For the post-2022 ordinary route, certification must establish at least a 25% reduction in covered annual energy and power costs compared with the applicable reference building. A product label, utility-savings estimate, or before-and-after bill comparison is not that denominator.
Once the threshold is met, the 2026 published formulas increase potential rates by whole percentage points before reaching separate caps.
Define the fraction
The denominator is covered reference annual cost
If the reference model produces $200,000 and the proposed model produces $140,000, the illustrative reduction is $60,000 ÷ $200,000, or 30%.
The model must use the applicable ASHRAE baseline, qualified software, and consistent comparison assumptions.
2026 potential rate checkpoints
Each pair shows base and increased potential $/SF.
Entry point
PWA or valid exception required
Still below base cap
Increased cap
Base cap
| Item | Value | Note |
|---|---|---|
| 25% · base | $0.59/SF | Entry point |
| 25% · increased | $2.97/SF | PWA or valid exception required |
| 50% · base | $1.09/SF | Still below base cap |
| 50% · increased | $5.94/SF | Increased cap |
| 55% · base | $1.19/SF | Base cap |
Threshold
Below 25%, the ordinary route has no potential rate
A 24% result is below the entry threshold. At exactly 25%, the 2026 potential rates are $0.59 base and $2.97 increased.
Crossing the threshold does not complete the claim. Dates, systems, inspection, certification, cost, prior deductions, and path requirements remain independent gates.
Two curves
The 2026 paths rise at different increments and cap points
Base equals the lesser of $1.19 or $0.59 plus $0.02 for each percentage point above 25. Increased equals the lesser of $5.94 or $2.97 plus $0.12 per point.
The increased path caps at 50%; the base path reaches its cap at 55%. Separate rounded formulas explain why the curves are not exactly fivefold at every point.
Crossing the ordinary-route threshold
A one-point change has a defined—not general—meaning.
24%
Below ordinary threshold
25%
Potential rate begins
Certification
Support modeled result
Limits
Cost and prior claims
Apply responsibly
Area comes after the rate, then limitations follow
Supported square feet multiplied by the potential rate gives a preliminary amount. Eligible cost and prior building deductions can reduce it.
Use certified savings rather than marketing claims, attach the tax year to every rate, and have the preparer reconcile amount and filing treatment.
Illustrative 30% fraction
Keep numerator and denominator visible.
| Review point | Evidence or measure | Why it matters |
|---|---|---|
| Reference annual cost | $200,000 | Illustrative covered reference cost. |
| Proposed annual cost | $140,000 | Illustrative covered proposed cost. |
| Reduction | 30% | ($200,000 − $140,000) ÷ $200,000. |
Prepare the review
Verify the percentage before discussing the rate
- Applicable ASHRAE baseline
- Qualified software and version
- Covered reference annual cost
- Covered proposed annual cost
- Certified whole-percent savings
- Tax year for indexed rates
- Base or increased path support
- Supported area
- Eligible cost
- Prior building deductions
Continue the review
Common questions
Practical answers before the review
Is 25% measured against existing utility bills?
No. The ordinary route compares modeled covered annual costs with an applicable reference building.
Does every additional point increase the amount indefinitely?
No. Both formulas have caps.
Why do the rate curves cap at different points?
The separately published base and increased formulas use different increments and maximums.