Introduction

Thank you for your interest in and support of Lighting the Way, Advance's new monthly e-newsletter. The inaugural issue in January debuted to overwhelming response, confirming the market's interest in and need for timely information on EPAct 2005, lighting industry trends and initiatives, and new Advance products and resources. We appreciate your continued interest and feedback.

EPAct Update From the Hill

As the major trade association for the electrical products industry, the 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 Coalition, NEMA continues to lobby on behalf of the smooth and effective implementation of EPAct 2005 and its tax deduction opportunities. NEMA is also dedicated to helping to promote awareness of these and other related legislative developments among the nation's energy users.

• As a result of NEMA's recent lobby activities, Senators Feinstein and Snowe are introducing a bill to extend the tax deduction provision by five years, including an additional two years for completion of construction on designs developed in the five-year period. This 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 now allowed for this process. Also outlined in the bill is the request for the maximum tax deduction to be increased back to the $2.25 per square foot originally proposed (up from the $1.80 officially enacted). NEMA is currently working with the Senators to solicit support from the House of Representatives in order to move this bill forward.
  
  
• As part of their monthly commitment, the Commercial Building Tax Deduction Coalition met in mid-February and further discussed matters surrounding the possible deadline extension. In addition, the group began discussions of two technical matters – specific requirements related to luminaire power and bi-level switching for tax deduction eligibility – subjects upon which many end user questions have arisen.

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Don't Let EPAct 2005 Opportunities Pass You By….

Tax deductions offered through EPAct 2005 are 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 new and noteworthy resources:

EPAct 2005 Resources:

• For Federally-sponsored information on the new tax incentives offered through EPAct 2005, visit the Tax Incentives Assistance Project (TIAP) website at www.energytaxincentives.org
  
  
• Visit the National Lighting Bureau website at www.nlb.org to view the NLB's new EPAct brochure entitled “New Tax Incentives Make High-Benefit Lighting Less Expensive Than Ever Before”

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EPAct FAQs

As end users have begun to investigate their upgrade opportunities in support of EPAct 2005, they have surfaced a number of good questions about the Act and its requirements for tax deduction eligibility. We will feature a few below and in upcoming issues….

Question:

Is the financial incentive offered through EPAct 2005 a "tax credit" or a "tax deduction?"

Answer:

Though originally proposed as a tax credit in earlier versions of the bill, the financial instrument offered through EPAct 2005 was officially enacted as a tax deduction. As opposed to a tax credit, which would reduce a company's tax bill directly by a set amount of money, EPAct's tax deduction gets applied against the company's income and its value calculated in accordance with the company's tax rate.

 

Question:

What is the process for certifying energy savings and how will compliance be determined?

Answer:

According to language within the Act (H.R. 6), “the secretary of the treasury shall prescribe procedures for the inspection and testing for compliance of buildings that are comparable to the requirements in the Mortgage Industry National Accreditation Procedures for Home Energy Rating Systems . Individuals qualified to determine compliance shall only be those recognized by one or more organizations certified by the secretary of the treasury for such purposes.” At press time, the market continues to wait for word on the status of this important procedural issue.

 

Question:

Can portions of a building be upgraded and still qualify for a deduction or would only a total building upgrade qualify?

Answer:

Upgrades conducted in all or any part of a building can qualify for tax deductions. The upgrade would be considered based on the energy savings it drove relative to ASHRAE 90.1-2001 requirements within the square footage affected.

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Leading with Lighting

The following real-life case study helps demonstrate how one institutional entity, Ontario's Joseph Brant Memorial Hospital, improved its lighting quality and bottom line by pursuing a lighting upgrade:

Faced with continuously escalating electricity prices, the Building Services team at Ontario's Joseph Brant Memorial Hospital recently undertook an extensive lighting upgrade to help reduce energy consumption and costs throughout the 380,000 square foot, 300-bed facility. The team selected a high-efficiency 25-watt fluorescent lamp system driven by low-watt electronic ballasts to replace their existing T12 and early-generation T8 lighting technology. Following the upgrade, light levels visibly improved, particularly in those areas that contained older T12 lighting. And energy cost savings as a result of the upgrade to T8 technology were significant, with Joseph Brant expected to enjoy an up to 40% reduction in energy costs in those areas upgraded from T12 lighting and 20-30% savings potential in those areas upgraded from early-generation T8 technology. The team expects the upgrade to deliver a less than two-year payback and an attractive 50%+ return on investment.

