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September 8, 2005

Mr. Donald C. Hunt

Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

450 Fifth Street N.W.

Washington, DC 20549

    Re:

    Electric City Corp.

Amendment No. 2 to Registration Statement in Form S-3

Filed August 1, 2005

File No. 333-123437

Amendment No. 2 to Form 10-K for the period Ended December 31, 2004

File No. 001-16265

Dear Mr. Hunt:

This letter is in response to the letter dated August 18, 2005 from Peggy Fisher in which the
Commission provided additional comments to the above referenced filings.

Attached is a copy of the third amendment to our Registration Statement on Form S-3, marked to show
changes from the second amendment to our Registration Statement on Form S-3 filed with the SEC on
August 1, 2005.

The following are our responses to the comments contained in your letter relating to our
Registration Statement on Form S-3:

    Your

    Comment #

    Comment/Response

    1.

    Please file as correspondence your letters dated June 14
and August 1, 2005 in response to our comment letter dated
May 9, 2005.

    The letters were filed as correspondence on August 25,
2005. This letter will be filed shortly.

    2.

    We note your response to prior comment 6. If a selling
shareholder is a broker-dealer, that selling shareholder
must be identified as an underwriter in the prospectus
unless it received the securities being registered as
compensation for underwriting activities. If such is the
case, please revise your disclosure to the contrary in
footnote (5) to clarify.

    Your

    Comment #

    Comment/Response

    We have revised our disclosure to indicate Delano Group
Securities, LLC is an underwriter and included an
explanatory paragraph under the Plan of Distribution.

    3.

    Please refer to prior comment 32. We note your response
that “a majority of our commercial sales of Energy Saver
units are made on an installed basis.” Accordingly, it
appears that EITF 00-21 may be applicable to your
installation obligation related to your product sales.
Please tell us how you considered the applicability of
multiple-element revenue accounting as outlined in that
guidance. Unless you can show us that multiple-element
accounting is not applicable, that response should also
show us that your application of EITF is appropriate. We
may have further comments on revenue policy disclosure upon
review of your response.

    Many of our sales to customers are in the form of
multiple-deliverable arrangements. In many instances, we
will sell the energy saver unit and also provide
installation services for the unit. Following is an
evaluation of the criteria for assessing if the delivered
items should be considered a separate unit of accounting:

    a)

    The delivered items have value to the customer on a
standalone basis. The energy saver unit has value on a
standalone basis as the customer could resell the unit on a
stand-alone basis and the Company also sells the unit on a
standalone basis.

    b)

    There is objective and reliable evidence of the fair
value of the undelivered item. The undelivered item in this
case would be the installation services. These installation
services could be obtained independently by the customer
from another third party and therefore we believe there is
an objective fair value for this item.

    c)

    If the arrangement includes the general right of return
relative to the delivered item, delivery or performance of
the undelivered item is considered probable and
substantially in the control of the vendor. Substantially
all of the customer orders in which we provide installation
services require customer acceptance of the unit or
verification of the operating performance of the unit by
the customer. In the event such acceptance was not
obtained, the customer would have the right of return. As
indicated in paragraph 14 of EITF 00-21, “The amount
allocable to a delivered item is limited to the amount that
is not contingent upon the delivery of additional items or
meeting other specified performance conditions (the
noncontingent amount).” As such, the entire amount of the
order is allocated to the installation, resulting in no
recognition of revenue at the point the energy saver unit
is delivered.

    Our approach regarding revenue recognition for this
situation is also consistent with the guidance provided in
SAB 104 (paragraph 3(b)) which indicates, “If an
arrangement expressly requires customer acceptance, the
staff generally believes that customer acceptance should
occur before the entity has substantially accomplished what
it must do to be entitled to the benefits

    Your

    Comment #

    Comment/Response

    represented by
the revenues, especially when the seller is obligated to
perform additional steps.”

    At the time the energy saver units are delivered but
installation has not yet occurred, we record the units as
consignment inventory. We believe the transaction is
in-substance a consignment sale as we do not have the right
to bill for the delivered product which implies that the
risks and rewards of ownership have not been transferred to
the customer. We believe this treatment of the delivered
energy saver units as consignment inventory is in
accordance with Accounting Research Bulletin No. 43.

    4.

    We noted on page 23 of Management’s Discussion and Analysis
that a significant portion of your revenue for the year was
attributable to a short term utility consulting engagement.
Please revise future filings to disclose revenues from the
sale of products, services, and other products if revenues
from any individual referenced component are more than 10
percent of the total revenue for the year. Related cost
and expenses should be combined and grouped separately.
Refer to Rule 5-03(b) of Regulation S-X.

    We will disclose separately individual classes of revenue
that exceed 10 percent of total revenue and group their
related expenses separately in future filings.

    5.

