[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1423 Introduced in House (IH)]
108th CONGRESS
1st Session
H. R. 1423
To amend the Internal Revenue Code of 1986 to expand the energy credit
to include investment in property which produces energy from certain
renewable sources and expenditures for cool roofing, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 25, 2003
Mr. Engel (for himself and Mr. Terry) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addition
to the Committee on Energy and Commerce, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to expand the energy credit
to include investment in property which produces energy from certain
renewable sources and expenditures for cool roofing, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Preserving Our World's Energy and
Resources Act of 2003''.
SEC. 2. ENERGY CREDIT FOR INVESTMENTS IN CERTAIN RENEWABLE RESOURCE
PROPERTY AND COOL ROOF PROPERTY.
(a) Energy Property Used in Business.--
(1) In general.--Subparagraph (A) of section 48(a)(3) of
the Internal Revenue Code of 1986 (defining energy property) is
amended by striking ``or'' at the end of clause (i) and by
inserting after clause (ii) the following new clauses:
``(iii) equipment which uses wind to
generate electricity, or
``(iv) cool roof property,''.
(2) Energy percentage.--Paragraph (2) of section 48(a) of
such Code (relating to energy percentage) is amended--
(A) in subparagraph (A) by striking ``The'' and
inserting ``Except as provided in subparagraph (B),
the'', and
(B) by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subparagraph
(A) the following new subparagraph:
``(B) Exception.--The energy percentage for the
following properties is--
``(i) 25 percent for equipment which uses
solar energy to generate electricity,
``(ii) 25 percent for equipment which uses
wind to generate electricity,
``(iii) 25 percent for equipment which uses
energy derived from geothermal deposits and
which is described in paragraph (3)(A)(ii), and
``(iv) 30 percent for cool roof
property.''.
(3) Cool roof property defined.--Subsection (a) of section
48 of such Code (relating to energy credit) is amended by
redesignating paragraphs (4) and (5) as paragraphs (5) and (6),
respectively, and by inserting after paragraph (3) the
following new paragraph:
``(4) Cool roof property.--For purposes of this subsection,
the term `cool roof property' means property which is used as a
roof or roof coating and which has a solar reflectance index
(as determined by the Lawrence Berkeley National Laboratory) of
65 percent or greater.''.
(4) Credit allowable against regular and minimum tax.--
(A) In general.--Section 38(c) of such Code
(relating to limitation based on amount of tax) is
amended by redesignating paragraph (3) as paragraph (4)
and inserting after paragraph (2) the following:
``(3) Special rules for energy credit relating to equipment
which uses wind to generate electricity and cool roof
property.--
``(A) In general.--In the case of the portion of
the energy credit relating to equipment which uses wind
to generate electricity and cool roof property--
``(i) this section and section 39 shall be
applied separately with respect to such portion
of the credit, and
``(ii) in applying paragraph (1) to such
portion of the credit--
``(I) subparagraphs (A) and (B)
thereof shall not apply, and
``(II) the limitation under
paragraph (1) (as modified by subclause
(I)) shall be reduced by the credit
allowed under subsection (a) for the
taxable year (other than such portion).
``(B) Portion of energy credit relating to
equipment which uses wind to generate electricity and
cool roof property.--For purposes of this subsection,
the portion of energy credit relating to equipment
which uses wind to generate electricity and cool roof
property means the credit allowable under subsection
(a) by reason of clauses (iii) and (iv) of section
48(a)(3)(A).''.
(B) Conforming amendment.--Subclause (II) of
section 38(c)(2)(A)(ii) of such Code is amended by
inserting ``or the portion of energy credit relating to
equipment which uses wind to generate electricity and
cool roof property'' after ``employment credit''.
(b) Renewable Resource and Cool Roof Property.--
(1) In general.--Subpart A of part IV of subchapter A of
chapter 1 of such Code (relating to nonrefundable personal
credits) is amended by inserting after section 25B the
following new section:
``SEC. 25C. CERTAIN RENEWABLE RESOURCE AND COOL ROOF PROPERTY.
