II

106TH CONGRESS

1ST SESSION S. 414

To amend the Internal Revenue Code of 1986 to provide a 5-year extension

of the credit for producing electricity from wind, and for other purposes.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 11, 1999

Mr. GRASSLEY (for himself, Mr. JEFFORDS, Mr. CONRAD, Mr. LEAHY, Mr.

MURKOWSKI, Mr. SMITH of Oregon, Mr. WELLSTONE, Mr. CHAFEE, Mr.

BREAUX, Mr. GRAHAM, Mr. MACK, Mr. DASCHLE, Mr. DORGAN, and Mr.

BURNS) introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide

a 5-year extension of the credit for producing electricity

from wind, and for other purposes.

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

3 SECTION 1. 5–YEAR EXTENSION OF CREDIT FOR PRODUC4 ING ELECTRICITY FROM WIND.

5 (a) IN GENERAL.—Paragraph (3) of section 45(c) of

6 the Internal Revenue Code of 1986 (defining qualified fa7 cility) is amended to read as follows:
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S 414 IS

1 ‘‘(3) QUALIFIED FACILITY.—The term ‘quali2 fied facility’ means any facility owned by the tax3 payer which is originally placed in service—

4 ‘‘(A) in the case of a facility using wind to

5 produce electricity, after December 31, 1993,

6 and before July 1, 2004, and

7 ‘‘(B) in the case of a facility using closed8 loop biomass to produce electricity, after De9 cember 31, 1992, and before July 1, 1999.’’.

10 (b) CREDIT NOT TO APPLY TO ELECTRICITY SOLD

11 TO UTILITIES UNDER CERTAIN CONTRACTS.—Subsection

12 (b) of section 45 of such Code is amended by adding at

13 the end the following new paragraph:

14 ‘‘(4) CREDIT NOT TO APPLY TO ELECTRICITY

15 SOLD TO UTILITIES UNDER CERTAIN CONTRACTS.—

16 ‘‘(A) IN GENERAL.—The credit determined

17 under subsection (a) shall not apply to

18 electricity—

19 ‘‘(i) produced at a qualified facility

20 placed in service by the taxpayer after

21 June 30, 1999, and

22 ‘‘(ii) sold to a utility pursuant to a

23 contract originally entered into before Jan24 uary 1, 1987 (whether or not amended or

25 restated after that date).
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S 414 IS

1 ‘‘(B) EXCEPTION.—Subparagraph (A)

2 shall not apply if—

3 ‘‘(i) the prices for energy and capacity

4 from such facility are established pursuant

5 to an amendment to the contract referred

6 to in subparagraph (A)(ii);

7 ‘‘(ii) such amendment provides that

8 the prices set forth in the contract which

9 exceed avoided cost prices determined at

10 the time of delivery shall apply only to an11 nual quantities of electricity (prorated for

12 partial years) which do not exceed the

13 greater of—

14 ‘‘(I) the average annual quantity

15 of electricity sold to the utility under

16 the contract during calendar years

17 1994, 1995, 1996, 1997, and 1998,

18 or

19 ‘‘(II) the estimate of the annual

20 electricity production set forth in the

21 contract, or, if there is no such esti22 mate, the greatest annual quantity of

23 electricity sold to the utility under the

24 contract in any of the calendar years

25 1996, 1997, or 1998; and
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S 414 IS

1 ‘‘(iii) such amendment provides that

2 energy and capacity in excess of the limita3 tion in clause (ii) may be—

4 ‘‘(I) sold to the utility only at

5 prices that do not exceed avoided cost

6 prices determined at the time of deliv7 ery, or

8 ‘‘(II) sold to a third party subject

9 to a mutually agreed upon advance

10 notice to the utility.

11 For purposes of this subparagraph, avoided cost

12 prices shall be determined as provided for in 18

13 CFR 292.304(d)(1) or any successor regula14 tion.’’.

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