The $14.5 billion package provides tax incentives for consumers to buy more energy efficient assets and for manufacturers and builders to provide them. Among these assets are energy-smart vehicles, building materials and solar energy equipment. Those wanting to take advantage of these tax credits should check with their tax professionals to make sure they conform to the effective dates of the Act.

"For most small-to-lower income taxpayers the biggest effect of the energy bill will be the provisions on appliances and vehicles," said Bob Sperling, a tax advisor on the tax research hotline at Fiducial's Technical and Administrative Support Center (TASC) in Columbia, MD.

The tax credits are available for home improvements such as new doors and windows, air-circulating fans and insulation that meet certain efficiency standards. The credit applies to improvements made after Dec. 31 and is for 10% of the cost up to a lifetime maximum of $500. No more than $200 can be attributable to windows.

A new tax credit is available for the purchase of hybrid, fuel cell, advanced lean burn and other alternative power vehicles which vary from $400 to $2,400 depending generally on the weight class of the vehicle and the rated fuel economy. The higher the fuel economy, the higher the one-time tax credit on new vehicle purchases. Buyers can also get a credit of $250 to $1,000 based on the vehicle's estimated lifetime fuel savings.

The credit applies to vehicles placed in service after 2005 with termination dates varying with the type of alternative power vehicle. The fine print of the law limits to 60,000 vehicles per manufacturer from 2006 through 2010.

Life in the fast lane

But there's a detour ahead for those buying hybrids who think the fast lane is one step from the showroom since carpool lane privileges will not be available to all who want them, especially in California which has more High Occupancy Vehicle (HOV) lanes than any state in the country, according to CalTrans, the state Department of Transportation.

Under state law, the California Department of Motor Vehicles can issue only 75,000 decals to hybrid drivers allowing them to drive in the diamond-shaped carpool lane but there already are 57,164 hybrids currently registered in the state, the DMV said.

Gene Polley, a senior business advisor for Fiducial in San Diego, believes hybrid vehicles will be a huge item for California residents.

"If you can move to the HOV lane it makes a big difference in purchasing the vehicle," he said. "They would improve commute times with vehicles burning less gas. The HOV lanes [here] are not anywhere near capacity."

One of Polley's small business clients, who owns a beauty supply and hair salon, called him after the energy bill was signed, anxious about the prospects of cutting down his lengthy commute.

"He lives in north county and has one business in mid-city and another in south bay," said Polley. "He's pretty far from his new locations but he's located right where the HOV lanes start. He would definitely be able to take advantage of it."

Still, it depends on the where the consumer is located as to whether they want to purchase a hybrid or alternative fuel vehicle.

Despite much of the state's economy geared to the auto industry, Michiganders are not real enthused about taking hybrids for a test drive, according to Mark Gabriel, who handles client acquisition and consulting duties for his father, Ken, a Fiducial franchisee in St. Claire Shores.

Gabriel doesn't see many state residents jumping on the hybrid bandwagon unless gasoline prices reach the $4 to $5 level. Drawing a distinction between the energy crisis of the early 1970s, he said many people didn't go whole hog into conserving fuel then because gas and heating oil prices didn't reach extremes. He thinks some vehicle fleets will go the alternative fuel route in large numbers because it's going to save them money, but it's a different story for everyone else.

"Individuals act more with sticks and carrots," he said. "Around here you don't see people cutting back on their driving until you go up to the pump and it's $5 a gallon and they say 'oh my gosh this is out of hand.' "

Unless the infrastructure is in place to provide ample natural gas refills for alternative powered vehicles, though, Gabriel said there won't be many drivers making the switch.

"Until that becomes feasible where a Sunoco or some other company adds a pump for that alternative fuel at 20,000 locations across the country it's a bit of a Catch-22 when those two lines will converge," he said. "You can't go to the market with a $50,000 vehicle. People want mini-vans and SUVs. They don't want a mini-Cooper with a hybrid engine that's probably super efficient but the demand and supply will have to come together for it to happen."

