Effective August 8, 2005 Statutes at Large 119 Stat. 594 | Public law 109-58 | |
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Other short titles Coal Leasing Amendments Act of 2005Electricity Modernization Act of 2005Energy Policy Tax Incentives Act of 2005Energy Research, Development, Demonstration, and Commercial Application Act of 2005Energy Tax Incentives Act of 2005Federal Reformulated Fuels Act of 2005Indian Tribal Energy Development and Self-Determination Act of 2005EPAct 2005John Rishel Geothermal Steam Act Amendments of 2005National Geological and Geophysical Data Preservation Program Act of 2005No Oil Producing and Exporting Cartels Act of 2005NOPECOil Shale, Tar Sands, and Other Strategic Unconventional Fuels Act of 2005Price-Anderson Amendments Act of 2005Public Utility Holding Company Act of 2005SAFE ActSet America Free Act of 2005Spark M. Matsunaga Hydrogen Act of 2005Underground Storage Tank Compliance Act Long title An Act to ensure jobs for our future with secure, affordable, and reliable energy. Enacted by |
The Energy Policy Act of 2005 (Pub.L. 109–58) is a bill passed by the United States Congress on July 29, 2005, and signed into law by President George W. Bush on August 8, 2005, at Sandia National Laboratories in Albuquerque, New Mexico. The act, described by proponents as an attempt to combat growing energy problems, changed US energy policy by providing tax incentives and loan guarantees for energy production of various types.
Contents
- General provisions
- Tax reductions by subject area
- Change to daylight saving time
- Commercial building deduction
- Energy management
- Summary of Energy Savings Percentages Provided by IRS Guidance
- Cost estimate
- Support
- Criticism
- Legislative history
- Provisions in the original bill that were not in the act
- Preliminary Senate vote
- Conference committee
- Final Senate vote
- References
The Public Utility Holding Company Act of 1935 was repealed, effective February 2006, by the passing of this act.
General provisions
In Congressional bills, an "authorization" of a discretionary program is a permission to spend money IF money has been appropriated; while an "appropriation" is the provision of funds so it can be spent. The authorizations above will not get carried out if money is never appropriated for them.
Tax reductions by subject area
Change to daylight saving time
The bill amends the Uniform Time Act of 1966 by changing the start and end dates of daylight saving time, beginning in 2007. Clocks were set ahead one hour on the second Sunday of March (March 11, 2007) instead of on the first Sunday of April (April 1, 2007). Clocks were set back one hour on the first Sunday in November (November 4, 2007), rather than on the last Sunday of October (October 28, 2007).
Lobbyists for this provision included the Sporting Goods Manufacturers Association, the National Association of Convenience Stores, and the National Retinitis Pigmentosa Foundation Fighting Blindness.
Lobbyists against this provision included the U.S. Conference of Catholic Bishops, the United Synagogue of Conservative Judaism, the National Parent-Teacher Association, the Calendaring and Scheduling Consortium, the Edison Electric Institute, and the Air Transport Association. This section of the act is controversial; some have questioned whether daylight saving results in net energy savings.
Commercial building deduction
The Act created the Energy Efficient Commercial Buildings Tax Deduction, a special financial incentive designed to reduce the initial cost of investing in energy-efficient building systems via an accelerated tax deduction under section §179D of the Internal Revenue Code (IRC)[4] Many building owners are unaware that the [Policy Act of 2005] includes a tax deduction (§179D) for investments in "energy efficient commercial building property" designed to significantly reduce the heating, cooling, water heating and interior lighting cost of new or existing commercial buildings placed into service between January 1, 2006 and December 31, 2013. §179D includes full and partial tax deductions for investments in energy efficient commercial building that are designed to increase the efficiency of energy-consuming functions. Up to $.60 for lighting, $.60 for HVAC and $.60 for building envelope, creating a potential deduction of $1.80 per sq/ft. Interior lighting may also be improved using the Interim Lighting Rule, which provides a simplified process to earn the Deduction, capped at $0.30-$0.60/square foot. Improvements are compared to a baseline of ASHRAE 2001 standards.
