# Presentation: 495964

## Implications for PNW Efficiency Programs of the Energy Efficiency Provisions of EPACT 2005

- August 23, 2006

## EPACT 2005’s Energy Efficiency Provisions

- Title I – Energy Efficiency
- Subtitle A - Federal Programs
- Subtitle B - Energy Assistance and State Programs
- Subtitle C - Energy Efficient Products
- Subtitle D - Public Housing
- Title IX – Research and Development
- Subtitle A – Energy Efficiency
- Title XIII – Energy Policy Tax Incentives
- Subtitle C – Conservation and Energy Efficiency Provisions

## Certain versus Uncertain

- Will Happen
- Improve product efficiency standards
- Improve Energy Star efficiency levels
- Extend daylight savings time
- Add Federal tax incentives for efficiency
- May Happen if Funded*
- Expand Programs for low-income, state programs, public housing, federal buildings
- Expand Research, Development & Demonstration

**Funding dependent upon annual federal budget process*

## Savings From EPACT Product Standards Will Be Modest in PNW

- 7 of 15 products covered by EPACT already regulated by OR & WA statutes
- Implementation dates differ
- OR &  WA regulate one product (metal halide lamp fixtures) not covered by EPACT
- 5th Plan efficiency targets are higher than “minimums” set by state or federal standards
- (e.g. Target efficiency for commercial clothes washers 75% above EPACT standard)

## Research & Development

- Major Focus of Electric Efficiency R&D
- $50 million/yr for FY07 – FY13 allocated for “next generation” lighting (white LEDs)*

**Funding dependent upon annual federal budget process*

## EPACT Tax Incentives

- Provided for:
- Commercial building HVAC, Lighting
- New homes,  including both site built and manufactured
- Residential heating and cooling equipment
- Shell improvements to existing homes
- High-efficiency appliances
- High-efficiency vehicles
- Stationary fuel cells and microturbines
- Solar systems
- But:
- Short duration (two years)
- Some verification & documentation issues

## Energy Savings Impacts

- Total US Savings ~ 2.5 Quads in 2020—about 2% of total forecast consumption
- Oil savings negligible - conferees cut Senate 1 MBD savings target
- Senate bill would have saved ~ 4% of 2020 oil use
- US Electricity savings 206 TWH, ~4% of 2020 forecast (Smaller % in PNW)
- US Natural gas savings 1.4 TCF, ~5% of 2020 forecast (Similar % in PNW)

## Implications for PNW Efficiency Programs

- Tax incentives may leverage demand for efficiency products & services
- Increase the volume of utility, BPA and State programs
- Product standards require changes in current programs
- Measures targeted
- (e.g. Pre-rinse spray heads now required by law)
- Programs must target higher efficiency models
- (e.g. minimum efficiencies for ice-makers now set by law)
- Savings estimates
- (e.g. new baseline efficiency levels 15 products )
- Near-term program focus – leverage tax incentives
- New homes & HVAC equipment, new commercial buildings, clothes washers and refrigerators top priorities for PNW

## Details, Details, Details

## Summary of Title I Uncertain Impacts

- Less Utility Support _May_ Be Required to Improve Federal Facilities*
- Funding for Federal Low Income Energy Assistance and Weatherization Programs _May_ Increase*
- State Energy Efficiency Programs _May_ Expand*
- Federal Support of State Efficiency Efforts _May_ Increase*
- Public Housing projects _May_ be made more efficient*

**Funding dependent upon annual federal budget process*

## Summary of Title I Certain Impacts

- New Federal Product Efficiency Standards _Will _Produce Modest Near-Term Savings
- 15 New federal product efficiency standards set by statute
- 9 New product efficiency standards to be set by rulemaking
- Expansion and Clarified of DOE Rulemaking Authority _Will_ Improve Efficiency of Existing Standards
- Energy Star  Savings _Will_ Increase As A Result of Mandated Efficiency Levels Upgrades
- Daylight Savings Time _Will_ Be Extended

## Summary of Title IX Uncertain Impacts

- Federal Energy Efficiency Research, Development and Demonstration _May_ Expand*
- Major Focus of Electric Efficiency R&D
- $50 million/yr for FY07 – FY13 allocated for “next generation” lighting (i.e., white LEDs)*

