Last week we sent out correspondence in support of changes to the initiatives under discussion in the Energy and Natural Resources Committee. Our objective was to point out the multiple imperatives: Demand reduction/conservation – as well as the need to protect the Federal Treasury and the support of the Federal deductions under §179D. §179D meets the imperatives – by incentivizing the energy reductions and offering deductions for qualifying assets – rather than a credit.
Here’s a copy of our letter to the Senate and Energy and Natural Resources Committee sent last week:
Dear Acting Director Zients:
We write to encourage you in your objective to advance the US economy and establish an energy efficiency initiative that is based upon improvements in energy efficiency and building performance. We commend you in your efforts to improve our country’s energy efficiencies and smart building effectiveness. (Reference: U.S. Senate letter to Secretary Geithner and Acting Director Zients, 2.10.2012)
As a “third-party” Certifying organization under §179D of the 2005 Energy Policy Act – we have been involved in thousands of projects – and have firsthand knowledge and information relative to the application of the efficiency deductions, the confusion surrounding the qualifying requirements and the abuse presently rampant with the existing guidelines. In particular we would like to respond to the Improvements to Existing Tax Incentives as they exist under §179D. We feel strongly that it makes fiscal sense to extend the policy beyond 2013 and encourage energy efficiency with an increase in the amount awarded from $1.80 to $3.00 a square foot – for Whole Building – and corresponding – increases to partial deductions. We also agree that the program should also be broadened to include REIT’s, include assets that were originally considered yet still not included: exterior lighting, process loads and refrigeration; and to include NPO’s (like hospitals, who are major energy users).
After reviewing a variety of recommendations – it concerns us that proposed policy rulings would possibly remove the requirement for third party certification for these incentives. The issues of abuse could prove costly to our federal treasury and encourage breaches of measurement and verification protocol. In our experience, third party certification for energy efficiency deductions is necessary to maintain objectivity and prevent abuses. Capital Review Group serves our clients as energy and tax advisors, and we have seen the effects of situations where no third party certification was performed. We have corrected §179D reports for clients who have been misled by those abusing the current §179D process. Clearly, when vendors and contractors perform their own energy efficiency analysis for clients who wish to deploy energy saving improvements, there is a significant temptation as “self-certifiers” to embellish the results. We feel that the third party certification is an important safeguard in maintaining the integrity of federal government incentives – and also to protect tax advisors and those entities that must adhere to Circular 230.
The reason for energy incentives is to advance energy efficiency in the United States, and this process should include input from objective, qualified, third party Certifiers to maintain quality control and make true advances that benefit business/building owners, their employees, and the environment. If third party input is removed, the quality of energy efficiency projects may be greatly reduced while costs are inflated by those who seek to gain from the opportunity. This would create a greater risk that businesses will not feel they can move ahead with energy improvements, resulting in a significant slowing of the energy platform.
We ask that you represent and support our sustained efforts to advance energy efficiency in the United States, and maintain standards that will protect and benefit those business owners who choose to make improvements that benefit all of us.
Marky A. Moore, LEED AP, CSBA
CEO, Capital Review Group
CC: Secretary Tim Geithner
Secretary Stephen Chu
The Honorable Olympia Snowe
The Honorable Dianne Feinstein
The Honorable Maria Cantwell
The Honorable Jeff Bingaman
The Honorable John Kerry
The Honorable Thomas Carper
The Honorable Joe Biden