``(a) Allowance of Credit.--In the case of an individual, there
shall be allowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the amount paid or incurred by
the taxpayer for qualified renewable resource property and qualified
cool roof property installed during such taxable year.
``(b) Limitation.--
``(1) Limitation based on amount of tax.--The credit
allowed under subsection (a) for any taxable year shall not
exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under this
subpart (other than this section) and section 27 for
the taxable year.
``(2) Carryforward of unused credit.--If the credit
allowable under subsection (a) exceeds the limitation imposed
by paragraph (1) for such taxable year, such excess shall be
carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such taxable year.
``(c) Definitions.--For purposes of this section--
``(1) Qualified renewable resource property.--The term
`qualified renewable resource property' means--
``(A) equipment which uses solar energy to generate
electricity,
``(B) equipment which uses wind to generate
electricity, and
``(C) equipment which uses energy derived from
geothermal deposits to generate electricity and which
is described in section 48(a)(3)(A)(ii).
``(2) Cool roof property.--The term `cool roof property'
means property which is used as a roof or roof coating and
which has a solar reflectance index (as determined by the
Lawrence Berkeley National Laboratory) of 65 percent or
greater.
``(3) Labor costs.--Expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original
installation of the property described in paragraph (1) or (2)
and for wiring to interconnect such property to the dwelling
unit shall be taken into account for purposes of this section.
``(4) Energy storage medium.--Expenditures which are
properly allocable to a swimming pool, hot tub, or any other
energy storage medium which has a function other than the
function of such storage shall not be taken into account for
purposes of this section.
``(d) Special Rules.--For purposes of this section--
``(1) Property must be installed on principal residence.--
Property shall not be treated as described in subsection (c)
unless--
``(A) such property is installed in or on a
dwelling--
``(i) located in the United States, and
``(ii) owned and used by the taxpayer as
the taxpayer's principal residence (within the
meaning of section 121),
``(B) the original use of such property commences
with the taxpayer, and
``(C) such property reasonably can be expected to
remain in use for at least 5 years.
``(2) Dollar amounts in case of joint occupancy.--In the
case of any dwelling unit which is jointly occupied and used
during any calendar year as a residence by 2 or more
individuals the following shall apply:
``(A) The amount of the credit allowable under
subsection (a) by reason of expenditures for qualified
renewable resource property and qualified cool roof
property made during such calendar year by any of such
individuals with respect to such dwelling unit shall be
determined by treating all of such individuals as
1 taxpayer whose taxable year is such calendar year.
``(B) There shall be allowable with respect to such
expenditures to each of such individuals, a credit
under subsection (a) for the taxable year in which such
calendar year ends in an amount which bears the same
ratio to the amount determined under subparagraph (A)
as the amount of such expenditures made by such
individual during such calendar year bears to the
aggregate of such expenditures made by all of such
individuals during such calendar year.
``(3) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having paid his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of the cost of qualified renewable resource property
and qualified cool roof property made by such corporation.
``(4) Condominiums.--
``(A) In general.--In the case of an individual who
is a member of a condominium management association
with respect to a condominium which he owns, such
individual shall be treated as having paid his
proportionate share of the cost of qualified renewable
resource property and qualified cool roof property made
by such association.
``(B) Condominium management association.--For
purposes of this paragraph, the term `condominium
management association' means an organization which
meets the requirements of paragraph (1) of section
528(c) (other than subparagraph (E) thereof) with
respect to a condominium project substantially all of
the units of which are used as residences.
``(5) Manufactured homes included.--For purposes of this
section, the term `dwelling' includes a manufactured home which
conforms to Federal Manufactured Home Construction and Safety
Standards (24 C.F.R. 3280).
``(6) Joint ownership of items of solar or wind energy
property.--
``(A) In general.--Any expenditure otherwise
qualifying as an expenditure described in paragraph (1)
or (2) of subsection (c) shall not be treated as
failing to so qualify merely because such expenditure
was made with respect to 2 or more dwelling units.
