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Last week Louisville Gas and Electric Company and Kentucky Utilities Company announced rebates from $2,000 to $10,000 tied to achieving certain LEED credits.

Electric utility based incentives that support energy efficiency, including LEED certification, are increasing in number across the U.S. at all but geometric rates, while at the same time new government incentives have stalled.

Since September 1, new utility based incentives were announced, not only in Kentucky, but also in Ohio, South Carolina, New Hampshire, Missouri, Colorado, and Georgia.

Utilities offer incentives for energy efficiency, which might at first glance seem counterintuitive given that the utilities make money selling electricity, despite that most are funded by rate payers, .. for several reasons, including that some are required by state regulators (in at least 29 states), others have capacity constraints that encourage conservation (it is very costly to build a new power plant), and in a small number of utility markets there has been a regulatory decoupling of revenue and profits.

Many credit Pacific Gas and Electric as the first utility to offer a modern energy rebate program. Today, while incentives vary, most are crafted by a small group of consultants that serve the utility industry and enable very similar programs across the country.

It is worthy of note that there are at least 55 existing energy incentives across Kentucky.

The new electric utility incentive is available for construction of a new commercial facility that is LEED certified from between $2,000 and $10,000. The new construction may be under any of several LEED ratings systems: Commercial Interiors, Core and Shell Development, Healthcare, Retail: New Construction, Schools: New Construction, or Retail: Commercial Interiors; for work completed after the November 14, 2014 retroactive start date.

Rebates are based on points awarded on a sliding scale under LEED Energy & Atmosphere, Credit 1 – Optimize Energy Performance credit. A less than 25,000 square foot building that earns up to 5 points under that Optimize Energy Performance credit earns a rebate of $2,000, while a building that is larger than 25,000 and earns 16 points under that credit is eligible for a rebate of $10,000.

Some have criticized this and other utility based incentives as simply being too modest to be worth expending time, effort and dollars to apply for. And such may be a fair criticism of these programs that can be worth pennies on the dollar when compared to a local government multi year property tax credit that can easily have a value of hundreds of thousands of dollars.

Some utility incentives arguably have greater efficacy and offer more dollars. A regulatory required program in Maryland, available through BGE and other utilities, encourages energy savings pursued through the LEED credit for implementing Enhanced Commission Services. Funding is available for up to 50% of the cost of achieving the Enhanced Commissioning LEED credit, up to $20,000 per project.

This law firm maintains a national database of green building associated incentives, to be able to advise our clients about first costs of projects. It is clear from our new data that electric utility based incentives tied to LEED certification and earning specific LEED credits are increasing at all but geometric rates.