Introduction
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National Update: EPAct 2005
IRS Unveils Procedure Enabling Commercial Property Owners to Qualify for Energy Efficiency Deduction
On June 2nd, 2006, the Internal Revenue Service issued an advance copy of 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 notice establishes a process to certify the required energy savings in order to claim the deduction. As established in EPAct 2005, the amount deductible may be as much as $1.80 per square foot of building floor area for buildings that achieve a 50-percent whole buildings energy savings target. Lighting systems would still qualify for a deduction of up to 60 cents per square foot of building floor area if they meet a whole buildings 16⅔ percent energy savings target. The interim lighting systems deduction previously described is still available.
Before claiming the deduction, the taxpayer must obtain a certification that the required energy savings will be achieved. The IRS’ just-released notice prescribes the content of that certification and the qualifications that must be met by the person providing the certification.
The notice also announces that the Department of Energy will create and maintain a public list of software that must be used to calculate energy savings for purposes of providing the certification. It also provides a process that software developers must use if they desire to have their software included on that list. Users can access the complete 24-page IRS notice PDF file online.
The National Electrical Manufacturers Association (NEMA) is currently reviewing and interpreting the document and developing user-friendly text to help communicate and explain the elements of the IRS notice in more detail. Please visit efficientbuildings.org, lightingtaxdeduction.org, or energytaxincentives.org for more information. Though highly supported by both the Congress and Senate, Bill S. 2401 — proposing extension of the commercial building tax deduction from 2007 to 2010 — has officially been postponed for consideration until later in 2006 or 2007 due to the government’s excessive docket of issues currently under discussion. Senators Feinstein and Snowe, who officially introduced the bill in March 2006, will continue to champion the initiative through to its hopefully successful conclusion.
In July 2006, Capital Lighting & Supply will host two mid-Atlantic seminars to discuss how business owners can “Put The Lighting Tax Deduction To Work For Your Building(s).” The seminars, featuring experts from both the building and national lighting supply community, will be held for building owners and managers on July 18th in Greenbelt, MD and on July 20th in Richmond, VA. For more information, contact Capital Lighting Director of Marketing Ken Cain via email or at (571) 436-5376.
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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. Please see the following “National Update” section above for more details on this important development.
• Now 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 efficientbuildings.org, energytaxincentives.org, or NEMA.org. < TOP >
Leading with Lighting
The following real-life case study helps demonstrate how a leading California-based medical research institute improved its lighting quality and bottom line by pursuing a lighting upgrade:
 Based on its commitment to developing and utilizing cutting-edge technology to help contribute to the betterment of health and the human condition, it came as no surprise that a leading California-based medical research institute would pursue a lighting upgrade for the benefit of its own employees.
Faced with the presence of outdated lighting in two of its underground parking structures, the institute embarked on a lighting upgrade within the two and three-story facilities. The original 150-watt High Pressure Sodium lighting in place cast a dull, orange glow throughout the space, giving it a basement-like appearance and making it difficult for employees to identify their cars
Desiring a safer, more modern, and more energy-efficient technology consistent with their own high-tech, cutting-edge industry approach, the management team opted for a 100-watt Ceramic Metal Halide system involving Philips Lighting's MasterColor® ED-17 lamps driven by Advance's e-Vision® electronic HID ballasts. In addition to the system's superior white light, high color rendering, unparalleled uniformity, consistent lamp-to-lamp color, and high energy-efficiency, the lamps' 20,000-hour life span will reduce maintenance requirements and costs over the life of the system.
Following the upgrade within the parking facilities' 350+ fixtures, light levels immediately increased by an estimated 35%, while the quality of the light—made significantly whiter and brighter--improved immensely. Total fixture wattage declined from 190 watts to 112 watts, a 41% drop, which helped to radically reduce the facility's monthly $1.5 million electric bill and offset the company's high 14-18 cent kWh electricity rates. And with the easy one-to-one changeout of fixtures and electronic technology associated with the Philips Lighting and Advance system, maintenance concerns will be minimized throughout the life of the system.
