Introduction

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National Update: EPAct 2005

IRS Unveils Procedure Enabling Commercial Property Owners to Qualify for Energy Efficiency Deduction

• Topics discussed during the recent June 27th meeting of the Commercial Tax Deduction Coalition in the Washington, D.C. area included the June 2nd IRS rulings (Issue IR-2006-088, Notice 2006-52, detailing the official procedures by which commercial building owners or leaseholders can qualify for the tax deduction for making their building energy efficient), the use of ASHRAE standard 90.1 methodology in calculating energy savings, and the status of congressional tax extender legislation. The National Electrical Manufacturers Association (NEMA) has drafted and is currently finalizing a response to the IRS' June rulings, noting errors and suggesting alternative approaches.
  
  
• Though highly supported by both the Congress and Senate, extension of the commercial building tax deduction continues to be postponed for consideration until later in 2006 or 2007 due to the government's excessive docket of issues currently under discussion. As of June 2006, five separate bills have been introduced (by Senators Baucus, Grassley, Conrad, Cantwell, and Clinton) proposing the extension of the commercial tax deduction from its current deadline of 2007 to anywhere between 2010 and 2014.
  
  
• On July 18th and 20th, 2006, Capital Lighting & Supply hosted two mid-Atlantic seminars to discuss how business owners can “Put The Lighting Tax Deduction To Work For Your Building(s).” The seminars, sponsored by Lutron Electronics, Advance, Sylvania, Cooper Lighting, and Capital Lighting & Supply, featured experts from both the building and national lighting supply community and were held for building owners and managers on July 18th in Greenbelt, MD and on July 20th in Richmond, VA.
  
  
• On September 14th, 2006, the World Energy Engineering Congress will feature two presentations on the Energy Policy Act of 2005. The conference will be held in the Washington Convention Center in Washington, D.C. For more information, visit www.energycongress.com.

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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:

• On June 2nd, the IRS issued Notice IR-2006-088, its official procedures enabling commercial property owners to qualify for energy efficiency deductions. Information describing the contents and qualifications for the certification are listed in Notice 2006-52, Deduction for Energy Efficient Commercial Buildings, which can be found at www.irs.gov.
  
  
• Newly available! A website devoted solely to providing information on lighting upgrade activities and related EPAct 2005 tax deduction opportunities was recently launched at www.lightingtaxdeduction.org.
  
  
• For up-to-the-minute information on EPAct 2005 and related tax incentives, continue to visit www.efficientbuildings.org, www.energytaxincentives.org, or NEMA.org.

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Leading with Lighting

The following real-life case study helps demonstrate how a leading fashion retailer improved its lighting quality and bottom line by pursuing a lighting upgrade:

With a firm goal of reducing energy costs while maintaining light output, a well-known specialty retailer of men's, women's, and children's clothing and accessories recently undertook a lighting upgrade throughout its network of 1,000 stores nationwide. Assessing its lighting system, the retailer realized that significant energy and maintenance cost could be saved by upgrading from its 75-150 watt incandescent halogen lamps to a more energy-efficient configuration within its 5-8,000 square-foot stores.

Following extensive analysis by its in-house lighting design team, the retailer elected to pursue a strategy that many other retailers have also found to be extremely effective: conversion to metal halide technology. The retailer ultimately selected a combination of 70-Watt Mastercolor® ceramic metal halide lamps by Philips Lighting Company driven by Advance's e-Vision® electronic HID ballasts, a system that is ideal for downlighting, accent lighting, and store displays.

The system has proven to offer the combined benefits of long life, energy efficiency, bright, white light, and superior color consistency. Because 70-Watt metal halide lamps consume only 70-80 watts compared to the 150 watts consumed by the halogen lamps previously installed in the stores, the retailer was able to reduce its energy consumption by nearly half. In addition, with metal halide lamps providing 10,000 + hours of rated life compared to just 2-3,000 hours for halogen light sources, the retailer will benefit from the reduction in maintenance costs associated with less frequent re-lamping. Overall, the reduction in energy has saved the retailer over $2,300 in energy costs per store per year, which amounts to savings of $2.3 million annually across all of the stores within its chain.