To obtain these benefits the facilities/energy division of a business, its tax department, and a firm specializing in EPAct 179D deductions needed to cooperate. IRS mandated software had to be used and an independent 3rd party had to certify the qualification. For municipal buildings, benefits were passed through to the primary designers/architects in an attempt to encourage innovative municipal design.
The Commercial Buildings Tax Deduction expiration date had been extended twice, last by the Energy Improvement and Extension Act of 2008. With this extension, the CBTD could be claimed for qualifying projects completed before January 1, 2014.
Energy management
The commercial building tax deductions could be used to improve the payback period of a prospective energy improvement investment. The deductions could be combined by participating in demand response programs where building owners agree to curtail usage at peak times for a premium. The most common qualifying projects were in the area of lighting.
Summary of Energy Savings Percentages Provided by IRS Guidance
Energy Savings Percentages permitted under Notice 2006-52 Interior Lighting Systems 16⅔% Heating, Cooling, Ventilation, and Hot Water Systems 16⅔% Building Envelope 16⅔% Effective for property placed in service January 1, 2006 – December 31, 2008
Energy Savings Percentages permitted under Notice 2008-40 Interior Lighting Systems 20% Heating, Cooling, Ventilation, and Hot Water Systems 20% Building Envelope 10% Effective for property placed in service January 1, 2006 – December 31, 2013
Energy Savings Percentages permitted under Notice 2012-22 Interior Lighting Systems 25% Heating, Cooling, Ventilation, and Hot Water Systems 15% Building Envelope 10% Effective date of Notice 2012-22 – December 31, 2013; if § 179D is extended beyond December 31, 2013, also effective (except as otherwise provided in an amendment of § 179D or the guidance thereunder) during the period of the extension
Cost estimate
The Congressional Budget Office review of the conference version of the bill estimated the Act will increase direct spending by $2.2 billion over the 2006-2010 period, and by $1.6 billion over the 2006-2015 period. The CBO did not attempt to estimate additional effects on discretionary spending. The CBO and the Joint Committee on Taxation estimated that the legislation would reduce revenues by $7.9 billion over the 2005-2010 period and by $12.3 billion over the 2005-2015 period.
Support
The collective reduction in national consumption of energy (gas and electricity) is significant for home heating. The Act provided gible financial incentives (tax credits) for average homeowners to make environmentally positive changes to their homes. It made improvements to home energy use more affordable for walls, doors, windows, roofs, water heaters, etc. Consumer spending, and hence the national economy, was abetted. Industry grew for manufacture of these environmentally positive improvements. These positive improvements have been near and long-term in effect.
The collective reduction in national consumption of oil is significant for automotive vehicles. The Act provided tangible financial incentives (tax credits) for operators of hybrid vehicles. It helped fuel competition among auto makers to meet rising demands for fuel-efficient vehicles. Consumer spending, and hence the national economy, was abetted. Dependence on imported oil was reduced. The national trade deficit was improved. Industry grew for manufacture of these environmentally positive improvements. These positive improvements have been near and long-term in effect.
Criticism
Legislative history
The Act was voted on and passed twice by the United States Senate, once prior to conference committee, and once after. In both cases, there were numerous senators who voted against the bill. John McCain, the Republican Party nominee for President of the United States in the 2008 election voted against the bill. Democrat Barack Obama, President of the United States from January 2009 to January 2017, voted in favor of the bill.
Provisions in the original bill that were not in the act
To remove from 18 CFR Part 366.1 the definitions of “electric utility company” and exempt wholesale generator (EWG),that an EWG is not an electric utility company.
Preliminary Senate vote
June 28, 2005, 10:00 a.m. Yeas - 85, Nays - 12
Conference committee
The bill's conference committee included 14 Senators and 51 House members. The senators on the committee were: Republicans Domenici, Craig, Thomas, Alexander, Murkowski, Burr, Grassley and Democrats Bingaman, Akaka, Dorgan, Wyden, Johnson, and Baucus.
Final Senate vote
July 29, 2005, 12:50 p.m. Yeas - 74, Nays - 26