``(B) Limits applied separately.--In the case of
any expenditure described in subparagraph (A), the
amount of the credit allowable under subsection (a)
shall (subject to paragraph (1)) be computed separately
with respect to the amount of the expenditure made for
each dwelling unit.
``(7) Allocation in certain cases.--If less than 80 percent
of the use of an item is for nonbusiness residential purposes,
only that portion of the expenditures for such item which is
properly allocable to use for nonbusiness residential purposes
shall be taken into account. For purposes of this paragraph,
use for a swimming pool shall be treated as use which is not
for residential purposes.
``(8) When expenditure made; amount of expenditure.--
``(A) In general.--Except as provided in
subparagraph (B), an expenditure with respect to an
item shall be treated as made when the original
installation of the item is completed.
``(B) Expenditures part of building construction.--
In the case of an expenditure in connection with the
construction or reconstruction of a structure, such expenditure shall
be treated as made when the original use of the constructed or
reconstructed structure by the taxpayer begins.
``(C) Amount.--The amount of any expenditure shall
be the cost thereof.
``(9) Reduction of credit for grants, tax-exempt bonds, and
subsidized energy financing.--The rules of section 29(b)(3)
shall apply for purposes of this section.
``(e) Basis Adjustment.--For purposes of this subtitle, if a credit
is allowed under this section for any expenditure with respect to any
property, the increase in the basis of such property which would (but
for this subsection) result from such expenditure shall be reduced by
the amount of the credit so allowed.''.
(c) Conforming Amendments.--
(1) Subsection (c) of section 23 of such Code is amended by
striking ``sections 24'' and inserting ``sections 24, 25C,''.
(2) Subparagraph (C) of section 25(e)(1) of such Code is
amended by inserting ``25C'' after ``25B,''.
(3) Paragraph (1) of section 26(a) of such Code is amended
by striking ``and 25B'' and inserting ``25B, and 25C''.
(4) Section 904(h) of such Code is amended by striking
``and 25B'' and inserting ``25B, and 25C''.
(5) Subsection (d) of section 1400C of such Code is amended
by striking ``and 25B'' and inserting ``25B, and 25C''.
(6) Subsection (a) of section 1016 of such Code is amended
by striking ``and'' at the end of paragraph (27), by striking
the period at the end of paragraph (28) and inserting ``;
and'', and by adding at the end the following:
``(29) to the extent provided in section 25C(e), in the
case of amounts with respect to which a credit has been allowed
under section 25C.''.
(7) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 25B the following new item:
``Sec. 25C. Certain renewable resource
and cool roof property.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years ending on or after the date of the enactment of
this Act.
SEC. 3. NET METERING.
Part II of the Federal Power Act is amended by adding the following
new section at the end thereof:
``SEC. 215. NET METERING.
``(a) Definitions.--As used in this section:
``(1) The term `customer-generator' means the owner or
operator of an electric generation unit qualified for net
metering under this section.
``(2) The term `net metering' means measuring the
difference between the electricity supplied to a customer-
generator and the electricity generated by a customer-generator
that is delivered to a local distribution section system at the
same point of interconnection during an applicable billing
period.
``(3) The terms `electric generation unit qualified for net
metering' and `qualified generation unit' mean an electric
energy generation unit that meets the requirements of paragraph
(5) and each of the following requirements:
``(A) The unit is a fuel cell or uses as its energy
source either solar, wind, or biomass.
``(B) The unit has a generating capacity of not
more than 100 kilowatts.
``(C) The unit is located on premises that are
owned, operated, leased, or otherwise controlled by the
customer-generator.
``(D) The unit operates in parallel with the retail
electric supplier.
``(E) The unit is intended primarily to offset part
or all of the customer-generator's requirements for
electric energy.
``(4) The term `retail electric supplier' means any person
that sells electric energy to the ultimate consumer thereof.
``(5) The term `local distribution system' means any system
for the distribution section of electric energy to the ultimate
consumer thereof, whether or not the owner or operator of such
system is also a retail electric supplier.