Satisfied that the new lighting system has met all of its objectives, the retailer has mandated that the upgraded system be a standard installation within all newly-constructed stores and plans to remodel up to 10% of its existing stores to the new configuration each year.

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News You Can Use

Electricity Rates Up 11.5% in First Quarter 2006
According to June 2006 data from the U.S. Energy Information Administration, the nation's average electricity rates through the first quarter of 2006 were a total of 11.5% higher than they were for the same period in 2005, due to moderate, yet steady, economic growth and higher world oil prices. Electric kWh rates in the Industrial sector experienced the largest year-to-year increase, rising by 12.9% between 2005 and 2006, while electric rates in the Residential and Commercial sectors rose by 10.7% and 10.3% respectively during that period.

•  Wireless Technology on the Rise: A study by IMS Research estimates that the use of wireless communication in automation will grow by an average of 28% annually in the period from 2005 to 2009.

•  Global Report Forecasts Future Energy Requirements for Lighting : The United Nations' International Energy Agency (IEA) warns that the amount of energy used for lighting will be 80 percent higher in the year 2030 than it is today if quick action is not taken. The report reviews the impact of lighting energy-efficiency policy actions to date and maps out the sets of measures that will be needed if an energy-efficient lighting future is to be reached. More information on the report is available at www.iea.org.

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Tools of the Trade

Simplify the Lighting Upgrade Process With Advance's
Exclusive New “Ballast Checker”

Lighting upgrades have never been easier with Advance's Ballast Checker, a hand-held device that quickly identifies a ballast's technology type for use in confirming ballast status and pinpointing lighting upgrade opportunities.

When pointed at a fixture, the Ballast Checker turns green if the light source is powered by a high frequency electronic ballast and orange if it's powered by a magnetic ballast, indicating a prime opportunity for a lighting upgrade involving electronic technology. In addition to assisting contractors, distributors, and other lighting professionals in determining a ballast's status as well as adding credibility when conducting a lighting audit, Advance's Ballast Checker can be used to verify that a fixture has indeed been installed with an electronic ballast post-installation.

Compact and lightweight, the Ballast Checker can operate at up to 15 feet or more from a light source and comes complete with long-life batteries that are pre-loaded for immediate use as well as an attached lanyard for carrying convenience.

For more information on the Advance Ballast Checker (including price and availability), contact your Advance sales representative or your nearest Advance stocking distributor or visit www.ballastchecker.com.

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Customer Spotlight

Jared Johnson, CLMC, CLEP
Vice President of California-based EnerTech Systems, Inc.

On customer response to EPAct 2005
commercial tax deduction opportunities

"We have definitely seen knowledge and awareness of EPAct 2005 tax deduction opportunities growing among our customer base in Southern California and some of our National Accounts. We have also helped many customers by discussing the opportunity and calculating their potential deduction for them. While the final rulings and procedures are being resolved by the federal government, however, we continue to sell lighting upgrade projects based on the system improvements and financial benefits that they deliver, and have found manufacturing facilities to be among the largest beneficiaries of upgrades and financial incentives in our area.

The tax deductions available through EPAct have been an exciting development, because in addition to promoting lighting upgrades in general, we anticipate that they will help drive upgrade activity in areas of the country where utility rebates have not been regularly available. Even if end users are not completely clear on EPAct's tax deduction opportunity today, we encourage them to move forward and not wait to initiate energy-saving projects that make financial sense for their business. Customers can prepare their tax documents and benefit from the additional incentive at a later time during the window of this opportunity, but should not wait to begin realizing the immediate and significant energy savings that a lighting upgrade project can drive all on its own."

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Lighting Library...

See the following recent trade article for reference information on EPAct 2005, green building, and lighting upgrade opportunities:

“A Legislative Update”
Buildings, June 2006
Read article...

“The Road to Sustainability”
Today's Facility Manager, June 2006
Read article...

“Shedding Light on LEED”
Electrical Wholesaling, May 2006
Read article...

“Control Daylight, Save Money”
Commercial Building Products, May 2006
Read article...

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