‘‘(ii) in the case of a facility prin-
cipally using coal to produce electricity,
biomass comprises not more than 25 per-
cent (on a Btu basis) of the average
monthly fuel input of the facility for the
taxable year which includes such month.
‘‘(C) SPECIAL RULES.—
‘‘(i) In the case of a qualified facility
described in subparagraph (B)(i)—
‘‘(I) the 10-year period referred
to in subsection (a) shall be treated as
beginning no earlier than the date of
the enactment of this paragraph, and
‘‘(II) subsection (b)(3) shall not
apply to any such facility originally
placed in service before January 1,
1997.
‘‘(ii) In the case of a qualified facility
described in subparagraph (B)(ii)—
‘‘(I) the 10-year period referred
to in subsection (a) shall be treated as
beginning no earlier than the date of
the enactment of this paragraph, and
‘‘(II) the amount of the credit
determined under subsection (a) with
respect to any project for any taxable
year shall be adjusted by multiplying
such amount (determined without re-
gard to this clause) by 0.59.’’.
(b) CREDIT NOT TO APPLY TO ELECTRICITY SOLD
TO UTILITIES UNDER CERTAIN CONTRACTS.—Subsection
(b) of section 45 of such Code is amended by adding at
the end the following new paragraph:
‘‘(4) CREDIT NOT TO APPLY TO ELECTRICITY
SOLD TO UTILITIES UNDER CERTAIN CONTRACTS.—
‘‘(A) IN GENERAL.—The credit determined
under subsection (a) shall not apply to
electricity—
‘‘(i) produced at a qualified facility
placed in service by the taxpayer after
June 30, 1999, and
‘‘(ii) sold to a utility pursuant to a
contract originally entered into before Jan-
uary 1, 1987 (whether or not amended or
restated after that date).
‘‘(B) .—Subparagraph (A) shall not apply
if—
‘‘(i) the prices for energy and capacity
from such facility are established pursuant
to an amendment to the contract referred
to in subparagraph (A)(ii);
‘‘(ii) such amendment provides that
the prices set forth in the contract which
exceed avoided cost prices determined at
the time of delivery shall apply only to an-
nual quantities of electricity (prorated for
partial years) which do not exceed the
greater of—
‘‘(I) the average annual quantity
of electricity sold to the utility under
the contract during calendar years
1994, 1995, 1996, 1997, and 1998,
or
‘‘(II) the estimate of the annual
electricity production set forth in the
contract, or, if there is no such esti-
mate, the greatest annual quantity of
electricity sold to the utility under the
contract in any of the calendar years
1996, 1997, or 1998; and
‘‘(iii) such amendment provides that
energy and capacity in excess of the limita-
tion in clause (ii) may be—
‘‘(I) sold to the utility only at
prices that do not exceed avoided cost
prices determined at the time of deliv-
ery, or
‘‘(II) sold to a third party subject
to a mutually agreed upon advance
notice to the utility.
For purposes of this subparagraph, avoided cost
prices shall be determined as provided for in 18
CFR 292.304(d)(1) or any successor regula-
tion.’’.
(c) QUALIFIED FACILITIES INCLUDE ALL BIOMASS
FACILITIES.—
(1) IN GENERAL.—Subparagraph (B) of section
45(c)(1) of such Code is amended to read as follows:
‘‘(B) biomass.’’
(2) BIOMASS DEFINED.—Paragraph (2) of sec-
tion 45(c) of such Code is amended to read as fol-
lows:
‘‘(2) BIOMASS.—The term ‘biomass’ means—
‘‘(A) any organic material from a plant
which is planted exclusively for purposes of
being used at a qualified facility to produce
electricity, and
‘‘(B) any solid, nonhazardous, cellulosic
waste material, which is segregated from other
waste materials, and which is derived from—
‘‘(i) any of the following forest-related
resources: mill residues, precommercial
thinnings, slash, and brush, but not includ-
ing old-growth timber,
‘‘(ii) 
waste 
pallets, 
crates, 
and
dunnage, manufacturing and construction
wood wastes (other than pressure-treated,
chemically-treated, 
or 
painted 
wood
wastes), and landscape or right-of-way tree
trimmings, but not including unsegregated
municipal solid waste (garbage), or
‘‘(iii) agriculture sources, including or-
chard tree crops, vineyard, grain, legumes,
sugar, and other crop by-products or resi-
dues.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to electricity produced after the
date of the enactment of this Act.
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