    Please refer to prior comment 33. Please revise future
filings to specifically include the revenue recognition
policy for this arrangement with Xcel Energy. Additionally
your Management’s Discussion and Analysis in future filings
should include discussions of this policy and its impact on
delaying revenue recognition on the previously delivered
units.

    We will include a discussion of our revenue recognition
policy for programs similar to the program with Xcel
Energy. We will also include a discussion of the policy’s
impact from delaying the recognition of previously
delivered units in the MD&A in future filings.

    6.

    We see that on February 28, 2005, you amended your
revolving credit facility with Laurus Master Fund which
allowed you to borrow an amount in excess of the
supportable borrowing base and reduced the fixed conversion
price. Please tell us and revise future filings to
disclose how you accounted for the significant terms of the
credit arrangement and the amendment thereto.
Additionally, please tell us how EITF 98-5 and EITF 00-27
impact your accounting requirements for the conversion
terms associated with the agreement. We may have further
comments after reviewing your response.

    First, we evaluated the change in the terms of the
revolving line of credit to determine if the changes
resulted in an extinguishment or a modification of the
related debt. EITF 98-14 provides guidance on accounting
for changes in line-of-credit or revolving debt agreements.
As the borrowing capacity of the new arrangement is
greater than or equal to the borrowing capacity of the old
arrangement, the unamortized deferred costs and any fees
paid to the creditor

    Your

    Comment #

    Comment/Response

    (the only consideration was reduction
in the conversion price) should be associated with the new
arrangement. As such, remaining deferred financing fees at
the date of the modification will be amortized over the
remaining term of the line of credit.

    At the time of the modification, the reduced conversion
price of $1.05 was compared to the current market price of
$0.97. As the conversion price of the common stock was in
excess of the market price, there was no beneficial
conversion feature recognized.

    Outstanding borrowings on the line of credit are
convertible at the option of the holder at a fixed
conversion price of $1.05. Each advance under the line of
credit agreement is considered a new issuance of
convertible debt and at that point in time the beneficial
conversion feature (as defined under EITF 98-5) is
measured. Until an advance is requested, the Company does
not believe the commitment date has been reached for
purposes of calculating the beneficial conversion. The
commitment date is the date when an agreement as to terms
has been reached and the investor is committed to purchase
the convertible securities based on those terms (that is,
performance by the investor is probable because of
sufficiently large disincentives for nonperformance). In
March 2005, the Company drew $2 million against the line of
credit, at which time the market price of the common stock
was $0.99 compared to the conversion price of $1.05. As the
conversion price of the common stock was in excess of the
market price, there was no beneficial conversion feature
recognized.

    7.

    We note in item (d) that you issued warrants in connection
with the common stock issuance. You disclosed that if you
fail to register the shares underlying the transaction, you
will have to pay certain damages. Please tell us how your
classification and accounting for the warrants and the
associated registration rights complies with GAAP. Your
response should reference the appropriate GAAP which
supports your conclusions. Please tell us how SFAS 129,
EITF 00-19 and EITF 05-04 impact your accounting and
disclosure requirements for the common stock and warrants.
Revise future filings to disclose how account for and
classify the warrants and the associated registration
rights. We may have further comments after reviewing your
response.

    The Company has considered classification of the warrants
in accordance with EITF 00-19. The common stock and the
common shares underlying the warrants are required to be
registered. However, in the event the registration
statement is not filed within a specified time or declared
effective with a specified time, the holder is entitled to
liquidated damages equal to 1/30 of 1% of the gross
proceeds for each day between the registration default date
and the date the registration statement becomes effective
up to a maximum of 12%. Under the terms, assuming a
registration statement is not declared effective, the
Company would incur maximum liquidated damages of
approximately $675,000. This maximum amount of liquidated
damages limits the amount of cash the Company would be
required to pay investors and the Company believes it
represents a reasonable estimate of the difference in the
fair values

    Your

    Comment #

    Comment/Response

    between registered and unregistered shares. As
the warrants allow net share settlement with unregistered
shares, the Company has classified the warrants as equity.
This treatment will be clarified in the disclosures of
future filings. Other than the registration rights, the
common stock and warrants issued in the May PIPE have no
rights or preferences over other equity holders which would
require disclosure in accordance with FAS 129.

    As no consensus has been reached on EITF 05-04, we did not
initially take it into consideration when accounting for
the warrants or liquidated damages provision of the
purchase agreement. While we did describe the potential
penalties in detail, we did not explicitly state the
maximum amount of cash payments that could be payable under
the registration rights agreement. We will include this
disclosure in future filings.

We hope that we have adequately addressed all of your questions and comments. Please feel free to
contact me or our attorney, Andy Connor, at (312) 845-5118, if you have any further questions or
comments regarding our filings.

Sincerely,

/s/ Jeffrey Mistarz

Jeffrey Mistarz

Chief Financial Officer & Treasurer

enclosure