Smart Ideas energy incentives a smart play for independent stores

When a light went out at Uncle’s Dan’s the Great Outdoors Store, another light bulb came on inside the head of Company President Al Weiss.

Weiss, the father of company CEO Brent Weiss, became concerned when he learned that replacing the ballast on a 400-watt, high-bay metal halide light fixture in the Evanston store would cost $325. The store has 29 such light fixtures and at the time, it appeared Weiss might have to repair all of the lights.

ComEd’s Edward Krembuszewski points to Al Weiss of Uncle Dan’s the Great Outdoor Store, Evanston, how he can save money on lighting his store.

But having participated in IRMA’s Energy Summit last fall and being a long-time IRMA member, Weiss knew about the Smart Incentives Program and that it could save him money in lighting and electrical upgrades. So he contacted IRMA, and the Association coordinated a site visit by ComEd to assess the electrical use in his store.

“We wondered what a review might produce for a smaller store,” IRMA President & CEO David F. Vite said. “We already knew there are many opportunities for savings in more energy-intensive situations, but this was a chance to show there are opportunities in stores like Uncle Dan’s.”

Indeed there are. The moment ComEd’s Edward Krembuszewski walked into Uncle Dan’s on Church Street in Evanston he knew the lights were a problem. After walking through the store and researching Uncle Dan’s electric bills over the past 18 months, Krembuszewski came up with a plan primarily involving new lighting, ceiling fans and better use of the store’s programmable thermostat.

ComEd’s Edward Krembuszewski sets a programmable thermostat during a site visit to Uncle Dan’s the Great Outdoors Store in Evanston.

His recommendations could save the store about $7,000 annually after investing about $10,000, funded partly by more than $2,700 in incentives from ComEd’s “Smart Ideas for Your Business” program.

Uncle Dan’s was eligible for the incentives because Weiss participated in a Evanston’s Community Energy Challenge, part of ComEd’s “Smart Ideas for Your Business” program.

While Weiss will discuss his options with his landlord before changing the lighting, he was very happy with ComEd’s visit and the recommendations in the report.

“It was just fantastic,” Weiss said. “Ed just did an outstanding job, and we will be doing some changes. I am going to look into what we can do in the future.”

The 6,200-square-foot space leased by Uncle Dan’s uses only electric heat, but the main opportunity for energy improvements are in lighting. ComEd suggested replacing each of the existing 400-watt metal halide lamps and fixtures with new six-lamp, T-8 high bay fixtures using florescent bulbs. Krembuszewski said the metal halide lamps were meant for warehouse use, to stay on for long periods of time.

“You don’t need these types of fixtures. Florescent uses as little as one-third of the electricity and comes right on without any warm-up,” he told Weiss.

With the current lighting, Krembuszewski calculated a lighting density of 2.7 watts a square foot, or 45 percent greater than the 1.5 watts per square foot listed in the 2004 ASHRAE 90.1 Lighting Density Standard for retail spaces. Installing energy-efficient lighting would bring the lighting density for the store down to just 1.28 watts per square foot.

The lighting retrofits were estimated to cost $9,200, but the Smart Ideas incentive would reduce that cost by $2,600, based on the program year 2. The new lights are estimated to save the store about $4,900 in electric costs annually.

While the store has four programmable thermostats, Krembuszewski noticed the scheduling feature on the thermostats was not being utilized – the fan was set to ‘on’ and running continuously, and the temperature was set the same, day or night.

Krembuszewski told Weiss that setting the temperature lower overnight would save the business about $200-$300 per year on its electric bill. The store could save another $1,600 annually by setting the thermostats’ fans on ‘auto’ at the end of each business day and back to ‘on’ each morning. Krembuszewski reset all four thermostats during his site visit so the savings would start immediately.

Adding ceiling fans would reduce the temperature difference between the floor and ceiling during the heating season.

“The ceiling fan is the biggest bang for your buck,” Ed said. “The amount of electricity needed to run the fans pays off in a reduction in heating bills.”

Three ceiling fans would cost about $900, but the store could recoup about $140 in Smart Ideas incentives and save about $200 each year in electric costs.

The Smart Ideas program will pay out more than $23 million in incentives during its first two years, allowing businesses to reap electric savings of more than $30 million annually. Those savings continue year after year. For small businesses like Uncle Dan’s, $7,000 in annual savings is no small amount.

The potential to save on electricity costs at Uncle Dan’s is proof that the Smart Incentives Program is beneficial to a small retailer. It shows retailers throughout the state how investing in energy efficiencies can save them money too.

“I think it’s great Uncle Dan’s is getting involved,” said Steve Baab, ComEd’s Manager of Business Programs. “We’re looking at ways of making this program more attractive to small customers.”

Legislation led to incentives

The “Smart Ideas” incentive programs which could help fund more than $2,700 in recommended energy efficiency improvements at Uncle Dan’s the Great Outdoor Store in Evanston are the result of legislation passed three years ago.

The 2007 Illinois Rate Relief Act established energy efficiency and demand response goals, including directing Ameren Illinois Utilities and ComEd to implement incentive programs to encourage and facilitate cost-effective energy-efficiency improvements for non-residential customers.

