Legislation Introduced to Amend Tax Credits and Tie it to ENERGY STAR; Industry Responds FavorablyOctober 16th, 2009 by DWM Magazine
For months, there has been action from some in the industry, including the Window and Door Manufacturers Association (WDMA), to modify the .30/.30 standard in the window tax credit so it is tied to ENERGY STAR Standards instead.
Well almost eight months since .30/.30 was introduced, legislation (S. 1792) was introduced to this end on October 15 by Sen. John Rockefeller (D – W.Va.) and Sen. Chuck Grassley (R – Iowa) and was referred to the Committee on Finance.
The bill would replace the .30/.30 standard for the $1,500tax credit and replace it with the 2010 ENERGY STAR® standards for windows, doors and skylights. It would apply to purchases in 2010.
The WDMA released a statement the day after the bill’s introduction applauding the legislation.
“The one-size-fits-all approach of the current tax credit fails to recognize that different regions of the country require different standards to achieve improved energy efficiency depending on climate,” says WDMA executive vice president Michael O’Brien. “A window, door or skylight designed to protect from the cold winters of the north is not ideal to face the heat of a southern summer. Established ENERGY STAR standards, widely recognized by consumers, builders and retailers, recognize these differences and have different requirements for four different regions.”
“Modification of this tax credit has been a top priority for WDMA,” adds WDMA chairperson Steve Tourek, senior vice president and general counsel for Marvin Windows and Doors. “We commend Senators Rockefeller and Grassley for their leadership in introducing this bill … “
The American Architectural Manufacturers Association (AAMA) weighed in on the bill as well as its members also would have liked to see the tax credit more closely tied to ENERGY STAR.
“In January, AAMA and its members urged the U.S. Senate and House of Representatives to support legislation that would extend and expand the 25C tax credits for energy-efficient home improvements, including ENERGY STAR® products such as doors and windows,” says AAMA president Richard Walker. “When the .30/.30 legislation was enacted, there was much confusion within the marketplace. Understandably, ENERGY STAR qualifications are easier for consumers to understand than U-values and solar heat gain coefficients.”
Walker says he is pleased to see a bill introduced that would tie the credits to ENERGY STAR–a proven program in the marketplace.
“While the energy savings realized with ENERGY STAR technology are well documented – and while manufacturers have invested in manufacturing products that deliver superior energy-efficiency – incentivizing consumer behavior is an ideal way to encourage homeowners to invest in our lagging economy,” he says. “In short, these tax credits help to build consumer demand for energy-saving technology, create thousands of jobs, save precious energy resources and reduce consumer energy bills.”
Several individual manufacturers also have expressed a positive reaction to the bill-though Gorell president Wayne Gorell notes he has mixed feelings about it.
“I’m hesitantly in favor of the proposed legislation,” he says. “I think the .3 U-value requirement is better for everyone than the ENERGY STAR standards, but the shading coefficient is better to change with the geographic location. Hopefully ENERGY STAR will adjust the standards to reflect a better U-value but retain the shading coefficient to adjust to climatic conditions in the near future.”
Truseal’s Ric Jackson says it is good for the industry that this action has been taken.
“It’s not easy to make one window for all environments,” he says. “It’s good for consumers because .30/.30 was overkill in the South, etc.”
He adds that if passed, this should help positively reinforce ENERGY STAR as a program that is well-designed and will help strengthen legitimacy of the program.
The current tax credit tied to the .30/.30 standard effectively eliminates skylights from even qualifying for tax credits. Skylights are installed in a non-vertical application, and are also tested that way. They also project above the plane of the roof, unlike windows which are installed in the plane of the wall. Because of this, their U-factor is higher than windows of identical construction. In addition, skylights are installed expressly to admit daylight. The 0.30 SHGC is actually too dark in the northern zones of the country and eliminate beneficial solar heat gain, according to the WDMA.
Skylight manufacturers such as VELUX have been working to get this changed since .30/.30 was introduced since it virtually eliminates any of its products from qualifying.
“If S.1792 is enacted, it should enable our customers to finally participate in the drive to replace old skylights with the most efficient, highest quality and readily available affordable units on the market,” says Roger LeBrun, product certification engineer for VELUX America Inc.
“Having different standards has been confusing to consumers. ENERGY STAR has become a recognized brand to the consumer and has proven to be the best standard available,” he adds.
LeBrun adds that VELUX would prefer to see the new criteria apply retroactively to 2010 ENERGY STAR qualified skylights bought by residential customers anytime after June 1, 2009.
“Many of the buyers who chose to proceed with “full-price” efficient skylights even though they did not expect a tax credit deserve the same benefit as those who replaced older windows and doors with qualifying options available to them,” he says.
Will Confusion Ensue?
Although many in the industry agree that the legislation is a step in the right direction, some also say it likely will create more confusion in the marketplace.
“Some in the industry have told me recently that they weren’t sure they should do anything,” says Jackson. “They’re worried that by the time their products reach the market they will be obsolete. I know some manufacturers who literally just received their .30/.30 results and now they will hear that competitors who stuck to their original products can access the [tax credit] program.”
He says manufacturers are now uncertain as to what their real target should be. Jackson encourages manufacturers not to waste time and look down the road two to three years and determine what their thermal performance should be.
Another challenge will be getting the correct information regarding this possible new legislation down the supply chain. Some dealers are still confused as to what products meet .30/.30 and now they may have new changes to convey to the customer.
“That whole line of communication is strained,” says Jackson. “The leaders will be those who find a way to communicate down the chain as far as dealers/contractors.”
DWM magazine spoke to the WDMA’s O’Brien about the bill and the timeline for its possible passage. He says if passed the new criteria would go into effect after December 31, which means the bill would have to be passed before that date. If it isn’t O’Brien says it could still be passed but would obviously then have an implementation date that goes into effect sometime in 2010.
“Our goal is for the bill to be added to tax credit legislation already moving through Congress,” says O’Brien. “We just have to find the right vehicle for which to attach it.”
He encourages the industry to contact their members of Congress now regarding the credit to “immediately gain their support.”
CLICK HERE to read Jim Plavecsky’s blog, which focuses on the legislation.