I 

110TH CONGRESS 

1ST SESSION H. R. 2001 

To amend the Internal Revenue Code of 1986 to apply the energy credit 

to combined heat and power system property. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 23, 2007 

Mr. INSLEE (for himself, Mr. TERRY, Mr. GILCHREST, Mr. HIGGINS, Ms. 

MCCOLLUM of Minnesota, Ms. BERKLEY, Mr. DELAHUNT, Mr. PITTS, 

Mr. COHEN, Ms. SCHAKOWSKY, and Mr. MCDERMOTT) introduced the 

following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to apply 

the energy credit to combined heat and power system 

property. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Industrial Cogenera5 tion Act of 2007’’. 

6 SEC. 2. ENERGY CREDIT FOR COMBINED HEAT AND POWER 

7 SYSTEM PROPERTY. 

8 (a) IN GENERAL.—Section 48(a)(3)(A) (defining en9 ergy property) is by striking ‘‘or’’ at the end of clause 


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1 (iii), by inserting ‘‘or’’ at the end of clause (iv), and by 

2 adding at the end the following new clause: 

3 ‘‘(v) combined heat and power system property,’’. 

4 (b) COMBINED HEAT AND POWER SYSTEM PROP5 ERTY.—Section 48 is amended by adding at the end the 

6 following new subsection: 

7 ‘‘(d) COMBINED HEAT AND POWER SYSTEM PROP8 ERTY.—For purposes of subsection (a)(3)(A)(v)— 

9 ‘‘(1) COMBINED HEAT AND POWER SYSTEM

10 PROPERTY.—The term ‘combined heat and power 

11 system property’ means property comprising a sys12 tem— 

13 ‘‘(A) which uses the same energy source 

14 for the simultaneous or sequential generation of 

15 electrical power, mechanical shaft power, or 

16 both, in combination with the generation of 

17 steam or other forms of useful thermal energy 

18 (including heating and cooling applications), 

19 ‘‘(B) which has an electrical capacity of 

20 not more than 50 megawatts or a mechanical 

21 energy capacity of not more than 67,000 horse22 power or an equivalent combination of electrical 

23 and mechanical energy capacities, 

24 ‘‘(C) which produces— 


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1 ‘‘(i) at least 20 percent of its total 

2 useful energy in the form of thermal en3 ergy which is not used to produce electrical 

4 or mechanical power (or combination 

5 thereof), and 

6 ‘‘(ii) at least 20 percent of its total 

7 useful energy in the form of electrical or 

8 mechanical power (or combination thereof), 

9 ‘‘(D) the energy efficiency percentage of 

10 which exceeds 60 percent, and 

11 ‘‘(E) which is placed in service before Jan12 uary 1, 2011. 

13 ‘‘(2) SPECIAL RULES.— 

14 ‘‘(A) ENERGY EFFICIENCY PERCENT15 AGE.—For purposes of this subsection, the en16 ergy efficiency percentage of a system is the 

17 fraction— 

18 ‘‘(i) the numerator of which is the 

19 total useful electrical, thermal, and me20 chanical power produced by the system at 

21 normal operating rates, and expected to be 

22 consumed in its normal application, and 

23 ‘‘(ii) the denominator of which is the 

24 higher heating value of the primary fuel 

25 sources for the system. 


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1 ‘‘(B) DETERMINATIONS MADE ON BTU

2 BASIS.—The energy efficiency percentage and 

3 the percentages under paragraph (1)(C) shall 

4 be determined on a Btu basis. 

5 ‘‘(C) INPUT AND OUTPUT PROPERTY NOT

6 INCLUDED.—The term ‘combined heat and 

7 power system property’ does not include prop8 erty used to transport the energy source to the 

9 facility or to distribute energy produced by the 

10 facility. 

11 ‘‘(D) CERTAIN EXCEPTION NOT TO

12 APPLY.—The first sentence of the matter in 

13 subsection (a)(3) which follows subparagraph 

14 (D) thereof shall not apply to combined heat 

15 and power system property. 

16 ‘‘(3) SYSTEMS USING BAGASSE.—If a system is 

17 designed to use bagasse for at least 90 percent of 

18 the energy source— 

19 ‘‘(A) paragraph (1)(D) shall not apply, but 

20 ‘‘(B) the amount of credit determined 

21 under subsection (a) with respect to such sys22 tem shall not exceed the amount which bears 

23 the same ratio to such amount of credit (deter24 mined without regard to this subparagraph) as 


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1 the energy efficiency percentage of such system 

2 bears to 60 percent. 

3 ‘‘(4) NONAPPLICATION OF CERTAIN RULES.— 

4 For purposes of determining if the term ‘combined 

5 heat and power system property’ includes tech6 nologies which generate electricity or mechanical 

7 power using back-pressure steam turbines in place of 

8 existing pressure-reducing valves or which make use 

9 of waste heat from industrial processes such as by 

10 using organic rankine, stirling, or kalina heat engine 

11 systems, paragraph (1) shall be applied without re12 gard to subparagraphs (C) and (D) thereof.’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to periods after December 31, 

15 2007, in taxable years ending after such date, under rules 

16 similar to the rules of section 48(m) of the Internal Rev17 enue Code of 1986 (as in effect on the day before the date 

18 of the enactment of the Revenue Reconciliation Act of 

19 1990). 

Æ 


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