Tax Aspects of Connecticut's Push for MUSH Energy Program


The State of Connecticut is aggressively moving forward to drive down energy costs in their state's government building sector as part of the state's MUSH building categories initiative: Municipal buildings, Universities, Schools, and Hospitals. In late 2011, Connecticut's electric distribution companies came together to file the 2012 Conservation and Load Management Plan with the state's Department of Energy and Environmental Protection. The proliferation of this Plan, along with several other laws, technological advancements, and macroeconomic developments are going to make it highly advantageous for government building in the MUSH categories to retrofit their buildings with energy-efficient lighting, HVAC, and building envelope equipment.

This article 1. Describes the tax benefits related to achieving energy-efficient government buildings design; 2. Describes the comprehensive approach taken by Connecticut; and 3. Defines the MUSH building categories and describes the tax incentives specifically available to them.

The EPAct Section 179D Tax Opportunities

Pursuant to Energy Policy Act (EPAct) Section 179D, designers of energy-efficient MUSH projects making qualifying energy-reducing investments at new or existing government properties can obtain immediate tax deductions of up to $1.80 per square foot. This federal tax incentive is awarded for catching the largest economic driver of the project, namely decreased energy costs, through their energy-efficient design techniques, which inures to the benefit of the Connecticut state government.

If the building project doesn't qualify for the maximum EPAct Section 179D $1.80 per square foot immediate tax deduction, there are tax deductions of up to $0.60 per square foot for each of the three major building subsystems: lighting, HVAC (heating, ventilating, and air conditioning), and the building envelope. The building envelope is every item on the building’s exterior perimeter that touches the outside world including roof, walls, insulation, doors, windows and foundation.

Connecticut's MUSH Push for Increased Energy Efficiency

The Energy Efficiency Board of Connecticut, working in conjunction with DEEP, the Public Utilities Regulatory Authority, and many utilities in the state promulgated their 2012 Plan with the explicit goal of cutting costs and reducing energy use in the state. The programs created by the Plan will provide utility bill savings for customers and economic, environmental, and jobs benefits to meet Connecticut’s policy objectives. The electric and natural gas programs are aimed at capturing opportunities for reducing energy bills and providing other benefits through a wide range of strategies . For instance, the Plan utilizes an Increased Savings Scenario that will help the state reach significantly higher energy savings and benefits. By some estimates, the Scenario will provide annual electric savings equivalent to 2.1% of retail sales, natural gas savings equivalent to 0.7% of retail sales, additional fuel oil and other fuel savings, plus over $800 million in benefits.

A touchstone of the plan that will bear directly on energy efficiency is the $253 million in ratepayer funding that will support and leverage about $500 million of customer energy efficiency projects in 2012 alone. Another goal outlined in the plan is for all state facilities to pay for and install a benchmarking software that provides a dashboard for monitoring energy usage. The effect of benchmarking in jurisdictions have previously passed similar requirements has been to simulate increased funding in energy efficiency .

MUSH: Municipal Buildings, Universities, Schools, and Hospitals

The MUSH categories of buildings that are eligible for major EPAct tax savings are outlined below:


The typical buildings in this category include: 1. City/Town/Village Halls; 2. Parking Garages ; 3. Police Stations; 4. Firehouses; 5. Libraries; and 6. Transportation/ Highway/Sanitation/Maintenance Departments along with other local government support structures.

State Universities

This building category typically involves large central and regional campuses with a wide range of facilities, including academic, laboratories, libraries, athletic facilities, student unions, health care facilities, maintenance facilities, parking garages and other facilities. From a state government perspective, state universities and community colleges are the biggest government building EPAct category


Government-run K-12 Schools include High schools, Middle Schools, Elementary schools and Vocational Schools. K-12 schools are the largest overall government building EPAct category since there is a K-12 public school in virtually every community in the United States.


Building in this category include State, County and city-owned facilities . Because these facilities are often especially energy-intensive, hospitals present a great opportunity for Connecticut's state and local governments to simultaneously realize large tax savings and energy cost savings .

Energy Savings Measures for MUSH Buildings

One of the easiest ways for the MUSH buildings to achieve energy savings is to upgrade to energy-efficient lighting (which is increasingly LED's) particularly in certain building categories. For example, many of the municipal building categories are characterized by small spaces, including offices where LED lighting is advantageous. Long-life LED's should also be considered in any difficult-to-reach spaces where ongoing replacement is expensive. It's important to replace all federally banned probe start metal halide lighting typically found in parking garages maintenance buildings, vehicle garages, gyms and athletic facilities. In sum, new low wattage LED's fit perfectly into Connecticut's plans for the state's energy reduction.

One of the largest costs for human-occupied government buildings is HVAC. Many government buildings were originally constructed on first-cost bid basis, meaning the lower bidders who used lower cost, less energy-efficient equipment got the job. As result of new, more rigorous building energy codes and technology improvements much more energy-efficient HVAC is now available and often mandated. Many of these new HVAC technologies will qualify for EPAct .


The following quote is taken directly from the language of the 2012 Plan: "A stated goal of the Malloy administration is to make Connecticut the leading state in energy efficiency. To achieve this ambitious outcome, the current program offerings will need to be expanded significantly. In addition, private capital will need to be leveraged to deliver savings of the scale required to put Connecticut in the lead. This chapter builds upon the base plan detailed in previous chapters with a framework of modifications needed to begin the process of accelerating savings to achieve the stated policy objectives." Fortunately, Connecticut's objectives align neatly with the federal government's EPAct government building designer tax incentives.
Charles Goulding and Daniel Penza, "New York City Hotels Energy Becnhmarking Related Legal and Tax Compliance," Google Knol (June 18, 2011) <>
Charles Goulding, Jacob Goldman, and D. Malcolm Thomas, "Multiple Lighting Technologies Driver Large EPAct Tax Deductions for Parking Garages" International Parking Institute (August 2010)
Charles Goulding, Jacob Goldman, and Malcolm Thomas, "For-profit and Government Hospitals Can Earn Tax Deductions for New Construction and Renovation," Building Operating Management (March 2010)
Charles Goulding, Robert Goulding, and Raymond Kumar, "The Energy Tax Aspects of Hospitals," Corporate Business Taxation Monthly (November 2009), at 15.
Charles Goulding and Andrea Albanese, "EPAct Tax Incentives for Energy Efficient Fitness Center," Google Knol (June 30, 2011) <>
Charles Goulding, Jacob Goldman, and Kenneth Wood, "Tax Deductions for HVAC Efficiency," Building Operating Management (April 2010)

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