A total of about $50 million was devoted to various sectors of utility customers across the state in the first year, $100 million in the second year and $150 million in the third year, which starts in June 2010.

Since the first year of the incentives, IRMA provided its members with information on program criteria, cash-back limits and the application process. IRMA has also monitored progress, working with utility officials to provide and obtain input to help members who are applying for incentives.

For information on “Smart Ideas” visit www.comed.com/bizincentives, call 888/806-2273 or email comedsmartideas@kema.com.

IL Supreme Court: Internet shipping charges are subject to sales tax

When Nancy Kean purchased a trampoline through Wal-Mart’s internet store, little did she realize that she would ignite a controversy that would find its way to the Illinois Supreme Court.

The controversy resulted from Wal-Mart’s decision to charge Ms. Kean sales tax on the shipping for the trampoline. Ms. Kean eventually became the named plaintiff in a class action lawsuit that was filed against Wal-Mart. The Illinois Supreme Court ultimately concluded that Wal-Mart properly collected sales tax on the shipping charges.

The question of whether shipping or delivery charges are subject to sales tax is one of the most misunderstood questions in Illinois sales tax.

Many retailers view shipping as a non-taxable service. The Illinois Department of Revenue views shipping very differently. The Department of Revenue, in fact, has a regulation which provides that transportation and delivery charges are generally taxable unless the buyer and seller reach a separate agreement on the delivery.

Under the Department’s regulation, simply billing the delivery separately on an invoice is not enough to avoid sales tax. Instead, there must be evidence that the seller and buyer agreed upon the transportation or delivery charges separately from the selling price of the tangible personal property.

According to the Department, the best evidence that transportation or delivery charges were agreed to separately is a separate and distinct contract for transportation or delivery. Absent such a contract, a retailer can still avoid sales tax on delivery charges if it is able to demonstrate that the purchaser had the option of taking delivery of the property at the retailer’s location.

The Department’s rules on shipping charges have caught many unwary retailers by surprise over the years. Many companies, including caterers, ready-mix concrete vendors and fuel sellers, have all been audited by the Department and assessed for the failure to collect sales tax on shipping charges.

Nancy Kean’s class action lawsuit against Wal-Mart provided a different twist on the shipping charge saga because it concerned internet purchases. Ms. Kean and her class argued that Wal-Mart should not have charged sales tax on the shipping charges because those charges were “post-sale” and were therefore not part of the selling price of the product.

The Illinois Supreme Court disagreed. The Court was especially persuaded by the fact that neither Ms. Kean nor any Wal-Mart internet customer could complete an on-line transaction without paying for shipping.

Shipping, in other words, was not optional; it was instead a necessary part of any internet purchase from Wal-Mart. For this reason, the Supreme Court concluded that Wal-Mart properly collected sales tax on its shipping charges because those charges were an integral part of any internet purchase of goods.

In the end, a story that began with Ms. Kean’s on-line purchase of a trampoline ended with vindication for Wal-Mart.

Nevertheless, this case should serve as a cautionary tale for Illinois retailers who charge for shipment or delivery. In accordance with the Department of Revenue’s longstanding position as recently upheld in the Wal-Mart litigation, such retailers are expected to collect tax on their delivery charges unless they can establish that they have a separate transportation or delivery agreement in place with their customer.

Midwest Hardware honors IRMA Director

IRMA Director Linda Johnson, owner of Village True Value Hardware, Western Springs, has been named Citizen of the Year for 2009 by the Midwest Hardware Association.

Johnson, who took over the family business in 1989, said volunteerism and community service are very important to her, which are also key criteria for the village’s annual awards.

“We were very much encouraged as kids to volunteers, and I learned that trhough Girl Scouts and other community and church activities,” she told a newspaper. “But it’s me. I like to help out.”

Johnson is an active MHA member, and she serves as the MHA representative on the Board of Directors of the North American Retail Hardware Association. She has also twice served as IRMA’s Chairman of the Board.

Johnson, whose father, Ed Johnson, won the award in 1987, said she was shocked by the honor.

“I didn’t even know I had been nominated,” she said. “I was really speechless. It was very humbling.”

Register now for Retail Day 2010

IRMA, in conjunction with the Illinois Manufacturers Association, will host Business Day 2010 in Springfield on Wednesday, May 5 at the President Abraham Lincoln Hotel and Conference Center, 701 E. Adams Street, Springfield.

The annual event brings retailers face-to-face with leaders of Illinois government to discuss relevant topics of concern. For many retailers, this event is their chance to be heard and contribute to the lobbying efforts of one of the largest and most active business groups in the state.

To make reservations to attend this event, contact IRMA at 800/572-5044 or email dbasowski@irma.org. Individual registrations are $85 per person. Meeting and hotel registration deadline is Tuesday, April 13. A limited number of rooms are available at a group rate of $102/night at the Presidential Abraham Lincoln Hotel & Conference Center, Ask for Group Code “IRMA” and call 866/788-1860 for room reservations.