**Funding dependent upon annual federal budget process*

## Summary of Title XIII Certain Impacts

- EPACT Provides Tax Incentives
- Commercial buildings
- New homes
- Residential heating and cooling equipment
- Shell improvements to existing homes
- High-efficiency appliances
- High-efficiency vehicles
- Stationary fuel cells and microturbines
- Solar systems

## Intent of Title XIII – Tax Incentives

- Focused on advanced technologies and practices
- Exception is residential retrofits
- Use short-term incentives to promote long-term changes in the market
- Increase volumes so product prices come down
- Increase familiarity with products/practices among designers, installers, retailers, consumers

## Efficient Products –15 New Standards

| Product | Effective Date |
| --- | --- |
| Fluorescent lamp ballasts  | Ballasts manufactured on or after July 1, 2009, or sold on or after October 1, 2009, or incorporated into a luminaries manufactured on or after July 1, 2010. |
| Ceiling fans and ceiling fan light kits  | One year after enactment of EPACT 2005, but not later than August 8, 2006 |
| Illuminated exit signs  | January 1, 2006 |
| Torchieres  | January 1, 2006 |
| Low voltage dry-type distribution transformers  | January 1, 2007 |
| Traffic signal modules and pedestrian modules  | January 1, 2006 |
| Unit heaters  | August 8, 2008 |
| Medium base compact fluorescent lamps  | January 1, 2006 |
| Dehumidifiers  | January 1, 2007 |
| Commercial pre-rinse spray valves  | January 1, 2006 |
| Mercury vapor lamp ballasts  | January 1, 2008 |
| Commercial package air conditioning and heating equipment  | January 1, 2010 |
| Commercial refrigerators, freezers, and refrigerator-freezers  | January 1, 2010 |
| Automatic commercial ice makers  | January 1, 2010 |
| Commercial clothes washers  | January 1, 2007 |

## Efficient Products – 9 New Standards Rulemakings

| Product | Rulemaking Deadline |
| --- | --- |
| Ceiling fan light kits (niche products – candelabra base, halogen, etc.) | Dec. 31, 2006 |
| Commercial refrigeration – ice-cream freezers, packaged units without doors, remote-condensing equipment | January 1, 2009 |
| Battery chargers | August 1, 2009 |
| External power supplies | August 1, 2009 |
| Refrigerated beverage vending machines | August 1, 2009 |
| Dehumidifiers (revised standard) | October 1, 2009 |
| Commercial clothes washers (revised standards) | January 1, 2010 and January 1, 2015 |
| Commercial packaged refrigerators & freezers (revised standards) | 1/1/13 and every three years after standards take effect |
| Ice-makers (revised standards) | 1/1/15 and every 5 years after standards take effect |

## Why Savings From EPACT  Standards Will Be Modest

- 7 of 15 products covered by EPACT already regulated by Oregon and Washington statutes
- Some federal standards have slightly earlier implementation dates, some later
- Oregon and Washington regulate one product (metal halide lamp fixtures) not covered by EPACT
- 5th Plan’s efficiency targets are often beyond “minimums” set by state or federal standards
- Target efficiency for commercial clothes washers 75% above EPACT standard

## EPACT 2005 Replicates Several Oregon & Washington Standard 

| Product | OR  | WA | EPACT |
| --- | --- | --- | --- |
| Commercial pre-rinse spray valves | 2007 | 2007 | 2006 |
| Illuminated exit signs | 2007 | 2007 | 2006 |
| Ceiling fans and ceiling fan light kits | Not Covered | Not Covered | 2007 |
| Commercial clothes washers | 2009 | 2007 | 2007 |
| Low-voltage dry-type transformers | 2003 | 2007 | 2007 |
| High intensity discharge lamp ballasts (mercury vapor) | Not Covered | Not Covered | 2008 |
| Automatic commercial ice makers | 2008 | 2008 | 2010 |
| Commercial refrigerators and freezers | 2007 | 2007 | 2010 |
| Large packaged AC  >20 tons | Not Covered | Not Covered | 2010 |
| Single-voltage external power supplies | 2007 | 2007 | 2011 |
| Metal halide lamp fixtures | 2008 | 2008 | Not covered |

