EPAct 2005 instructs the Secretary of the Treasury to issue rules that lay out the procedure for certifying the design of projects based on qualified software programs and recognizing who can certify them. Initial guidance appears in IRS Notice 2006-52.
The “whole building method” (alternatives other than the "Interim Rule") applicable to the full (or partial) deduction compares the expected annual energy and power costs of the lighting and HVAC systems of the taxpayer’s building to the expected annual energy and power costs of the lighting and HVAC systems of a reference building that meets the minimum requirements of Standard 90.1-2001 to determine if the 50-percent (or 16-2/3) reduction is achieved. A reference building is a hypothetical building that is located in the same climate zone as the taxpayer’s building and is otherwise comparable to the taxpayer’s building (e.g., both serve the same function, such as a restaurant, hotel, retail space, etc.).
The Notice provides that the energy performance of the reference building is to be determined by following the methods for baseline building performance in the PRM in Appendix G of Standard 90.1-2004, using certain additional requirement from the 2005 California Title 24 Nonresidential Alternative Calculation (ACM) Approval Manual. Legislative history provides that the calculation methodology is to take into account design methods and technologies not otherwise credited in either Standard 90.1-2001 or the 2005 California ACM. |
‘‘(2) METHODS OF CALCULATION.—The Secretary, after consultation with the Secretary of Energy, shall promulgate regulations which describe in detail methods for calculating and verifying energy and power consumption and cost, based on the provisions of the 2005 California Nonresidential Alternative Calculation Method Approval Manual.
‘‘(3) COMPUTER SOFTWARE.—
‘‘(A) IN GENERAL.—Any calculation under paragraph
(2) shall be prepared by qualified computer software.
‘‘(B) QUALIFIED COMPUTER SOFTWARE.—For purposes of this paragraph, the term ‘qualified computer software’ means software—
‘‘(i) for which the software designer has certified
that the software meets all procedures and detailed methods for calculating energy and power consumption and costs as required by the Secretary,
‘‘(ii) which provides such forms as required to be filed by the Secretary in connection with energy efficiency of property and the deduction allowed under this section, and
‘‘(iii) which provides a notice form which documents the energy efficiency features of the building and its projected annual energy costs …
‘‘(5) NOTICE TO OWNER.—Each certification required under this section shall include an explanation to the building owner regarding the energy efficiency features of the building and its projected annual energy costs as provided in the notice under paragraph (3)(B)(iii).
‘‘(6) CERTIFICATION.—
‘‘(A) IN GENERAL.—The Secretary shall prescribe the manner and method for the making of certifications under this section.
‘‘(B) PROCEDURES.—The Secretary shall include as part of the certification process procedures for inspection and testing by qualified individuals described in subparagraph
(C) to ensure compliance of buildings with energy-savings plans and targets. Such procedures shall be comparable, given the difference between commercial and residential
buildings, to the requirements in the Mortgage Industry National Accreditation Procedures for Home Energy Rating Systems.
‘‘(C) QUALIFIED INDIVIDUALS.—Individuals qualified to determine compliance shall be only those individuals who are recognized by an organization certified by the Secretary for such purposes.” |
