I have met lots of energy experts all over the world, but I feel that building managers in the US need to know about “Dr. EPACT,” who during the past 3.5 years has saved his clients over $7 million in tax rebates using the Energy Policy Act. His name is Bill Bissmeyer and he has presented over 200 seminars on EPAct.
Bill believes that “Saving energy is saving American jobs,” and I agree completely! Please read his case study below and see if it can apply to your facility. Anyone who has visited the IRS website knows that it can be overwhelming, but if you have questions, Mr. Bissmeyer can be contacted at 800-357-6845.
As many of you already know, EPAct is a Federal program that allows building owners to qualify for up to a $1.80 per square foot tax deduction if they install or replace hybrid light fixtures and/or a hybrid HVAC system. However, many of you might not believe that the tax deduction can literally pay for an entire project within one year! What’s really great is if the building owners replace both the lighting and HVAC system at the same time, they can triple their Federal Tax deduction.
Unique 2011 changes in the IRS tax laws now allow a building owner to reach back to energy reduction work completed after 2006 to match energy savings projects in 2011 and take advantage of the full tax deduction without having to amend previous year’s tax filings.
Complementing the Federal stimulus funds that are now available, there are numerous state and local funds, grants, and rebates that are available to further help the building owner to pay for energy efficiency projects.
A 20-year-old, 100,000-square-foot warehouse in Peoria, IL, presently has twelve (12) natural gas unit heaters and 250 metal halide light fixtures.
A consulting engineering firm completes an energy audit and recommends that to reduce the building’s energy foot print, the building owner replace the unit heaters with an air turnover unit and the 250 metal halide fixtures with a new hybrid fluorescent light fixtures.
The turnkey installation cost of the air turnover unit would be $54,000 and the 250 lights would cost $225 each, or $56,250. The estimated total retro project would cost $110,250.
The use of EPAct could save the building owner a total federal tax deduction of $180,000, which converts to a tax credit of $63,000.
Project Cost : $ 110,500
1st Year’s Energy Savings
Lighting - 24,860 Heating - 22,160
Less EPAct Fed Tax credits – 63,000
Net cost after 1st year $ 480
When combined with the first year annual energy savings from the new hybrid lighting and heating systems of $47,020, the building owner can legitimately expect that the first year’s energy savings combined with EPAct tax credits of $63,000 to total $110,020.
In essence, with the simplest accounting prowess, the project is paid within the first year with a second year energy savings of $47,000 carried forward as long as the building is operated.
Total project Cost = $110,250
Frequently Asked Questions:
How do you find additional funding for your project?
In many states, across the country, there would be several other federal or state programs bundled under the classification of “WCB310,” which would allow the typical company to qualify for additional funding. In Illinois, for our case study, the gas utility would grant a $17,000 energy rebate, and the electric utility would rebate $12,500 for the lighting, based on meeting local regulations for the utilities.
How do you get your project certified?
When asked what has to be done to qualify for the EPAct federal Tax program, you are best served by contacting your CPA, or you can find the rules on several federal websites or our favorite website EPActCertification.com.
Actual EPAct project certification requires a report from an independent professional after the commissioning of the project. Several national accounting or consulting firms offer the certification process for $0.03 to $0.05 per square foot, which on our case study would cost $3,000 or $5,000. This too is fully deductible under EPAct.
How can you tell if your building qualifies?
We recommend that you do a simple analysis of your utilities and if your energy footprint is above $0.95 per square foot per year (lighting and heating) you are an instant candidate. The typical American warehouse averages $1.00 per square foot for their annual lighting and heating costs.
Most buildings that have been EPAct certified have been able to reduce their energy footprint by 40-60%. In our case study, the energy footprint was independently commissioned and confirmed to save 46.5%.