The nation now has a new energy bill. The Energy Policy Act of 2005 gives the country the foundation for a more secure, reliable and affordable energy future. Significantly for the lodging and hospitality industry, the new energy act also creates the potential for greater profitability, thanks to its promotion and support of energy efficiency.
The economy, and indeed our way of life, depends on energy. For those in the lodging and hospitality industry, energy accounts for three to five percent of operating costs. The benefits of greater energy efficiency also extend to the environment and even our national security.
The legislation creates higher energy-efficiency standards for many new commercial and consumer products that use large amounts of energy, including:
Fluorescent lighting ballasts, effective 2009 (installed ballast, effective date 2010). Mercury vapor ballasts are banned as of 2008;
All lighted exit signs, which now must meet Energy Star Version 2.0 standards (input power of 5 Watts or less per face) as of 2006;
Electric heating and cooling equipment (packaged air conditioners and heat pumps), effective 2010;
Refrigerators and freezers, effective 2009, with standards to be finalized by 2010 and put into effect by 2012;
Commercial ice makers, effective 2010.
The energy law will also offer $2.7 billion in tax deductions and credits to encourage the purchase of high efficiency products and appliances. For the commercial sector, these include a maximum tax deduction of $1.80 per square foot for commercial buildings that save 50 percent or more in energy costs compared to a reference building defined by ASHRAE 90.1-2001 standards. This tax deduction applies only to interior lighting, heating and cooling equipment, water heating and the building envelope on a per building basis. If the building does not qualify for these savings it might still qualify for interior lighting savings, but at a reduced maximum tax deductionÃ.‚¬"$0.60 cents per square foot.
The lodging and hospitality industry, among other commercial segments, will also be eligible for tax credits if they install photovoltaic or solar thermal panels, microturbines, or fuel cells in 2006 and 2007. The solar power credit is 30 percent of the cost in the installation year with no cap. For microturbines with a maximum capacity of 2000 kilowatts (kW), the credit is a maximum of $200.00 per 1 kW produced, up to 10 percent of the cost. And fuel cells that generate at least 0.5 kW using an electrochemical process are eligible for a maximum of $500.00 per 0.5 kW up to 30 percent of the cost. To maximize energy savings, the lodging and hospitality industry is also encouraged to contact the electric company or utilities that service their company.
For those with properties throughout a region or the country, EEIÃ.‚¬s National Accounts Network can help at no cost. The Network focuses exclusively on the needs of companies with multiple sites or outlets.
The Network can also help lodging and hospitality facilities take advantage of any incentive programs or other services. The National Energy Customer Assistance Network (NECAN) directory is available online at www.eei.org.
The Energy Policy Act of 2005 will lead to a future with a more reliable, affordable and environmentally sustainable supply of energy. And with its incentives for energy efficiency, it is a future that looks even brighter for the lodging and hospitality industry.
Steve Kiesner is director National Accounts for the Edison Electric Institute, an energy industry lobbying group.