Get tax credits for energy efficiency improvements

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So, does anyone know what a monopoly is?

A monopoly is the right to be the sole provider of a particular product or service. Someone who owns or owns a monopoly has no real competition and is generally not accountable to the market to the extent that someone in a competing company would be.

El Paso Electric is basically a monopoly. This is because the city council has, in effect, granted her sole authority to supply our community with electricity. Because of this, and the board bureaucracy, the company is essentially assured of profit. Partly because of this, it could be sold to a private investment company at a huge premium above the stock market value.

To the surprise of no one in our community, El Paso Electric has already started raising electricity rates. I think it’s fair to say that everyone in this community expects the company to continue to raise its electricity rates.

So the question is, what can we do about it?

There is very little we can do about the legal monopoly – the city council granted those legal rights and we will have to live with that monopoly for many years to come. We can do something about our electricity consumption. We can also pursue our own alternative sources of electricity.

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WPS High School Solar Fair

Students from northeastern and central Wisconsin gather to demonstrate their solar energy projects.

Milwaukee Journal Sentinel

1. Alternative Sources of Electricity

I have some friends who made the decision to switch to solar a few years ago and it really paid off. They have several solar panels on their roofs that have been incredibly effective. I estimated that the panels would pay for themselves in about seven years.

This is mainly due to the falling cost of solar panels, the rise in the cost of electricity and the available federal tax credits. The tax credits can be significant.

For example, there is a housing energy credit that allows us to reduce our taxes by about 26% of the cost of qualified real estate. Qualifying features include solar panels, solar water heaters, and other similar equipment. Interestingly, there are some solar roof shingles, which can serve as both roofing materials and solar energy collection aids, that qualify, although they serve dual purposes.

2. Tax Credits for Efficiency Improvements

In addition, we may be able to claim a tax credit for 10% of the cost of qualifying improvements, such as energy-efficient windows, doors, skylights, insulation and certain types of roofing materials. The same goes for energy efficient heating and air conditioning systems, including natural gas and propane water heaters.

There are similar credits and deductions for business owners installing similar equipment in new or existing buildings. This credit also includes indoor lighting equipment, as well as heating, cooling, air conditioning and hot water systems.

El Paso Electric recently announced that it will charge a minimum fee for users who generate their own electricity. The reason for this was downright ridiculous in my opinion. Whether you agree or not, I think we can all agree that our electricity rates will continue to rise, perhaps significantly.

So, if you don’t like being a victim, and may be interested in buying or leasing alternative energy equipment, there are significant tax breaks that can be available to fund those purchases and improvements.

I urge you to contact your tax advisor and learn what those federal tax incentives are and how they can help make this happen for you.

David Leeper is a certified federal tax attorney with 40 years of experience. He can be reached at 915-581-8748, [email protected] and leepertaxlaw.com.

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