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output facilities on terms other than
those available to the general public if
such sale is to an on-system purchaser
or is an existing off-system sale.
‘‘(V) Such other transactions or
activities as may be provided in regu-
lations prescribed by the Secretary.
‘‘(iii) 
DEFINITIONS; 
SPECIAL
RULES.—For 
purposes 
of 
this
subparagraph—
‘‘(I) ON-SYSTEM
PURCHASER.—
The 
term 
‘on-system 
purchaser’
means a person who purchases electric
energy from a governmental unit and
whose electric facilities or equipment
are directly connected with trans-
mission or distribution facilities that
are owned by such governmental unit.
‘‘(II) 
OFF-SYSTEM
PUR-
CHASER.—The term ‘off-system pur-
chaser’ means a purchaser of electric
energy from a governmental unit
other than an on-system purchaser.
‘‘(III) 
EXISTING
OFF-SYSTEM
SALE.—The term ‘existing off-system
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sale’ means a sale of electric energy
to a person (other than a person
owned or controlled by the govern-
mental unit) that was an off-system
purchaser of electric energy in the
base year, but not in excess of the kil-
owatt hours purchased by such person
in such year.
‘‘(IV) BASE
YEAR.—The term
‘base year’ means 1998 (or, at the
election of such unit, 1996 or 1997).
‘‘(V) JOINT ACTION AGENCIES.—
A member of a joint action agency
that is entitled to make a sale de-
scribed in clause (ii)(IV) in a year
may transfer that entitlement to the
joint action agency in accordance with
rules of the Secretary.
‘‘(VI) GOVERNMENT-OWNED FA-
CILITY.—An electric output facility
(as defined in subsection (f)(4)(A))
shall be treated as owned by a govern-
mental unit if it is owned or leased by
such governmental unit or if such gov-
ernmental unit has capacity rights
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therein acquired before July 9, 1996,
for the purposes of serving one or
more customers to which such govern-
mental unit had a service obligation
on such date under State law or a re-
quirements contract.’’.
(b) ELECTION TO TERMINATE TAX-EXEMPT FI-
NANCING.—Section 141 of the Internal Revenue Code of
1986 (relating to private activity bond; qualified bond) is
amended by adding at the end the following:
‘‘(f) ELECTION TO TERMINATE TAX-EXEMPT BOND
FINANCING
FOR CERTAIN ELECTRIC OUTPUT FACILI-
TIES.—
‘‘(1) IN GENERAL.—An issuer may make an ir-
revocable election under this paragraph to terminate
certain tax-exempt financing for electric output fa-
cilities. If the issuer makes such election, then—
‘‘(A) except as provided in paragraph (2),
no bond the interest on which is exempt from
tax under section 103 may be issued on or after
the date of such election with respect to an elec-
tric output facility; and
‘‘(B) notwithstanding paragraph (1) or (2)
of subsection (a) or paragraph (5) of subsection
(b), with respect to an electric output facility no
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bond that was issued before the date of enact-
ment of this subsection, the interest on which
was exempt from tax on such date, shall be
treated as a private activity bond, for so long
as such facility continues to be owned by a gov-
ernmental unit.
‘‘(2) EXCEPTIONS.—An election under para-
graph (1) does not apply to—
‘‘(A) any qualified bond (as defined in sub-
section (e)),
‘‘(B) any eligible refunding bond,
‘‘(C) any bond issued to finance a quali-
fying T&D facility, or
‘‘(D) any bond issued to finance repair of
electric output facilities in service on the date
of enactment of this subsection. Repairs may
not increase by more than a de minimis degree
the capacity of the facility beyond its original
design.
‘‘(3) FORM AND EFFECT OF ELECTIONS.—An
election under paragraph (1) shall be made in such
a manner as the Secretary prescribes and shall be
binding on any successor in interest to the electing
issuer.
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‘‘(4) DEFINITIONS.—For purposes of this
subsection—
‘‘(A) ELECTRIC
OUTPUT
FACILITY.—The
term ‘electric output facility’ means an output
facility that is an electric generation, trans-
mission, or distribution facility.
‘‘(B) ELIGIBLE
REFUNDING
BOND.—The
term ‘eligible refunding bond’ means State or
local bonds issued after an election described in
paragraph (1) that directly or indirectly refund
State or local bonds issued before such election,
if the weighted averaged maturity of the re-
funding bonds do not exceed the remaining
weighted average maturity of the bonds issued
before the election.
‘‘(C) QUALIFYING
T&D
FACILITY.—The
term ‘qualifying T&D facility’ means—
‘‘(i) transmission facilities over which
services 
described 
in 
subsection
(b)(6)(C)(ii)(I) are provided, or
‘‘(ii) distribution facilities over which
services 
described 
in 
subsection
(b)(6)(C)(ii)(III) are provided.’’.
(c) EFFECTIVE DATE, APPLICABILITY, AND TRANSI-
TION RULES.—
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(1) EFFECTIVE DATE.—The amendments made
by this section take effect on the date of enactment
of this Act, except that a governmental unit may
elect to apply section 141(b)(6)(C) of the Internal
Revenue Code of 1986, as added by subsection (a),
with respect to permitted open access transactions
on or after July 9, 1996.
