I
107TH CONGRESS
1ST SESSION
H. R. 2184
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 pur-
poses.
IN THE HOUSE OF REPRESENTATIVES
JUNE 14, 2001
Mr. ENGEL (for himself, Mr. TERRY, Ms. KILPATRICK, Mr. SANDERS, and
Ms. MCKINNEY) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Engery 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 ex-
penditures for cool roofing, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives 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 2001’’.
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 (de-
fining 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 per-
centage) is amended—
(A) in subparagraph (A) by striking ‘‘The’’
and inserting ‘‘Except as provided in subpara-
graph (B), the’’, and
(B) by redesignating subparagraph (B) as
subparagraph (C) and by inserting after sub-
paragraph (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 de-
posits and which is described in paragraph
(3)(A)(ii), and
‘‘(iv) 30 percent for cool roof prop-
erty.’’.
(3) COOL
ROOF
PROPERTY
DEFINED.—Sub-
section (a) of section 48 of such Code (relating to
energy credit) is amended by redesignating para-
graphs (4) and (5) as paragraphs (5) and (6), re-
spectively, 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 RE-
LATING TO EQUIPMENT WHICH USES WIND TO GEN-
ERATE ELECTRICITY AND COOL ROOF PROPERTY.—
‘‘(A) IN GENERAL.—In the case of the por-
tion 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 para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the
taxable year (other than such por-
tion).
‘‘(B) PORTION OF ENERGY CREDIT RELAT-
ING TO EQUIPMENT WHICH USES WIND TO GEN-
ERATE
ELECTRICITY
AND
COOL
ROOF
PROP-
ERTY.—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.—Sub-
clause (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 prop-
erty’’ after ‘‘employment credit’’.
(b) RENEWABLE RESOURCE AND COOL ROOF PROP-
ERTY.—
(1) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of such Code (relating to
nonrefundable personal credits) is amended by in-
serting 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 in-
dividual, 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 im-
posed 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 PROP-
ERTY.—The term ‘qualified renewable resource prop-
erty’ means—
‘‘(A) equipment which uses solar energy to
generate electricity,
‘‘(B) equipment which uses wind to gen-
erate 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 reflec-
tance index (as determined by the Lawrence Berke-
ley National Laboratory) of 65 percent or greater.
‘‘(3) LABOR
COSTS.—Expenditures for labor
costs properly allocable to the onsite preparation, as-
sembly, or original installation of the property de-
scribed 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.—Expendi-
tures 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 PRIN-
CIPAL 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 (with-
in the meaning of section 121),
‘‘(B) the original use of such property
commences with the taxpayer, and
‘‘(C) such property reasonably can be ex-
pected to remain in use for at least 5 years.
‘‘(2) DOLLAR AMOUNTS IN CASE OF JOINT OC-
CUPANCY.—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 deter-
mined 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 individ-
uals, a credit under subsection (a) for the tax-
able 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 indi-
vidual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as
defined in such section), such individual shall be
treated as having paid his tenant-stockholder’s pro-
portionate share (as defined in section 216(b)(3)) of
the cost of qualified renewable resource property and
qualified cool roof property made by such corpora-
tion.
‘‘(4) CONDOMINIUMS.—
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a condo-
minium which he owns, such individual shall be
treated as having paid his proportionate share
of the cost of qualified renewable resource prop-
erty and qualified cool roof property made by
such association.
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the
term ‘condominium management association’
means an organization which meets the require-
ments 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 Stand-
ards (24 C.F.R. 3280).
‘‘(6) JOINT OWNERSHIP OF ITEMS OF SOLAR OR
WIND ENERGY PROPERTY.—
‘‘(A) IN GENERAL.—Any expenditure oth-
erwise qualifying as an expenditure described in
paragraph (1) or (2) of subsection (c) shall not
be treated as failing to so qualify merely be-
cause such expenditure was made with respect
to 2 or more dwelling units.
‘‘(B) LIMITS
APPLIED
SEPARATELY.—In
the case of any expenditure described in sub-
paragraph (A), the amount of the credit allow-
able under subsection (a) shall (subject to para-
graph (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 nonbusi-
ness residential purposes, only that portion of the
expenditures for such item which is properly allo-
cable 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
(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 insert-
ing ‘‘25B, and 25C’’.
(6) Subsection (a) of section 1016 of such Code
is amended by striking ‘‘and’’ at the end of para-
graph (27), by striking the period at the end of
paragraph (28) and inserting ‘‘; and’’, and by add-
ing 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 sec-
tion 25A the following new item:
‘‘Sec. 25B. 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 add-
ing 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 dis-
tribution section system at the same point of inter-
connection during an applicable billing period.
‘‘(3) The terms ‘electric generation unit quali-
fied 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 con-
trolled by the customer-generator.
‘‘(D) The unit operates in parallel with the
retail electric supplier.
‘‘(E) The unit is intended primarily to off-
set part or all of the customer-generator’s re-
quirements 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 en-
ergy 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 in-
tended for net metering and that notifies the sup-
plier of its generating capacity an electric energy
meter that is capable of net metering if the cus-
tomer-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 cus-
tomer-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 cred-
its 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 para-
graph (1) or (2) of subsection (b).
‘‘(2) If the electricity supplied by the retail elec-
tric supplier exceeds the electricity generated by the
customer-generator during the billing period, the
customer-generator shall be billed for the net elec-
tricity supplied by the retail electric supplier in ac-
cordance with normal metering practices.
‘‘(3) If electricity generated by the customer-
generator exceeds the electricity supplied by the re-
tail 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 elec-
tric energy generated during the billing period,
with this credit appearing on the bill for the fol-
lowing 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 re-
flects 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 accumu-
lated 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-gener-
ator at the end of the previous year.
‘‘(d) PERCENT LIMITATIONS.—
‘‘(1) TWO PERCENT LIMITATION.—A local dis-
tribution company retail electric supplier shall not be
required to provide local distribution service with re-
spect 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 sys-
tems 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 dis-
tribution company retail electric supplier shall not be
required to provide local distribution service with re-
spect to additional customer-generators using a sin-
gle 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 elec-
tric 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 Commis-
sion when the total generating capacity of such cus-
tomer-generators is equal to or in excess of 2 per-
cent of the capacity necessary to meet the supplier’s
aggregate customer peak demand during the pre-
vious calendar year and when the total generating
capacity of such customer-generators using a single
‘‘(f) STATE AUTHORITY.—Nothing in this section
shall preclude a State from establishing or imposing addi-
tional 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 Commis-
sion shall publish model standards for the physical connec-
tion between local distribution systems and qualified gen-
eration 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 sec-
tion, 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 Commis-
sion 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 Commis-
sion’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 appro-
priate. Such standards shall be consistent with all applica-
ble 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 ad-
ditional 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 de-
liveries of available energy from the generation unit to the
system when necessary in order to construct, install, main-
tain, 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 pro-
hibit the imposition of additional charges by local distribu-
tion systems for equipment or services for interconnection
that are additional to those necessary to meet such stand-
ards.
‘‘(h) INTERCONNECTION.—At the election of the
owner or operator of the generation unit concerned, con-
nections meeting the standards applicable under sub-
section (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 dis-
tribution 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 connec-
tion, 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 re-
sponsible body or licensed by a State or local govern-
ment authority.
‘‘(i) CONSUMER FRIENDLY CONTRACTS.—The Com-
mission shall promulgate regulations insuring that sim-
plified contracts will be used for the interconnection of
electric energy by electric energy transmission or distribu-
tion systems and generating facilities that have a power
production capacity not greater than 250 kilowatts.’’
Æ