## EPACT’s Expansion and Clarified of DOE Rulemaking Authority Will Improve Efficiency of Existing Standards

- DOE authorized to prescribe energy standards that cover energy used to circulate heating and cooling air (potentially impacts HSPF, SEER & AFUE ratings and/or air handler motor and fan efficiency)
- Permits DOE to regulate
- SEER/HSPF _and_ EER
- MEF _and_ Water Factor
- Heat Pump Efficiency (and Gas Furnace Efficiency) _and _Air Handler Efficiency

## Energy Star Efficiency Levels Are Being Upgraded

- EPACT Required EPA to adopt new Energy Star qualifying levels for Dishwashers and Clothes Washers
- Dishwashers
- EPA announce new levels effective 1/1/07
- Standard dishwashers – EF -0.65
- Compact dishwashers – EF -0.88
-  Clothes washers
- EPA announced new level effective 1/1/07
- MEF 1.72 and Water Factor 8.0

## Efficient Products – Consumer Education

- Establishes a “HVAC Maintenance” education program targeted at small businesses
- Program coordinated with Energy Star Small Business Program
- Authorizes establishment of a Small Business Energy Clearinghouse
- NCAT is only organization mentioned as “qualified resource provider” of such “clearinghouse” services.

## Efficient Products – Consumer Education

- DOE is authorized to establish and maintain a national “public energy education” program
- Focus on need to reduce energy use and economic value of doing so
- Provide practical guidance on “how-to” conserve
- Authority terminates 12/31/10
- Mission accomplished?

## Energy Efficient Utilities

- NARUC & NASEO to directed to conduct a study of state and regional policies that promote energy efficiency and report results to DOE
- Covers both IOU and Public utilities
- Study to Consider
- Performance standards/targets
- Funding mechanisms
- Infrastructure planning
- Cost & Benefits of consumer education
- Barriers to utility implementation of efficiency programs
- Will address cost & benefits of “public benefits” funded efficiency programs

## Energy Efficiency Pilot Programs

- DOE to provide financial assistance to at least 3 but not more than 7  States to carry out pilot programs designed to reduce energy consumption by at least 0.75%/yr
- State must submit independent verification of energy savings to DOE in order to claim the $
- $5 million/yr authorized* for FY2006-2010

**Funding dependent upon annual federal budget process*

## Public Housing

- Directs public housing agencies to purchase Energy Star and/or FEMP-designated products, unless such products are not cost-effective
- HOPE VI funded new or renovated housing must meet IECC efficiency standards
- HUD shall develop and implement an integrated strategy to reduce energy costs, including the establishment of energy savings targets
- HUD Secretary to submit report with one year of enactment and every two years thereafter

## Research and Development

- Authorizes funds for energy efficiency research, development and demonstration
- $783 million for FY07
- $865 million for FY08
- $952 million for FY09
- $50 million/yr for FY07 – FY13 allocated for “next generation” lighting (i.e., white LEDs)

**Funding dependent upon annual federal budget process*

## Research and Development

- Requires Office of Science and Technology to prepare a plan to carry out a “National Building Performance Initiative”
- Plan to be submitted to Congress within one year
- DOE to establish a grant and technical assistance program to support development of consensus-based standards for high performance buildings

## New Commercial Buildings Tax Deduction - Small Impact, Unless Extended

- Provides $1.80/sq ft *deduction *for buildings that reduce _*energy cost*_ by at least 50% below ASHRAE 90.1-2001
- Value depends on tax bracket (e.g., 30% tax bracket, deduction worth $0.54/sq ft)
- Challenge is that building must by “placed in service”by Dec. 31, 2007
- Congress being asked to extend date
- New and existing buildings covered
- Public buildings may assign deduction to designer

- More info:  _[http://www.](http://www.energytaxincentives.org/tiap-commercial-bldgs.html)__[energytaxincentives](http://www.energytaxincentives.org/tiap-commercial-bldgs.html)__[.org/](http://www.energytaxincentives.org/tiap-commercial-bldgs.html)__[tiap](http://www.energytaxincentives.org/tiap-commercial-bldgs.html)__[-commercial-](http://www.energytaxincentives.org/tiap-commercial-bldgs.html)__[bldgs](http://www.energytaxincentives.org/tiap-commercial-bldgs.html)__[.html](http://www.energytaxincentives.org/tiap-commercial-bldgs.html)_

