On July 11, 2012 the California Energy Commission adopted benchmarking requirements for nonresidential buildings in accordance with Assembly Bills 1103 and 531. Under the new laws the building owner or operator will be required to disclose energy usage data to a prospective buyer or lessee of the entire building, or a prospective lender financing the entire building. This information will be gathered by using an energy benchmarking system.
Why is energy benchmarking so important?
Energy benchmarking allows a building owner or operator to compare their building’s performance to that of similar buildings and determine how to manage energy costs.
Who will benefit from energy benchmarking?
Building owners and operators can use the energy consumption data to identify areas that need to improve efficiency, resulting in reduced energy costs, increased property value and increased comfort for the building occupants. Prospective buyers and lessees will be better able to estimate operational costs of the building.
How do I get started?
At least 30 days before a building is sold, leased, or financed the building owner must open an account at the U.S. EPA’s Energy Star® program Portfolio Manager website. The following basic information will be requested: building owner’s name, email address, name and address of the building, year built, all sources of energy use data for the most recent 12 months, and a request that all utility and energy providers to release energy use data for the most recent 12 months.
Buildings Greater than 50,000 sq. ft. – January 1, 2013
Buildings 10,000 – 50,000 sq. ft. – July 1, 2013
Buildings 5,000 – 10,000 sq. ft. – January 2014
$2 Million in savings is projected over the next 25 years from the 1.7 acre, 450 panel solar photovoltaic system installed at North Auburn’s Gold Country RV Park . The nearly $500,000 project secured financing from mPOWER in mid February, with approximately $330,000 coming from mPOWER financing and $150,000 from a Federal tax grant. To further reduce the initial cost of the system, park owner John Grant anticipates additional tax and depreciation savings.
The 66-site park is located on K.O.A. Way off Highway 49 in North Auburn and operates at near capacity year round. “We’re a big-rig park and those big RVs draw lots of power,” said Grant. Adding, “We’re able to achieve carbon-pollution offsets because the power we consume with the solar system doesn’t have to be generated elsewhere.” Approximately 60 percent of the park’s electrical needs are expected to be provided by the system.
Prior to installation of the solar photovoltaic system the park owner completed a number of retrofit projects, including several HVAC units and interior lighting in the recently remodeled clubhouse, and a new pool heater and pump.
PG&E is currently offering a fantastic, no-cost opportunity to attend training workshops in energy auditing and efficiency. These workshops will provide specific education in energy efficiency and alternative energy technologies that can open up new business opportunities for contractors, electricians and builders. Collaborative workshops will take place on location in Auburn. For those of you who cannot attend workshops in person, there are also many classes available online.
Be sure to register early as availability is limited. To search for classes in your area, or register for a class, please visit pge.com or call 800-244-9912.
Making the switch to solar energy can be a great way to save the environment and help your clients save on utility costs. As a bonus Uncle Sam will help pay the costs! The government and state utilities continue to offer lucrative income tax credits and cash incentives to non-residential property owners who install solar photovoltaic systems.
The IRS offers a tax credit that is equal to 30% of expenditures related to solar installations, with no maximum on the credit amount. This credit will remain available for all eligible systems placed in service on or before December 31, 2016. In addition, for 2011 and 2012, the IRS is allowing 100% and 50% bonus depreciation respectively. This means your taxable income and tax brackets will dictate your direct tax savings from depreciation, but in most cases should result in significant additional first year savings.
Various state utility programs offer cash incentives as well. For example, SMUD and Roseville Electric offer cash rebates through their Expected Performance Based Incentive (EPBI) program and the Performance Based Incentive (PBI) program. In most cases, customers that install solar have the choice of picking either a one-time, up-front rebate based upon the expected performance of your system or continuous rebates based upon actual production of your system over a 5 or 10 year period. Both of these programs significantly reduce the cost of solar installations and should be secured immediately. Each program’s rebates begin to decline as the utility installation targets are met.
If your client is one of the lucky taxpayers that began a solar installation in 2011, they may still be eligible for the expired Federal Section 1603 “Grant in Lieu of Tax Credit”. This program provides a 30% cash refund of the system’s installation costs paid within 60 days of placing your system in service. This refund is in lieu of claiming the income tax credits. It is beneficial for taxpayers who do not have a large income tax liability and cannot utilize all of the tax credits immediately. To qualify for this program, the system must have been 5% completed by December 31, 2011.
Tax year 2012 still looks to be a good year for businesses. With proper planning, purchasing a solar energy system can be a valuable and cost-effective business investment. By securing Federal/State incentives and reducing current electric bills, it is possible to see a complete return on investment in 3 – 5 years. Feel free to contact me with any questions.
This article was provided by
Sherif Boctor, CPA
PSG Certified Public Accountants
In a move to eliminate less efficient T12 fluorescent systems from U.S. markets, the Department of Energy has mandated the phase out of the T12 fluorescent lamps and ballasts. Beginning July 1, 2010 magnetic ballasts used in T12 fixtures, are no longer being produced for commercial and industrial applications. Continuing the phase out, many T12 lamps will be phased out of production beginning July 2012.
What does this phase out plan mean for you? In order to keep up with federal regulations of energy efficiency, manufacturers will turn their focus to T8 and T5 systems, making the availability of T12 systems progressively less. There may also be an increase in the cost of the T12 systems due to limited supply.