``(b) Adoption.--Not later than one year after the enactment of
this section, each retail electric supplier shall comply with each of
the following requirements and notify all of its retail customers of
such requirements not less frequently than quarterly:
``(1) The supplier shall offer to arrange (either directly
or through a local distribution company or other third party)
to make available, on a first-come-first-served basis, to each
of its retail customers that has installed an energy generation
unit that is intended for net metering and that notifies the
supplier of its generating capacity an electric energy meter
that is capable of net metering if the customer-generator's
existing electrical meter cannot perform that function.
``(2) Rates and charges and contract terms and conditions
for the sale of electric energy to customer-generators shall be
the same as the rates and charges and contract terms and
conditions that would be applicable if the customer-generator
did not own or operate a qualified generation unit and use a
net metering system.
Any retail electric supplier or local distribution company may, at its
own expense, install one or more additional electric energy meters to
monitor the flow of electricity in either direction or to reflect the
time of generation or both. Whenever a customer-generator with a net
metering system uses any energy generation system entitled to credits
under a Federal minimum renewable energy generation requirement, the
total amount of energy generated by that system shall be treated as
generated by the retail electric supplier for purposes of such
requirement.
``(c) Net Energy Measurement and Billing.--Each retail electric
supplier subject to subsection (b) shall calculate the net energy
measurement for a customer using a net metering system in the following
manner:
``(1) The retail electric supplier shall measure the net
electricity produced or consumed during the billing period
using the metering referred to in paragraph (1) or (2) of
subsection (b).
``(2) If the electricity supplied by the retail electric
supplier exceeds the electricity generated by the customer-
generator during the billing period, the customer-generator
shall be billed for the net electricity supplied by the retail
electric supplier in accordance with normal metering practices.
``(3) If electricity generated by the customer-generator
exceeds the electricity supplied by the retail electric
supplier, the customer-generator--
``(A) shall be billed for the appropriate customer
charges for that billing period;
``(B) shall be credited for the excess electric
energy generated during the billing period, with this
credit appearing on the bill for the following billing
period (except for a billing period that ends in the
next calendar year); and
``(C) shall not be charged for transmission losses.
If the customer-generator is using a meter that reflects the
time of generation (a `real time meter'), the credit shall be
based on the retail rates for sale by the retail electric
supplier at the time of such generation. At the beginning of
each calendar year, any remaining unused kilowatt-hour credit
accumulated by a customer-generator during the previous year
may be sold by the customer-generator to any electric supplier
that agrees to purchase such credit. In the absence of any such
purchase, the credit shall be assigned (at no cost) to the
retail electric supplier that supplied electric energy to such
customer-generator at the end of the previous year.
``(d) Percent Limitations.--
``(1) Two percent limitation.--A local distribution company
retail electric supplier shall not be required to provide local
distribution service with respect to additional customer-
generators after the date during any calendar year on which the
total generating capacity of all customer-generators with
qualified generation facilities and net metering systems served
by that local distribution company is equal to or in excess of
2 percent of the capacity necessary to meet the company's
average forecasted aggregate customer peak demand for that
calendar year.
``(2) One percent limitation.--A local distribution company
retail electric supplier shall not be required to provide local
distribution service with respect to additional customer-generators
using a single type of qualified energy generation system after the
date during any calendar year on which the total generating capacity of
all customer-generators with qualified generation facilities of that
type and net metering systems served by that local distribution company
is equal to or in excess of 1 percent of the capacity necessary to meet
the company's average forecasted aggregate customer peak demand for
that calendar year.
``(3) Records and notice.--Each retail electric supplier
shall maintain, and make available to the public, records of
the total generating capacity of customer-generators of such
system that are using net metering, the type of generating
systems and energy source used by the electric generating
systems used by such customer-generators. Each such retail
electric supplier shall notify the Commission when the total
generating capacity of such customer-generators is equal to or
in excess of 2 percent of the capacity necessary to meet the
supplier's aggregate customer peak demand during the previous
calendar year and when the total generating capacity of such
customer-generators using a single type of qualified generation
is equal to or in excess of 1 percent of such capacity.
