Use Tax Credits to Fund Efficiency Upgrades
By Megan McKoy

The idea of living in a more efficient home—and paying lower utility bills—has widespread appeal. But finding ways to fund improvements can be difficult during hard economic times.

Fortunately, the federal government offers two ways to recover some of your expenses when planning upgrades: energy efficiency tax credits and renewable energy tax credits.

Through the 2009 American Recovery and Reinvestment Act—know as the federal stimulus bill—Uncle Sam offers a personal tax credit of up to $1,500 for energy efficiency measures made at existing homes in 2009 and 2010. You can recover 30 percent of the cost of adding insulation materials and exterior doors, windows, and roofs designed to help reduce your home’s heat loss or gain. The credit also covers efficient central air conditioners, air-source heat pumps, hot water boilers, and biomass stoves.

With a maximum value of $1,500 for all improvements made in 2009 and 2010, the credit may be applied toward material costs on all projects. You can also use it on installation costs for heating, ventilation and air conditioning systems and biomass stoves.

ENERGY STAR, a joint program of the U.S. Department of Energy and the U.S. Environmental Protection Agency, provides guidelines on what qualifies for both tax credits at www.energystar.gov, keyword “Tax credits.”

You can file for energy tax credits using IRS Form 5695. Remember to get a Manufacturer Certification Statement (a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit) for your records. Both of the energy tax credits are non-refundable—they can increase your refund by reducing the taxes you owe, dollar for dollar, andcan becarried forward to reduce your taxes in following years. But you don't get a separate check for the credit amount.

If you are in the market to replace your water heater, a beneficial program offered by West Florida Electric Cooperative (WFEC) offers free water heaters for new & existing homes with a load control device.  These water heaters are high-efficiency, quick recovery units that have a high energy factor. They are very well-insulated with foam insulation around the tank. With a few additional efficiency measures like wrapping your pipes and insulating the bottom of the unit – they become even more efficient. Any member who participates in the H2O Plus program is guaranteed hot water for life. If the unit you receive from WFEC ever encounters electrical problems, begins leaking or has a problem with the thermostat, then WFEC will repair or replace the water heater at no cost to the member. Members of WFEC must be enrolled in the H2O Plus program to receive this guarantee. H2O Plus is an innovative program that puts technology to work to save energy. At the heart of the program is a load control device installed on your water heater that allows our power supplier, PowerSouth, to control your unit during those times of day when the demand for power is greatest (and when it is most expensive). However, if a member does not want to participate in the H2O Plus program, the same energy efficient water heaters are available for purchase from the cooperative.

Source: ENERGY STAR, Database for State Incentives for Renewables & Efficiency

Megan McKoy writes on consumer and cooperative affairs for the National Rural Electric Cooperative Association, the Arlington, Va.-based service arm of the nation’s 900-plus consumer-owned, not-for-profit electric cooperatives.