Energy efficiency and the consumer
Written by: Patti Hagewood – Energy Analyst and
edited by Karen Koch CPA – Partner & Manager of Energy Services
This is part two of our energy series originally published last week. If you have not read part one, please do that now before continuing any further.
Energy efficiency is most directly related to weather conditions and subject to change accordingly. Building materials such as triple paned windows and super insulated wall systems are sometimes sold at a much higher price than lesser materials in moderate climates. The truth is, these materials do relatively little to reduce energy consumption in moderate climates. They are really only noticeably effective in much more extreme climate conditions, and of course if the winter there is unseasonably warm for a few years, the resulting energy savings will be slight, even in extreme climate regions.
More intangible scams exist as well, such as questionable 179D certifications, otherwise known as certification for EPAct, or the Energy Policy Act of 2005.
Many providers of these certifications claim they will always get their client the maximum deduction of $1.80 per square foot. This deduction can only be obtained if the taxpayer’s building is 50% more efficient than a reference building based on ASHRAE 90.1 efficiency standards. Both buildings must be modeled with energy modeling software, and the modeled energy consumption results are compared.
Without getting too technical here, suffice it to say the ASHRAE 90.1 efficiency standards are not that low. Beating them by 50% is no easy task and really can only be achieved by a building that has been designed for high efficiency. But the modeling results can easily be manipulated if the provider knows their way around the software. An input point here or there can be adjusted (for an unrealistic result), and voila, there’s that 50% savings!
Needless to say, the integrity of these providers is questionable at the very least, but unfortunately, they are quite prevalent in the tax industry. Bedford has been eye witness to several of these reports, and found numerous errors as well as unfounded statements and assumptions, along with ridiculous energy consumption results.
The problem here is there has been no reviewing standard for these reports. We believe in the past the IRS had not paid much attention to the quality of the few reports they actually audited. As far as we know, they really had no staff dedicated to confirming the accuracy of these reports.
In all fairness, there are relatively few individuals who would know exactly where and what to look for in the outputs of all ten approved modeling software programs in order to identify questionable inputs that can skew the numbers. The modeling software produces literally thousands of pages of information on building systems, and the system inputs are buried deep within these pages, so this situation is unlikely to change much in the future.
It’s hard to compete with cheaters. There will always be someone with a “cheaper”, “better” or “more effective” solution to offer, but it’s important for the consumer to check all the facts before settling on a provider for their needs. Don’t naively accept what the first guy tells you. Do your research.
In the energy world, there is relatively little black and white, but a whole lot of gray. In the gray is where the wheat gets separated from the chaff, and veracity hopefully will outweigh mendacity.
We at Bedford believe that the right way is the only way, and we will never resort to unethical tactics to win a contract. We will always offer our clients unbiased and fact-based advice, and our reports and consultations will be as factual and accurate as we can make them.