendous economic sense on their own based on the energy savings, quality improvements, and productivity enhancements they drive. Tax deductions now enable the market to pursue these activities and enjoy the additional financial benefits of accelerated depreciation. We are confident that the tax deduction opportunity will help raise the priority of lighting upgrades in the commerical sector relative to other capital investments that could be made and that this will truly benefit American businesses as well as the nation's broader energy profile."

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Tools of the Trade

Take an Energy Savings Tour of Your Lighting Upgrade Opportunities

Whether you're responsible for an office building, factory, hospital, or retail establishment, opportunities to upgrade your lighting and benefit from energy savings, cost reductions and quality improvements are likely present. With Advance's on-line energy saving building tours you can see just what types of lighting opportunities are potentially available in your building(s). Outlined for seven of the most popular building types:

Advance's online energy saving building tours can help you identify practical lighting upgrade strategies and the savings you can accrue by upgrading. Let Advance's energy saving tours help you pinpoint the magnitude of your facility's lighting opportunity and start you on the beneficial path to an upgrade today!

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Industry Calendar

Join 20,000 other end users and lighting industry professionals to view the latest lighting innovations at Lightfair International, North America's largest annual lighting trade show. The event takes place on May 28 th – June 1 st at the Las Vegas Convention Center in Las Vegas, Nevada. For more information, visit the Lightfair website.

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