getting a grip on dealership energy · pdf filegetting a grip on dealership energy expenses...

Getting a Grip on Dealership Energy Expenses

How the average dealership can save $30-40k per year!

WithRobert Davis, CPA & Rudy Thomas, CPA, CVA

of Dixon-Hughes PLLC

and

David Ely of Energy Design Service Systems

Moderated byMike Bowers, Executive Editor of DealersEdge

Robert C. Davis III, CPA - Dixon Hughes, PLLCA Member in the Firm’s Memphis office, Robert Davis brings over 20 years of public accounting experience to his clients. He also gained valuable experience in the car business by spending countless hours in his father’s Lincoln-Mercury dealership when he was a child.

Currently, Robert serves dealership clients in the areas of accounting, audit, tax, and management advisory services. In addition, he is heavily involved in buy/sell agreements and litigation support services. Dealers around the country recognize Robert for his operational knowledge of automobile dealerships and the impact his Strategic Assessments have had on dealerships.

Education►University of Texas, M.P.A. (Taxation) ►University of Arkansas, B.S. (Business Administration)

Professional/Civic Organizations►American Institute of Certified Public Accountants (AICPA) ►President of Olive Branch Country Club ►Volunteer Pilot for Angel Flight South Central

Rudy Thomas, CPA, CVA - Dixon Hughes, PLLC Rudy is a member in the firm's Charleston-Bay Street office. He is licensed as a CPA in both Georgia and South Carolina.

Professional And Civic Organizations► American Institute of Certified Public Accountants ► South Carolina Association of Certified Public Accountants► Accredited in Business Valuation, 2002 ► Member: Rotary Club of Charleston ► Member: Charleston Trident Chamber of Commerce ► Board of Directors/Treasurer: Coastal Carolina Council, Boy Scouts of America ► Board of Directors and Treasurer: Coastal Conservation Association

Education: B.S. Business Administration, The Citadel, 1983

Dixon Hughes - 999 South Shady Grove Rd, Suite 400, Memphis, TN 38120 - Phone: 901-761-3000

Profitable energy strategies in a challenging business climate.

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Opportunities are available to capture unrealized dollars


Many commercial buildings qualify for Federal, State, City and Local tax deductions, credits, incentives and

rebates.


Commercial buildings placed into service after 2005 can qualify for up

to $1.80 per sq. ft. in EPAct tax

deductions


Commercial buildings which have had improvements to their Lighting,

HVAC, Building Envelope or Hot Water Systems can also qualify


There are also multiple State, City and local Utility Tax Credits,

Deductions, Incentives and Rebates


Your commercial building may qualify for these tax deductions and

incentives


How to capture unrealized dollars


A qualified Energy Professional will have specific programs in place to

indentify cost effective areas of benefit to their clientele


What to look for in a qualified partner for your energy savings needs


•Excellent credentials the include accounting and contracting contacts•Clearly defined programs to target/recoup benefits•Engineering/consulting capability to certify program results in 50 states•Governmental contacts to discuss the intent of programs and statutes•Extensive contacts with major utility companies for cost analyses•Ability to identify and recommend cost effective facility improvements•Direct ability to design AND IMPLEMENT facility improvements•Ability to recommend ONGOING energy considerations

Areas of opportunity



•Utility Audit•Utility Rebates Incentives•Energy Procurement•Facility Audit•Product Procurement•Maintenance Programs•State tax credits•Epact tax deductions•Future Topics

Utility AuditNationally, 18% of utility bills are incorrect• Rate for service (rate adjustments)• Non-utility Charges (state, local charges, franchise fees, etc.)• Cost per Kilowatt Hour• Out of range monthly averagesAdditional Indicators• Consistent late fees• Excessive utility usage


Utility/Energy Star Rebates and Incentives• Installation of energy efficient Lighting, HVAC, Water Heating

Systems• Qualifying Appliances


Energy Procurement• Deregulated States allow energy to be purchased through an

energy broker. • Prices can be solicited from multiple energy providers. • In some states a company can lower its energy rate up to 30

%.


Facility AuditOverall building assessment• Building Envelope Infiltration, physical structure(s), Roofs,

walls/doors, windows, etc. Mechanical and Electrical Systems• HVAC, electrical, lighting, controls, etc.Additional Considerations• Water, sewer, equipment, controls, trash, etc.


Energy Efficient Product Procurement and Installation• If $100,000 is invested in an upgraded, energy-efficient

lighting system, and the annual savings are $40,000, the payback is 2.5 years.

• A more meaningful calculation of return on investment, takes into account other factors including the life of the product, the tax depreciation rate and the effective income tax rate.

• In the example above, the return on investment is 44.6%.


Energy Efficient Product Procurement and Installation• It is generally agreed that a well-run corporation produces an

annual return on investment in the 20 to 25 percent range.• Therefore, any energy-efficiency measure which produces a

higher ROI will be considered an attractive use of money.• Returns on lighting efficiency have been shown to be in the

range of 30 to 50 percent.• With the tax deductions incentives and rebates available

projects can achieve $0.00 net dollar outlay.


Lamp upgrade and maintenanceServices are available to:• Inventory your lighting requirements.• Provide cost efficient lamp replacement.• Recommend energy efficient lighting for upgrade transitions.• Reduce labor cost by providing technicians in lieu of

electricians.


State Tax Credits• Many State Governments have tax credits (some matching)• As an example, Georgia will match $1.80/sq. ft. For Energy

Efficient buildings that are 50% efficient over ASHRAE 2005.• Tax credits up to 35% of the cost of the system (including

installation), offered in various counties in the United States.Heat pumps, Photovoltaic’s, biomass equipment and wind energy systems.


The Energy Policy Act of 2005• Commercial building’s placed in service after 2005, or

improvements which the owner plans to make, qualify for up to $1.80/sq. ft. in tax deductions

• Commercial building’s with lighting, HVAC, Building Envelope, or Hot Water System improvements which the owner plans to make, can qualify as well


The Energy Policy Act of 2005• Energy efficient commercial buildings placed into service after

2005• 50% efficiency $1.80 per square foot 60,000 sq.

ft.=$108,000.00• 33 1/3% efficiency $1.20 per square foot 60,000 sq.

ft.=$72,000.00• 16 2/3% efficiency $0.60 per square foot 60,000 sq.

ft.=$36,000.00• Lighting upgrades which improve efficiency between 25% and

40% qualify for: $0.35 to $0.60/sq. ft. • Warehouses must meet 50% efficiency to qualify $0.60/sq. ft.


Future Topics• Carbon Footprint Management• Alternative Energy Sources• Many image compliance improvements may not require

capitalization

• These topics will be discussed in our next presentation


As energy concerns cross paths with business interests,the importance of energy management takes an integral

role.• Seek out a professional energy management team who

can provide specific methodologies and tailor them to your needs.
