New Bill Seeks to 'Cut Energy Bills at Home'

November 30, 2011

A new bill that would provide tax incentives for home performance upgrades has been introduced by U.S. Senators Olympia J. Snowe (R‐Maine), Jeff Bingaman (D‐N.M.), and Dianne Feinstein (D‐Calif.).  The “Cut Energy Bills at Home Act” would provide as much as a 30 percent tax credit–up to $5,000–for upgrades that reduce whole-home energy consumption. 

The current residential energy efficiency tax credit, set to expire at year end, provides a tax credit for the purchase cost of windows, doors, insulation and boilers, according to a press release from the the senators.  The new bill "would, for the first time, provide tax credits for actual energy savings," it notes.

Under the bill, the value of the credit begins at $2,000 for a 20 percent reduction in the energy consumption of a residential home for heating, cooling, water heating, and permanent lighting. The credit increases by $500 for every additional 5 percentage point increase in energy savings, up to $5,000. The credit is capped at 30 percent of the cost of the improvements and expires at the end of 2014.

The bill also defines how to calculate energy savings using computer modeling calibrated to actual energy bills before the improvements, and sets requirements for the contractor, installation process, and the modeling software to ensure work quality.

"We’ve been in discussion with Senate staff to gain a better understanding of the new bill,” says David Walker, VP, Window & Door Dealers Alliance. “We support the goal of increasing the energy efficiency of American homes, but we are not clear on the bill’s potential impact on the window and door business.”

"At a time of finite federal dollars, we must prioritize tax policies towards the most cost‐effective method to secure our energy future," says Snowe. "Performance-based energy efficiency can transform America’s homes. I commend Senators Bingaman and Feinstein for their longtime leadership on energy efficiency, and look forward to working with our colleagues in Congress to address this vital issue.”

“This new tax credit rewards homeowners for reducing the amount of energy they use,” Bingaman states. “It’s an incentive that encourages homeowners to choose the most sensible and inexpensive option for saving energy. And, by helping lower energy use, this tax credit also will help reduce unhealthy air pollution and greenhouse gas emissions.”

“By offering incentives for energy efficient renovations, this bill helps create jobs in California’s ailing construction sector while at the same time decreasing energy use and pollution. This sort of investment—putting Americans back to work while leaving behind lasting improvements—is the type of legislation Congress should be spending more time on,” adds Feinstein.

The new bill has attracted the support of the home performance industry. "Efficiency First applauds Senators Snowe, Bingaman, and Feinstein’s introduction of the first home performance tax credit," says Greg Thomas, chairman of industry group and CEO of Performance Systems Development. "This legislation is a monumental step forward for both homeowners and the home performance industry. By providing financial incentives for real energy savings, the 25E tax credit will save energy, save money, and create jobs. This is a real and sustainable growth opportunity for our industry and real savings for the American homeowner. This is a win-win-win for America.”

WDDA has yet to take any position on the bill, according to Walker. "What we do know is the likelihood of passage this year is quite slim. Industry, however, can expect backers of the bill to push the bill hard next year."

At the moment, WDDA, as well as other industry organizations such as the American Architectural Manufacturers Association and the Window and Door Manufacturers Association, are more focused on the tax credits targeted specifically at windows, doors and skylights, which are set to expire at year end, Walker reports. "As to the current 25c tax credit, the next few weeks will determine whether it is part of of tax extender package. We remain vigilent on that front too, joining other industry groups in the push for higher incentives."