State and Utility Energy Efficiency Programs Can Use Provisions in New Federal Energy Law to Increase Local Energy Savings

September 14, 2005

Washington, D.C. — A report released today by the American Council for an Energy-Efficient Economy (ACEEE) concludes that the recently enacted federal Energy Policy Act of 2005 provides a number of opportunities for state and local energy efficiency programs, but will also require some adjustments to local programs. The report, The Federal Energy Policy Act of 2005 and its Implications for Energy Efficiency Program Efforts, summarizes the energy efficiency provisions of the new law (signed by President Bush on August 8, 2005) and focuses on two major provisions: tax incentives for advanced energy-saving technologies and practices and minimum energy efficiency standards on 16 products.

According to the new report, tax incentives in the new law provide more than $2 billion for advanced energy-saving technologies and practices beginning in 2006 and generally extending for two years. ACEEE suggests that utilities and other agencies implementing energy-saving programs should gear their programs to complement these new tax incentives, including enhanced programs to promote efficient new homes; new commercial buildings; appliances; heating, air conditioning, and water heating equipment; and retrofits to existing homes. The report also discusses opportunities to use the new tax incentives to promote hybrid, fuel cell, and advanced diesel vehicles and to advance use of stationary fuel cells and microturbines to generate electricity.

"Utilities and states are now spending around $1.5 billion annually on energy efficiency programs," noted ACEEE Executive Director Steven Nadel, who authored the new report. "The federal tax incentives will increase available funding by about 40% and provide an excellent opportunity for states and utilities to increase the amount of savings achieved by leveraging these federal resources," he stated.

The new law adopts standards on 16 products and directs the U.S. Department of Energy (DOE) to conduct rulemakings to revise some of these standards in addition to considering standards on several additional products. ACEEE recommends that program planners and implementers should consider increasing efforts to promote adoption of efficient products that will soon be subject to these DOE rulemakings, including refrigerated beverage vending machines, external power supplies, dehumidifiers, many types of commercial refrigeration systems, and ice makers. "By helping to better establish these advanced products in the market, program operators can increase the chances that DOE will adopt standards that achieve substantial savings," noted Nadel.

The new report also describes more than a dozen other efficiency provisions in the new law, ranging from provisions on appliance labeling and consumer education to provisions on combined heat and power plants and industrial efficiency improvements.

A downloadable copy is available at, or a hard copy can be purchased for $16 plus $5 postage and handling from ACEEE Publications, 529 14th St, N.W., Suite 600, Washington, D.C. 20045, phone: 202-507-4000, fax: 202-429-2248, e-mail: For additional information on the new energy bill and its impacts, see