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Predominate Use Study: a required engineering study for the elimination of State Sales and Use Tax. In manufacturing, the study determines what percent of electricity and natural gas used is non-taxable.  


A Predominate Use study entails the analysis of all the energy load usage in a plant. Each piece of energy using equipment must have its power consumption recorded and a determination made as to how much of that energy is used for manufacturing. 


A list of all the equipment and power consumption is recorded. The results are then analyzed to determine what percentage of energy is being used for manufacturing and if it is over 50%. 


If the criteria are met, then a “certificate of exemption” is written and sent to the REP (retail energy provider). The utility will then place the company on their exempt sales tax list and no further taxes are added to future billings. Along with the certificate, the Predominate Use Report will show a year of energy demand, consumption, and billing. State Sales Taxes in the State of Texas may be refunded for up to four years.


The required study must be performed by a professional engineer and filed with the State of Texas.  Reference: Texas Administrative Code, Title 34, Part 1, Chapter 3, Subchapter 0, Rule3.295 Natural Gas and Electricity. Note: 21 states offer significant utility sales tax exemptions / reductions for manufacturing.


  • Prior to our on-site work, we will require a copy of the Gas and Electric bills for the past 12 months. 
  • We will need an employee of your company to escort us while in the plant.
  • IEA’s primary task is to list & record all equipment, lighting, HVAC, computers, etc. and their power consumption in accordance with the current state codes.



Energy Study/Audit: increase efficacy in energy usage and eliminate waste.


An Energy Audit for commercial and industrial facilities includes the study of electric and natural gas usage and billing. Usage covers lighting, HVAC, motors, boilers, other energy using equipment, and building envelope. A typical audit usually takes two to ten hours at the facility, depending on size. It is helpful to have the assistance of a facility's person to locate the energy using equipment and to answer questions about plant operation. Also, twelve months of electric and gas bills are necessary for an effective energy study. After gathering the data, it is analyzed and a detailed report is prepared. The report addresses specific energy and cost reduction recommendations for the facility as well as their environmental reduction impacts. 


An energy appraisal includes: 

  1. An on-site study / inventory to: 
    1. Obtain equipment energy data 
    2. Observe operation of energy equipment 
    3. Observe envelope energy losses 
  2. Gather energy data from utility bills to:
    1. Determine average cost of energy 
    2. Determine peak and total energy demands and energy usage 
    3. Determine load and power factors 
    4. Determine if penalties or errors are in the energy billing 
  3. Analyze the data obtained to: Recommend changes that will reduce energy consumption, air pollution, and operational costs
  4. Prepare a written bound report with all the above engineering data and recommendations:
    1. Summary 
    2. Current Energy Use Analysis 
    3. Energy Conservation Measures 
    4. General Energy Information 
    5. CD copy of Energy Audit report



Putting Energy-efficiency and Procurement on an equal footing is a smart strategy.



Power Factor Analysis: to eliminate utility penalty in energy usage.


Power Factor (PF) is the ratio of working power to effective power. PF = kW/kVA. It measures the effectiveness of the electric power being used. 100% effectiveness is a PF of 1.0 and kVA = kW. Most electric loads today, such as motors and fluorescent lighting ballasts, are inductive and need a magnetic field to operate. The magnetic field works against the electron flow from the power company causing a heavier drain on the source and distribution system. Inductive loads require working power (kW), which drives the machines and lights, and reactive power (kVAR) to sustain the magnetic field and it does no useful "work", but only cycles between the generator and load. These two loads, kW and kVAR, make up the apparent or effective power (kVA), the true total electric load needed by the power company to operate an inductive load. To improve PF and avoid PF penalties, facilities may install power factor correction capacitors. Most power companies require a 0.95 PF to avoid penalty payments. A 70% PF requires 142 kVAs to produce 100 kWs, while a 95% PF requires only 105 kVAs to produce the same 100 kWs. It takes 35% more power at 70% PF than at 95% PF to produce the same power. The utility must supply this excess reactive current plus the working current and they have various ways to pass along the expenses of the larger generators, transformers, cables, switches, etc. required.



Utility Bill Analysis: to identify and eliminate billing errors in energy cost.


Errors on utility (electric and gas) bills can be expensive oversights which continue for long periods of time is not caught. Errors may include demand and power factor penalties, taxing errors, meter reading or recording errors, wrong meter listing, or any number of other errors. Most bill are just paid as a matter of habit. It takes experience when looking at a bill to locate these type errors. Besides errors, analyzing a year of billings may identify equipment or operational problems by the effect on the demand or energy usage changes.



Distributed Generation / Combined Heat and Power Analysis:

"Distributive Generation" or "Decentralized Generation" is the use of small electricity generating equipment located close to the load being served. It expands energy options by improving reliability and security in energy supply and produces a cleaner environment by reducing emissions. As interest in Distributed Generation solutions is growing, a number of factors are driving this interest, including the restructuring of the U.S. energy industry and the introduction of new technologies. Electric utilities, commercial and industrial companies, prisons, hospitals, and school districts are evaluating where DG should fit into their business planning process.


"Central Heat and Power" is the combined production of electricity and thermal (heat) energy. The use of the thermal energy adds value to Decentralized Generation. Overall efficiency of a CHP system is about 80% while the separate usage of electric power and natural gas for electricity and hot water is 57%, which means that overall operation costs are reduced.