Regulations such as the T12 phase out mandate can create financial hardships for commercial building owners, but there are ways to mitigate the expenses associated with replacement of the old equipment. Rebates from your local energy provider can help offset the costs associated with fixture replacement; but the benefits don’t stop there. The new fixtures will guarantee energy savings, which translates to money savings, in the years to come. Contact your local utility provider to find out more.
The answer is: when it’s an energy audit. You’ve heard the old adage, “Knowledge is Power”? That couldn’t be truer than in the case of identifying how a building is losing energy. This knowledge can give you the power to save money on your energy bills. When a professional energy audit is completed it’s easy to see, not only where your building is losing energy (resulting in higher energy costs), but how quickly you can recover the costs of energy improvements. This knowledge enables the owner to make informed decisions and see immediate results. Let’s face it, there’s nothing better than instant gratification.
The problem for many business property owners is that they lack the time to invest in learning about new technologies, what works best for their building and how to implement them. Perhaps they don’t know anything about energy audits, who performs them and what they cost. The good news is that, even though there are companies that specialize in energy audits and others that offer them as one of their services, many utility providers offer FREE energy audits.
This is good news, not only for property owners, but contractors. For contractors, utilizing the information provided by one of these free energy audits can be a powerful sales tool without incurring up-front costs. Whether the building can benefit from sealing leaks in walls and ceilings, adding high efficiency lights, adding insulation or installing a high efficiency water heater, an energy audit can reveal simple cost-effective ways to reduce energy consumption. By coupling that information with available rebates from the utility provider, your client will see that you have the foresight to look for easy, low cost ways of saving them money. This approach can free up capital that your client can invest in larger ticket items that are also needed, thus, reducing the overall payback period.
Oftentimes the energy saved will be more than the cost of the improvement.
KTKZ 1380’s Eric Hogue hosted MPOWER’s Jenine Windeshausen and Congressman Dan Lungren on his weekday radio show, Capitol Hour, on January 10th. The two guests had the opportunity to share with Capitol Hour listeners the economic and environmental benefits of Property Assessed Clean Energy (PACE) Programs, ones like mPOWER. Last year, Congressman Lungren, along with Representatives Nan Hayworth (NY) and Mike Thompson (CA), introduced the PACE Protection Act of 2011 (H.R. 2599) to allow local communities to establish, and in some cases re-establish, residential PACE programs. To date, the legislation has more than 50 co-authors showing broad support for the voluntary clean energy financing programs.
Congressman highlighted the job creation opportunities that could exist if PACE programs were fully operational, especially for the construction industry which has been decimated by the economic recession. The guests also discussed other benefits including increasing property values, providing utility savings and reducing carbon gas emissions. Click here to listen to the radio interview.
Most property owners wanting to improve the comfort of their homes and businesses, reduce water and energy costs, and reduce their impact on the environment have to consider the large up-front costs and limited payment terms before investing in these energy saving projects.
Property Assessed Clean Energy (PACE) programs across the country addressed the financial obstacles associated with energy efficient installations by eliminating up-front costs and allowing gradual repayment through the owner’s property taxes. However, in July 2010 a directive issued by the Federal Housing Finance Agency (FHFA) effectively suspended most residential PACE programs.
Multiple law suits have been filed, some of which have been dismissed. The California lawsuits have been combined and, after a favorable ruling by U.S. District Judge, Claudia Wilken, the combined suit is awaiting appeal by FHFA.
In the meantime, a bipartisan group of Members of Congress have initiated a legislative approach to solving the PACE issue. Representatives Dan Lungren (R-CA), Mike Thompson (D-CA), and Nan Hayworth (R-NY) introduced House Resolution 2599 on July 20, 2011. HR2599, also known as The PACE Assessment Protection Act of 2011, has garnered the bipartisan support of 48 House members, 20 Republicans and 28 Democrats.
The PACE Assessment Protection Act of 2011 aims to prevent Fannie Mae, Freddie Mac, and other Federal residential and commercial mortgage lending regulators from adopting policies that disregard established State and local property assessed clean energy laws and would guarantee that state and local governments maintain the right to levy taxes for public purposes.
HR2599 establishes strict guidelines intended to protect lenders. In return, federal regulators would be required to rescind prior guidance against local jurisdictions implementing or participating in a voluntary PACE program. Guidelines to establish an applicant’s credit-worthiness are outlined, as is the requirement for an energy audit. The energy and/or water savings realized would be required to exceed the amount of the PACE assessment.
Twenty-seven states have adopted PACE legislation. However, there are only a handful of programs currently offering financing. MPOWER is one of only five programs offering PACE financing for non-residential property owners in California.
If you thought that making your business more energy and water efficient was too expensive, think again. You may actually save more than the cost of financing by MPOWER-ing your business. You owe it to yourself to apply and reap the benefits.
MPOWER provides financing to make water and energy efficiency improvements as well as power generation improvements such as solar photovoltaic for property owners in Placer County. The financed amount is amortized and the annual amount due is added to your property tax bill each year until paid in full. If the property is sold, the unpaid amount stays on the property tax bill and the new owner assumes payment of the balance on the property tax bill each year.