Subsequently approved as the company's new standard technology for other applicable venues, ceramic metal halide technology provided this leading research facility with the combined benefits of improved lighting quality, enhanced safety and security, low maintenance, and significant energy savings and will continue to yield dividends for years to come. < TOP >
News You Can Use
• Lighting in Commercial Buildings: According to the Building Owners & Managers Association (BOMA), the average office building spent $1.52 per square foot for electricity in 2004. Lighting accounted for $.58 per square foot, or 38% of the total cost.
• Lighting Remains Major Energy Consumer: The U.S. Department of Energy has projected “commercial sector lighting” to remain the most important individual end use consumer of energy through at least 2020.
• Did You Know? According to a recent study by Cambridge, MA-based R&D firm TIAX, up to 20% of the energy consumed by commercial building HVAC and lighting systems could be wasted by “faults” such as duct leakage and systems being left on when office space is unoccupied. This is on top of the energy that could be saved by the use of more efficient technology.
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Product Spotlight
Capitalize on EPAct Opportunities with Advance’s Expanded Line of
SmartMate® Electronic Ballasts Featuring Quik-Start™ Technology
 Advance's line of SmartMate® electronic ballasts for the operation of one or two 13-watt, 18-watt, or 26-watt compact fluorescent lamps (CFLs) or one 32-watt or 42-watt 4-pin CFL has now been expanded to include a variety of new chassis options, making lighting upgrades easier than ever!
Ideal for such applications as offices and hotel bathrooms and foyers, the ballasts are now available in three different housings — “Dual Entry,” “Bottom,” or “Side Lead” — for enhanced flexibility and ease of use, for a total of nine product options. Specially designed for applications requiring faster lamp ignition time, the SmartMate models feature Advance's exclusive Quik-Start™ technology, which ignites CFLs in less than 1.0 seconds, compared to the 1.25 to 1.50-second starting ability offered by rapid-start CFL ballasts. The low-profile, lightweight ballasts additionally feature IntelliVolt® multiple voltage technology (enabling their operation at any input voltage from 120 to 277 volts, 50/60Hz) as well as Advance's exclusive color-coded, poke-in connectors to insure wiring accuracy while minimizing fixture assembly and ballast installation time.
Visit our website for information on our full line of SmartMate electronic ballasts.
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Customer Spotlight
Jeffrey M. Fadden, IES, CLEP
Principal of Northeast-based Creative Lighting Solutions LLC
On customer response to EPAct 2005
commercial tax deduction opportunities
 "The tax deduction opportunities available through EPAct 2005 have been extremely well-received by my customers and all are anxious to obtain more specific federal direction relative to the exact forms they will need to complete and how the savings will be verified. Without a doubt, EPAct 2005 tax deductions have successfully driven lighting upgrade activity in my served market and have been a valuable tool in helping to sell lighting design and upgrade projects overall. Based on the outdated lighting present in many of my customers' facilities, we have found ASHRAE standards to be relatively easy to meet using the range of efficient lighting technologies available. In a nutshell, with EPAct tax deductions, the timing has never been better to pursue a lighting upgrade — customers not only get to enhance the quality of their lighting systems and significantly reduce their electricity bills, but they get to take advantage of accelerated depreciation on their capital improvements as well."
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Tools of the Trade
White Papers Provide Valuable Informational Resources
Accounting for as much as 40% of the electric bill in a typical commercial facility in addition to related product, labor, and other maintenance costs, lighting can represent a significant source of energy and cost savings at the facility level. From an overview of the various costs associated with lighting to the comprehensive financial, aesthetic, and environmental benefits accrued by pursuing an energy-efficient lighting upgrade, Advance fully understands the comprehensive value of lighting to you and your facility.
Designed to support your lighting upgrade pursuits, let Advance demonstrate the value of lighting at the energybillinfo.com website and help you navigate your way down the beneficial path towards a lighting upgrade today!
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Lighting Library...
See the following recent trade articles for reference information on EPAct 2005 and tax deduction opportunities:
“The EPAct Impact”
The Construction Specifier, May 2006
Read article...
“Lighting Technologies Produce Energy Savings”
Energy & Power Management, May 2006
Read Article...
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