(2) APPLICABILITY.—References in this Act to
sections of the Internal Revenue Code of 1986 shall
be deemed to include references to comparable sec-
tions of the Internal Revenue Code of 1954.
(3) TRANSITION RULES.—
(A) PRIVATE BUSINESS USE.—Any activity
that was not a private business use prior to the
effective date of the amendment made by sub-
section (a) shall not be deemed to be a private
business use by reason of the enactment of such
amendment.
(B) ELECTION.—An issuer making the
election under section 141(f) of the Internal
Revenue Code of 1986, as added by subsection
(b), shall not be liable under any contract in ef-
fect on the date of enactment of this Act for
any claim arising from having made the elec-
tion.
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‘‘(2) CONTRIBUTIONS
AFTER
FUNDING
PE-
RIOD.—Notwithstanding any other provision of this
section, a taxpayer may make deductible payments
to the Fund in any taxable year between the end of
the funding period and the termination of the license
issued by the Nuclear Regulatory Commission for
the nuclear powerplant to which the Fund relates
provided such payments do not cause the assets of
the Fund to exceed the nuclear decommissioning
costs allocable to the taxpayer’s current or former
interest in the nuclear powerplant to which the Fund
relates. The foregoing limitation shall be applied by
taking into account a reasonable rate of inflation for
the nuclear decommissioning costs and a reasonable
after-tax rate of return on the assets of the Fund
until such assets are anticipated to be expended.’’.
(b) DEDUCTION FOR NUCLEAR DECOMMISSIONING
COSTS WHEN PAID.—Paragraph (2) of section 468A(c)
of such Code is amended to read as follows:
‘‘(2) DEDUCTION
OF
NUCLEAR
DECOMMIS-
SIONING COSTS.—In addition to any deduction under
subsection (a), nuclear decommissioning costs paid
or incurred by the taxpayer during any taxable year
shall constitute ordinary and necessary expenses in
carrying on a trade or business under section 162.’’.
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(c) LEVEL FUNDING AMOUNTS.—Subsection (d) of
section 468A of such Code is amended to read as follows:
‘‘(d) LEVEL FUNDING AMOUNTS.—
‘‘(1) ANNUAL AMOUNTS.—For purposes of this
section, the level funding amount for any taxable
year shall equal the annual amount required to be
contributed to the Fund in each year remaining in
the funding period in order for the Fund to accumu-
late the nuclear decommissioning costs allocable to
the taxpayer’s current or former interest in the nu-
clear powerplant to which the Fund relates. The an-
nual amount described in the foregoing sentence
shall be calculated by taking into account a reason-
able rate of inflation for the nuclear decommis-
sioning costs and a reasonable after-tax rate of re-
turn on the assets of the Fund until such assets are
anticipated to be expended.
‘‘(2) FUNDING
PERIOD.—The funding period
for a Fund shall end on the last day of the last tax-
able year of the expected operating life of the nu-
clear powerplant.
‘‘(3) NUCLEAR DECOMMISSIONING COSTS.—For
purposes of this section, the term ‘nuclear decom-
missioning costs’ shall mean all costs to be incurred
in connection with entombing, decontaminating, dis-
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mantling, removing, and disposing of a nuclear pow-
erplant, and shall include all associated preparation,
security, fuel storage, and radiation monitoring
costs. The taxpayer may identify such costs by ref-
erence either to a site-specific engineering study or
to the financial assurance amount calculated pursu-
ant to section 50.75 of title 10 of the Code of Fed-
eral Regulations. The term shall include all such
costs which, outside of the decommissioning context,
might otherwise be capital expenditures.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid after June 8,
1999, in taxable years ending after such date.
SEC. 804. RENEWABLE ENERGY TAX CREDIT.
(a) IN GENERAL.—Paragraph (3) of section 45(c) of
the Internal Revenue Code of 1986 (defining qualified fa-
cility) is amended to read as follows:
‘‘(3) QUALIFIED FACILITY.—The term ‘quali-
fied facility’ means any facility owned by the tax-
payer which is originally placed in service—
‘‘(A) in the case of a facility using wind to
produce electricity, after December 31, 1993,
and before July 1, 2004, and
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‘‘(B) in the case of a facility using closed-
loop biomass to produce electricity, after De-
cember 31, 1992, and before July 1, 1999.’’.
(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) 
EXCEPTION.—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);
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‘‘(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
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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.’’.
TITLE IX—MISCELLANEOUS
PROVISION
SEC. 901. STUDY.
The Secretary of Energy shall report to the Congress
within two years after the enactment of this Act on the
extent to which actions taken by the States have removed
regulatory and statutory barriers to interstate commerce
in electric energy. The report shall describe any remaining
barriers to interstate commerce and shall make rec-
ommendations to the Congress for additional action that
may be necessary to lower or eliminate barriers to inter-
state commerce in electric energy consistent with the de-
velopment of a fully competitive marketplace.
Æ
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