Maximizing Energy Rebates
Rebates for energy upgrades are on the rise, with utilities, governments and other agencies offering rebates and cash incentives that can help make energy projects more affordable. In California, for example, investor-owned utilities have budgeted upward of $2 billion to support energy-efficiency initiatives from 2006 through 2008.
Securing and administering rebates can be challenging, particularly for retailers with sites scattered across the country. Industry expert Mark Jewell, president of RealWinWin, a Philadelphia-based energy demand-reduction and rebate-administration consultancy, offers these suggestions for maximizing energy rebates:
Understand who is eligible. Most incentive programs send checks to the party named on the utility bill, and this can cause confusion during construction and renovation projects. For instance, it could happen that a temporary electric meter or some other item is in the contractor’s name. In cases like this, submit an affidavit, signed by all parties, to the funding source, along with the initial rebate application. The affidavit should explain who should receive the incentive and why.
“When preparing agreements with contractors, specify that they must cooperate with you or your agents to obtain any available incentives,” Jewell said;
Compare programs. In many cases, it’s necessary to choose between several rebate opportunities for a single project. Carefully review the available programs to select the most lucrative;
Invest in upfront engineering expertise. Designing “to code” isn’t enough to maximize energy efficiency—or rebate eligibility. Invest in the engineering expertise necessary to earn every possible rebate, which will also save on life-cycle costs. In some jurisdictions, the cost of this upfront engineering can be subsidized.
“Also, talk to utility companies and other funding sources about custom incentive programs,” Jewell said;
Specify proper configuration. Some incentive programs take a prescriptive approach (pays a certain amount per qualifying component); others take a performance approach (pays only if certain efficiency standards are exceeded).
It’s important to understand how the incentive is earned prior to specifying the equipment. For example, installing highly efficient lighting fixtures too close together could exceed a rebate’s maximum watts per square foot, making the project ineligible for incentives;
Fine-tune the specification. Many construction specs include language that lets bidders substitute “equivalent” equipment when necessary. Make sure these changes don’t reduce efficiency and rebate eligibility;
File for rebates as early as possible. Any incentive program can experience a sudden loss of funding. Stay on top of the filing dates for all programs a project might be eligible for, and file early;
Connect purchases with incentive approvals. Since it’s often necessary to place orders for equipment in advance of construction, good communication with the utility or funding source is key. Engage them at the initial stages of the project to establish the cause-and-effect of being approved for the incentive and ordering the equipment;
Plan and monitor the measurement and verification (M&V) process. Often, more generous rebates are available for projects that are documented more thoroughly. Also, mistakes in the collection of data can result in the loss of the rebate; and
Trust experts. Some companies force their vendors and contractors to provide incentive-processing services as a condition for winning a bid. But rebate processing is typically not a vendor’s core business, and it is a lose-lose situation to require one to absorb the cost of finding incentives, filing rebate paperwork, staying on top of utilities and so on. It better serves everyone’s needs, Jewell said, to outsource the function to a rebate-processing firm.
Top States for Incentives
The Energy Policy Act of 2005 (EPAct) offers $2.7 billion in tax deductions and credits to encourage facilities to purchase high-efficiency products. Steve Kiesner, director, national accounts, Edison Electric Institute (EEI), advises facility managers to try to combine the federal credits with any applicable state electric-utility incentives. EEI provides a list of electricutility incentive programs at www.eei.org/industry_issues/retail_services.
To help prioritize investments, here is a list of the top 10 states (by budget) for incentive programs:
California (more than $600 million in 2006, about $2 billion by 2008)
New York (about $280 million in 2006)
Florida (more than $200 million in 2006)
New Jersey (about $160 million in 2006)
Massachusetts (more than $100 million in 2006)
* Source: Edison Electric Institute (EEI)
Home Depot Projects Lower Profit in 2007
Atlanta, The Home Depot Inc. said Wednesday it will pump $2.2 billion into improving its business this year even as it expects lower earnings and slim sales growth. Home Depot said that for fiscal 2007 it expects sales growth in the range of flat to an increase of 2%, a decline in comp-store sales in the middle single digit percentages and an earnings per share decline of 4% to 9%.
Including the effect of a 53rd week in its fiscal year, consolidated sales are expected to increase by 1% to 2%, and earnings per share are expected to decline by 3% to 8%, Home Depot said.
CEO Frank Blake told investors at Wednesday’s conference that like last year, “2007 also will be a difficult year.” But he said it will be a year of focus on Home Depot’s priorities and a year with “hopefully less noise.”
The “noise” was apparently a reference to the investor furor over former CEO Bob Nardelli’s hefty compensation in light of the company’s lagging stock price. Nardelli resigned in early January after six years at the helm of the company. He took with him a severance package valued at $210 million.
To improve its business, Home Depot said it will invest $2.2 billion this fiscal year in key priorities, including the opening of 115 stores. The investment includes $1.6 billion in capital spending and $600 million in expense.
Home Depot said it will recruit master trade specialists, simplify its staffing model, use more technology to aid customer service, and redesign employee compensation and reward plans. It also will invest in new merchandise and review its pricing strategies. Additionally, the chain will spend money on customer loyalty programs, direct-ship programs, credit programs and other specialty sales initiatives.
Federated Plans Name Change
New York City, Federated Department Stores on Tuesday said it would ask shareholders to approve changing the company’s corporate name to Macy’s Group Inc. A vote to amend the corporation’s charter to accommodate the new name will be held in conjunction with Federated’s annual meeting on May 18. If approved, the company will be known as Macy’s Group Inc., effective June 1. The move comes on the heels of the company changing most of its store nameplates to Macy’s.
“Macy’s Group is the appropriate name for our company, given that about 90% of our sales involve the Macy’s brand. That said, Bloomingdale’s is—and will remain—a very important part of our company,” said Terry J. Lundgren, Federated’s chief executive. Federated Department Stores also said stronger sales at established stores and lower costs drove a 5% rise in fourth-quarter earnings. For the quarter ended Feb. 3, net income rose to $733 million from $699 million the prior-year period. Sales fell 4% to $9.16 billion from $9.57 billion, as the company shuttered 80 “duplicative” store locations. Comp-store sales rose 6.1% in the quarter.
During the quarter, Federated lowered its selling, general and administrative costs 11% to $2.31 billion.
The company also announced a $4 billion increase to its stock buyback program and said it will immediately repurchase 45 million shares for $2 billion under the plan.