## Tax Deduction for Commercial Lighting Efficiency – Good Idea 

- Allows building owners to deduct the entire cost of a lighting or building upgrade in the year the equipment is placed in service
- Deduction is capped
- @ $0.30/sq ft for 25% lower than ASHRAE
- @ $0.60/sq ft for 40% lower than ASHRAE (Exception: warehouses must be 50% under to get $0.60 (no sliding scale)
- ASHRAE controls + “bi-level switching” required
- Industry has asked that provision be made permanent
- More info:_[http://www.lightingtaxdeduction.org/](http://www.lightingtaxdeduction.org/)_

## Buildings That Meet or Slightly Exceeding PNW Codes May Be Eligible for Lighting Tax Credits

## Buildings Meeting PNW Codes May Be Eligible for Lighting Tax Credits

| Building Type | 90.1-2001 (watts/sqft) | 25% below (30 cents) (watts/sqft) | 40% below (60 cents) (watts/sqft) | Oregon Code | Washington Code |
| --- | --- | --- | --- | --- | --- |
| Office | 1.3 | 0.975 | 0.78 | 1.0 | 1.0 |
| Warehouse | 1.2 | Not Available | 0.6 (50% reduction) | 0.5 | 0.5 |
| School | 1.5 | 1.125 | 0.9 | 1.1 | 1.35 |
| Retail | 1.9 | 1.425 | 1.14 | 1.5 | 1.5 |

## Tax Credit for Energy Efficient New Homes – Might Produce Modest Savings

- $2000 credit provided for builders of _site built_ homes that exceed IECC criteria by 50%
- NW Alliance developing “prescriptive paths” for compliance
- Not many electrically heated homes, mostly natural gas savings
- $1000 credit provided to _manufactured home_ producers exceeding IECC by 30% or meeting Energy Star criteria
- PNW Manufacturers now offer complying products
- PNW State Energy Offices authorized to provide required “independent third party” certification
- Homes must be “substantially completed” after December 31, 2005 but before January 1, 2008.

- More info : _[http://www.](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)__[energytaxincentives](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)__[.org/](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)__[tiap](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)__[-](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)__[irs](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)__[-](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)__[regs](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)__[.html - housing](http://www.energytaxincentives.org/tiap-irs-regs.html#housing)_

## Residential Heating, Cooling & Water Heating Equipment Tax Credits

- $300 tax credit for:
- Split central AC with 15 SEER, 12.5 EER
- Single-package central AC with 14 SEER, 12 EER
- Central heat pumps with 15 SEER, 13 EER, 9.0 HSPF
- Ground source heat pumps meeting Energy Star _*with*_ integrated water heating
- Electric water heaters with 2.0 EF (i.e., heat pump water heaters)
- Cap of $500 per taxpayer for heating/cooling credits *plus *building shell credits

## Tax Credits for Shell Improvements to Existing Homes

- Overall credit limit is $500 for a given taxpayer including heating/cooling credits on previous slide
- Envelope measures eligible for 10% of cost, for:
- Insulation
- Windows (capped at $200)
- Duct sealing and infiltration reduction
- Metal roofs with coatings to reduce heat gain
** *****Only materials eligible, not labor***
- Manufacturers must certify products are eligible; homeowners need to be given a copy of this certification

## Tax Credits for Appliance Manufacturers – Large Savings Likely

- _Manufacturers_ of refrigerators, clothes washers, and dishwashers eligible for tax credits for production of high efficiency appliances*
- Credits tied to tiered efficiency criteria:
- Clothes washers, $100 for meeting 2007 Energy Star specification (1.72 MEF, 8.0 WF)
- Refrigerators, $75 for 15% savings relative to federal standard, $125 for 20% savings, $175 for 25% savings
- Dishwashers, $32.31 for meeting 2007 Energy Star specification (0.65 EF)
- Overall cap of $75 million per manufacturer

- *Council agreed to this provision when it endorsed agreement with manufactures on residential clothes washer standard

## Tax Incentives Assistance Project

- Multi-organization project to provide program administrators, trade allies, consumers and businesses information on the tax incentives and how to use them
- For more information on the tax incentives and TIAP: _[www.energytaxincentives.org](http://www.energytaxincentives.org/)_