A hot commodity

Consumers also can get a credit for using solar energy, including qualifying solar panels that produce electricity as well as solar equipment to heat water. The new law contains a 30 percent tax credit for the purchase of qualifying residential solar water heating, photovoltaic equipment, and fuel cell property. The maximum credit is $2,000 for solar equipment and $500 for each kilowatt of capacity for fuel cells. The credit applies for property placed in service after 2005 and before 2008.

Polley admitted that he and his wife need to replace the roof on their house so they're going to look into some of the solar energy credits.

"There are some benefits if you start generating solar electricity," he said.

Solar energy is a hot commodity, as you would expect in the housing market in Albuquerque, NM, said Fiducial franchisee Owen Fallon.

"Because there are 300 days of sunshine each year the individual market has been large for solar power," said Fallon who joined the Fiducial network in 1999. "It's booming and is expected to continue."
 
Also prospering across the Sun Belt are heating, ventilation and air conditioning companies. Residential builders are going to be pushing these new tax credits which include $300 for replacing central air conditioners with more energy efficient ones.

Fallon said many of the homes in these drier climates have evaporative cooling systems that have historically been the standard. While this type of cooling is less expensive in terms of the initial investment and operating costs, it involves drawing in hot outside air through a water-moistened filter to put moisture back into the super dry air in the Southwest. But it uses a lot of water in the process. That's why there are a lot of incentives at the municipal level for residential and commercial builders to install high efficiency air conditioners.

Home builders constructing new energy efficient homes in the U.S. may qualify for a business tax credit of either $2,000 or $1,000 per home, depending on the type of home and the energy reduction standard it meets. The credit applies to homes whose construction is substantially completed after Dec. 31, 2005, and which are purchased after Dec. 31, 2005 and before Jan. 1, 2008.

A deduction is also available for energy efficient commercial buildings meeting a 50% energy reduction standard. The deduction -- generally $1.80 per square foot but 60 cents per square foot in some cases -- is effective for property placed in service after Dec. 31, 2005 and before Jan. 1, 2008.

On the comeback trail

The Act contains considerable tax breaks for oil, gas and renewable energy companies.

In Houston, a major energy hub in the U.S., energy companies are coming back after taking hits caused by the wake of the Enron debacle.

"Energy companies caught a lot of flack from that," said Maribeth Bradberry, branch manager of Fiducial's Houston office. "If they can get some breaks from recouping the losses they incurred from losing contracts I think that may be part of the bill's intent. It's right after the Enron scandal so many oil and gas accountants are just now starting to pick up."

Bradberry has noticed that there's been more hiring going on and the rebound of energy companies has helped the local economy.

"It looks like it's picking up," she said. "Hopefully they'll pass the savings onto the consumer."

For HVAC companies, Bradberry said the Act could increase their installation business especially if people feel they're going to get a tax break on heating and air conditioning which is a big deal here.

"It's been hotter than last year, staying in the 90s and lows 100s and the humidity is unbearable," she said.

Randy Penn, branch manager of Fiducial's Arvada, CO, office admitted that construction companies and HVAC clients should get some business out of the tax breaks but doesn't see it "as a big kick."

One provision of the law that Penn said will make a difference is an extension of daylight savings time, beginning in 2007, by starting it three weeks earlier and ending it a week later.

"This will help our service clients so the garage owners can open the bay doors for natural light instead of turning on the lights at five p.m.," he said. "Or when they get there in the morning they may not have to burn their lights as long."

Penn noted that the only factions who are concerned about extending daylight savings time is the state of Arizona "where it's too hot already" and big companies who manage timekeeping systems such as cell phones, telecommunications and cable television that must ensure everything changes "like it's supposed to."

The reason why Y2K wasn't such a major deal in the end, he said, is that everybody got on it in a big way.

"Most of all, if it's important to you, you'll change it," he said. "If you're on a system that needs to be synchronized the big companies will take care of that for you like setting your watch ahead."

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STEPHEN PAREZO is the Media Manager for Fiducial.