NEMA Sees Tax Provisions In Senate Energy Legislation As Win For Electrical Business

May 28, 2004
With the backing of the National Electrical Manufacturers Association (NEMA), Washington, D.C., the Senate passed energy tax provisions for a new Senate energy bill with a vote of 92-5 on May 11.

With the backing of the National Electrical Manufacturers Association (NEMA), Washington, D.C., the Senate passed energy tax provisions for a new Senate energy bill with a vote of 92-5 on May 11.

The most interesting aspect of the bill for the electrical wholesaling industry is the Commercial Building Tax Deduction, which offers incentives for the use of energy-efficient electrical systems. The tax incentives also include a provision to reduce the depreciable lives for electric transmission assets from 20 years to 15 years.

NEMA believes these provisions will benefit the industry by stimulating investment in electrical products, and a NEMA release said it was “a big win for NEMA manufacturers, economic growth and jobs.”

The energy legislation now under consideration has been on a long and winding journey through the House and Senate chambers on Capitol Hill for the past few years. It’s unclear what shape the final legislation will take before the bill is presented to President Bush to sign into law.

The U.S. House of Representatives passed a comprehensive energy bill (the Energy Policy Act of 2003) in the spring of 2003, but the legislation was thwarted by the Senate. If the Senate approves a final energy bill, the measure would have to be reconciled with the House bill, which currently does not contain the same tax deductions for use of energy-efficient electrical equipment as the Senate bill.

The Senate bill, called the “FSC/ETI – Jumpstart our Business Strength Act (JOBS)” (S. 1637) contains the energy tax title from the previous Senate energy bill. Kyle Pitsor, NEMA’s vice president of government relations, said Congress considers the bill a ‘must pass’ piece of legislation.

“At issue is whether the House will include an energy tax provision in its version, and when the two chambers meet to ‘conference’ the two versions, how energy tax issues will be handled,” Pitsor said. “For the NEMA tax provisions, the differences have to do with effective dates, scope and duration of the tax deduction. These are matters that will be sorted out as the two houses come together on a new ‘conference’ bill.”

Pitsor is also hopeful the legislation will include the NEMA-backed provisions in S. 2095 on energy conservation standards for compact fluorescent lamps, exit signs, distribution transformers, and traffic signals; and research and development for solid-state lighting.

“NEMA worked with the environmental community to reach agreement on the energy conservation provisions, and they have broad support,” he said. “The association supports a comprehensive energy bill, and we have worked with the Alliance for Energy and Economic Growth to support comprehensive legislation. NEMA remains committed to comprehensive energy legislation, and we have and will make our views known to the Congress and the White House. The situation is very fluid given the political season.”

The tax provision that NEMA supports calls for a $2.25 per square foot deduction for new or renovated commercial buildings that exceed certain requirements in the ASHRAE 90.1-2001 standard for lighting, HVAC and building envelope technologies.

The ASHRAE 90.1-1999 standard calls for the design of energy-efficient buildings and the use of energy-efficient products and systems that meet strict watts-per-square-foot power density standards. According to Joe Knisley, a contributing editor for EM , the maximum power densities (in watts per square foot) vary with the type of space. The power density requirements for an office are 1.3 watts per square foot, while hospital requirements are 1.6 watts per square foot.

NEMA’s Pitsor says the Department of Energy (DOE) has encouraged states to revise building codes to comply with ASHRAE 90.1-1999 by July 15, 2004, but said the federal government hasn’t and won’t take action to force states to adopt 90.1. DOE has encouraged states to satisfy 90.1-1999 by providing funding to facilitate revising state building codes. Pitsor says about one-fourth of the states satisfy 90.1-1999, one-fourth satisfy 90.1-1989, and the rest have something else or have no building energy efficiency standards at all.