“We are delighted with the results of the upgrade so far,” concludes Joseph Brant Director of Engineering and Building Services Duncan McGill. “Overall, energy has become a bigger and bigger part of everyone's operating cost structure and cost savings opportunities are an imperative. Our lighting upgrade should serve the hospital well in the form of markedly improved costs, enhanced light levels, and a more standardized and easy-to-maintain lighting configuration for well into the future.”

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News You Can Use

Electricity Rates on the Rise
According to mid-February 2006 data from the U.S. Energy Information Administration, the nation's average electricity rates from January-November 2005 were 5.8% higher than they were for that time period one year earlier, 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 5.9% between 2004 and 2005, while electric rates in the Industrial and Residential sectors rose by 5.3% and 4.9% respectively between 2004 and 2005.

LEED Gets Simplified: In late 2005, the United States Green Building Council (USGBC) announced a series of major enhancements and refinements that will dramatically reduce the time, cost, and paperwork associated with the LEED (Leadership in Energy and Environmental Design) certification process, whereby a building's sustainability is assessed using Green Building Rating System Ô performance standards . For more information on the new process, visit www.usgbc.org.

Did You Know? A recent Cornell University study revealed that improvements in the average office lighting system can make employees over 1 hour more productive per week – resulting in 3-5% gains in employee productivity.

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Product Spotlight

Capitalize on EPAct Opportunities with Advance's e-Vision® Electronic HID Ballasts

Advance offers a variety of powerful and energy-efficient new e-Vision® electronic HID ballasts for metal halide lamps that can potentially qualify a facility for tax deductions through EPAct. High-performing, long-lasting, and energy-efficient, electronic HID technology drives significant energy savings over incandescent and magnetic HID alternatives. Electronic HID technology also delivers superior lamp wattage regulation, optimizing lamp color quality over life and reducing lamp-to-lamp variations. With Advance's new e-Vision 70-Watt and 100-Watt Reduced-Profile and 150-Watt Dimming electronic HID ballasts, users within a host of retail, commercial, institutional, and outdoor venues can realize the comprehensive benefits of electronic HID technology and explore new dimensions in lighting design.

Delivering an unprecedented package of benefits to support the market's broad range of downlighting and accent lighting applications, Advance's new e-Vision ballast solutions represent a breakthrough in electronic HID technology and offer enhanced options to help you capitalize on your lighting upgrade opportunities.

Visit our website for details on our e-Vision ballasts as well as our full line of electronic HID ballasts.

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Customer Spotlight

Todd Jarvis
Chief Operating Officer, Wheatstone Energy (ESCO)

On the impact that EPAct 2005 will have
on the lighting upgrade market

"We anticipate that the new Federal tax deduction opportunities available through EPAct 2005 will have a significant impact on the lighting upgrade market. With the backing and credibility now offered by the government, the market doesn't have to “sell” the upgrade opportunity anymore. Customer response has become less of “ Why should we do it?” and more focused on “ How do we do it?” and “ Which specific products will optimize our application?”

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Tools of the Trade

Energy Savings Opportunity Calculator Simplifies Upgrade Process

Advance's Energy Savings Opportunity Calculator, available at http://www.energybillinfo.com/calc/, is an easy-to-use online tool designed to help you assess the magnitude of the lighting upgrade opportunity in your facility. By simply filling in your facility type, square footage, and number of fixtures, the tool will quickly estimate your range of opportunity based on your existing lighting configuration and ASHRAE 90.1-2001 standards. Let the Energy Savings Opportunity Calculator simplify the upgrade process and help you determine the potential for energy savings in your facility today….

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For Your Reference...

See the following recent trade articles for general information on
EPAct 2005:

“New Year, New Energy Tax Credits,” Buildings , January 2006
Read article...

“Put Lighting's New Tax Deduction to Work,” Power Outlet , 2006
Vol. 6 Issue 1 Read article...

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