For many business owners 2008 was a record year for energy costs. The Obama administration, while pledging to reduce greenhouse gas emissions 80% by 2050, has said that ‘energy efficiency’ is the cheapest, cleanest and fastest energy ‘source.’
Consider the following tips to make your business more energy efficient.
Make
a commitment. Whether you operate from a
one-person home office or multiple commercial buildings, you can
expect to achieve measurable energy savings in response to
reasonable investments of both time and capital. The government
claims that Americans, through its Energy Star program, saved enough
energy in 2007 to prevent greenhouse gas emissions equivalent to
those from 27 million cars while saving $16 billion on their utility
bills.
Assess
performance. Perform an energy audit to measure the
actual or estimated performance of your facilities and equipment
against benchmarks for similar facilities, equipment and operations.
Although professional energy auditing and consulting firms and
high-end software tools are abundant, most are neither
cost-effective or necessary for the average small business. Small
businesses can take advantage of free do-it-yourself tools available
on the Internet from reputable sources such as their utility
providers or government agencies.
Electric utility Duke Energy, for example, provides free online energy auditing tools customized by state for its residential and commercial customers.
Businesses requiring a more sophisticated tool can use Portfolio Manager, an interactive energy management tool, to rate building energy performance. For many facilities, you can rate energy performance on a scale of 1–100 relative to similar buildings nationwide. A rating of 50 indicates that the building, from an energy consumption standpoint, performs better than 50% of all similar buildings nationwide, while a rating of 75 indicates that the building performs better than 75% of all similar buildings nationwide. Buildings rating 75 or greater may qualify for the Energy Star label.
Set
goals. Energy saving goals should be incorporated into
your overall operating plan. Based on your energy audit, you should
have a good idea where savings can be attained. The Energy Star for
small business program recommends that you visualize an overall
savings of 25% to 35%, which for many businesses can have a
significant impact on the bottom line.
Create
action plan. Your plan should fit your business.
The U.S. Environmental Protection Agency (EPA) publishes a 39-page
document called
Putting
Energy Into Profits: Energy Star Guide for Small
Business. This document, which provides action items and
resources for several basic improvements for specific types of small
businesses, provides a framework that CPAs can use for planning and
to engage in dialog with stakeholders including owners, managers,
property owners (leasors), lenders, equipment suppliers and building contractors.
Calculate
tax advantages. A tax deduction of up to $1.80 per
square foot is available to owners or designers of new or existing
commercial buildings that save at least 50% of the heating and
cooling energy of a building that meets ASHRAE Standard 90.1-2001.
Partial deductions of up to $0.60 per square foot can be taken for
measures affecting any one of three building systems: the building
envelope, lighting, or heating and cooling systems. These tax
deductions are available for systems “placed in service” from Jan.
1, 2006 through Dec. 31, 2013 (see IRS Sec. 179D(h) as amended by
Sec. 303 of the Emergency
Economic Stabilization Act of 2008 and IRS Notices 2006-52 and
2008-40). A
summary of federal tax credits for energy improvements that includes
links to relevant IRS publications is available here.
Compare
prices. As with any plan, accurate assumptions are
essential to its success. Energy Star rated appliances must meet
special requirements and, as a result, tend to have higher purchase
prices than standard models. Many utilitiy service providers offer
rebates to offset the added cost of Energy Star-rated equipment.
CPAs should carefully assess all tax incentives and rebates as well
as claims for future operational improvements. The Energy Star Web
site includes a search tool
to help find applicable rebates. Cost savings calculations prepared
by the the EPA and Department of Energy (DOE) typically use national
average retail utility rates provided by the Energy Information Administration
(EIA). Because retail utility rates vary significantly from state to
state, CPAs should use state-specific rate data available in the
EIA’s State
Energy Profiles if more specific historical rate data is unavailable.
Implement
action plan. Due diligence is essential. Products
and workmanship must meet specific requirements to
qualify for certain tax deductions. In the case of building
improvements, the software used to calculate the energy efficiency
of commercial buildings must be on the DOE’s approved list
and such improvements must be independently verified by a qualified
individual to meet IRS requirements for tax deductions (see IRS
Notices 2006-52 and
2008-40).
Evaluate
progress. Continually compare and correct plan
assumptions to results. For example, if you (or your client) own
three similar apartment buildings and you install heating and air
conditioning equipment with an anticipated improvement to energy
consumption of 30%, verify the results from the first building
upgraded before committing resources to upgrade the remaining buildings.
Recognize
achievements. The EPA has prepared a number of
ready-to-use materials
that are available free-of-charge to Energy Star partners. These
include print ads that you can customize for your business, banner
ads for the Web, Energy Star partner logos for use on your signage
and literature, a customizable news release, promotional event ideas
and a certificate of participation that you can display in your
place of business.
By Matthew G. Lamoreaux , a JofA senior editor. His e-mail address is mlamoreaux@aicpa.org .