``(e) Safety and Performance Standards.--(1) A qualified generation
unit and net metering system used by a customer-generator shall meet
all applicable safety and performance and reliability standards
established by the national electrical code, the Institute of
Electrical and Electronics Engineers, Underwriters Laboratories, or the
American National Standards Institute.
``(2) The Commission, after consultation with State regulatory
authorities and nonregulated local distribution systems and after
notice and opportunity for comment, may adopt by regulation additional
control and testing requirements for customer-generators that the
Commission determines are necessary to protect public safety and system
reliability.
``(3) The Commission shall, after consultation with State
regulatory authorities and nonregulated local distribution systems and
after notice and opportunity for comment, prohibit by regulation the
imposition of additional charges by electric suppliers and local
distribution systems for equipment or services for safety or
performance that are additional to those necessary to meet the
standards referred to in subparagraphs (A) and (B).
``(f) State Authority.--Nothing in this section shall preclude a
State from establishing or imposing additional incentives or
requirements to encourage qualified generation and net metering
additional to that required under this section.''.
``(g) Interconnection Standards.--(1) Within one year after the
enactment of this section the Commission shall publish model standards
for the physical connection between local distribution systems and
qualified generation units and electric generation units that would be
qualified generation units but for the fact that the unit has a
generating capacity of more than 100 kilowatts (but not more than 250
kilowatts). Such model standards shall be designed to encourage the use
of qualified generation units and to insure the safety and reliability
of such units and the local distribution systems interconnected with
such units. Within 2 years after the enactment of this section, each
State shall adopt such model standards, with or without modification,
and submit such standards to the Commission for approval. The
Commission shall approve a modification of the model standards only if
the Commission determines that such modification is consistent with the
purpose of such standards and is required by reason of local
conditions. If standards have not been approved under this paragraph by
the Commission for any State within 2 years after the enactment of this
section, the Commission shall, by rule or order, enforce the
Commission's model standards in such State until such time as State
standards are approved by the Commission.
``(2) The standards under this section shall establish such
measures for the safety and reliability of the affected equipment and
local distribution systems as may be appropriate. Such standards shall
be consistent with all applicable safety and performance standards
established by the national electrical code, the Institute of
Electrical and Electronics Engineers, Underwriters Laboratories, or the
American National Standards Institute and with such additional safety
and reliability standards as the Commission shall, by rule, prescribe.
Such standards shall ensure that generation units will automatically
isolate themselves from the electrical system in the event of an
electrical power outage. Such standards shall permit the owner or
operator of the local distribution system to interrupt or reduce
deliveries of available energy from the generation unit to the system
when necessary in order to construct, install, maintain, repair,
replace, remove, investigate, or inspect any of its equipment or part
of its system; or if it determines that curtailment, interruption, or
reduction is necessary because of emergencies, forced outages, force
majeure, or compliance with prudent electrical practices.
``(3) The model standards under this subsection prohibit the
imposition of additional charges by local distribution systems for
equipment or services for interconnection that are additional to those
necessary to meet such standards.
``(h) Interconnection.--At the election of the owner or operator of
the generation unit concerned, connections meeting the standards
applicable under subsection (g) may be made--
``(1) by such owner or operator at such owner's or
operator's expense, or
``(2) by the owner or operator of the local distribution
system upon the request of the owner or operator of the
generating unit and pursuant to an offer by the owner or
operator of the generating unit to reimburse the local
distribution system in an amount equal to the minimum cost of
such connection, consistent with the procurement procedures of
the State in which the unit is located, except that the work on
all such connections shall be performed by qualified electrical
personnel certified by a responsible body or licensed by a
State or local government authority.
``(i) Consumer Friendly Contracts.--The Commission shall promulgate
regulations insuring that simplified contracts will be used for the
interconnection of electric energy by electric energy transmission or
distribution systems and generating facilities that have a power
production capacity not greater than 250 kilowatts.''
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