I
103D CONGRESS
2D SESSION
H. R. 2026
To amend the Internal Revenue Code of 1986 to encourage energy efficiency
and the production and use of renewable energy.
IN THE HOUSE OF REPRESENTATIVES
MAY 6, 1993
Mr. MCDERMOTT introduced the following bill; which was referred to the
Committee on Ways and Means
JANUARY 27, 1994
Additional sponsors: Mr. HAMBURG and Mrs. UNSOELD
A BILL
To amend the Internal Revenue Code of 1986 to encourage
energy efficiency and the production and use of renew-
able energy.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Renewables and Energy Efficiency Incentives Act of
1993’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
TITLE I—INCENTIVES FOR PRO-
DUCTION AND USE OF RE-
NEWABLE ENERGY SOURCES
SEC. 101. ENERGY-RELATED CREDITS MAY OFFSET 25 PER-
CENT OF MINIMUM TAX.
(a) IN GENERAL.—Section 38(c) (relating to limita-
tion based on amount of tax) is amended by redesignating
paragraph (2) as paragraph (3) and by inserting after
paragraph (1) the following new paragraph:
‘‘(2) ENERGY CREDITS MAY OFFSET 25 PER-
CENT OF MINIMUM TAX.—
‘‘(A) IN GENERAL.—In the case of the en-
ergy credit—
‘‘(i) this section and section 39 shall
be applied separately with respect to such
credit, and
‘‘(ii) for purposes of applying para-
graph (1) to such credit—
‘‘(I) 75 percent of the tentative
minimum tax shall be substituted for
the tentative minimum tax under sub-
paragraph (A) thereof, 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 the energy
credit).
‘‘(B) ENERGY CREDIT.—For purposes of
this paragraph, the term ‘energy credit’ means
the portion of the credit under subsection (a)
which is attributable to the credits determined
under sections 45 and 48(a).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1993.
SEC. 102. SMALL WIND TURBINES ELIGIBLE FOR ENERGY
CREDIT.
(a) IN GENERAL.—Subparagraph (A) of section
48(a)(3) (defining energy property) is amended by strik-
ing ‘‘or’’ at the end of clause (i), by redesignating clause
(ii) as clause (iii), and by inserting after clause (i) the
following new clause:
‘‘(ii) equipment which uses wind en-
ergy to generate electricity but only if such
equipment has a rated capacity of 50 kilo-
watts or less and is not primarily used in
the trade or business of producing elec-
tricity for sale to an unrelated person, or’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to property placed in service
after December 31, 1993.
SEC. 103. LESSEES ELIGIBLE FOR CREDIT FOR ELEC-
TRICITY PRODUCED FROM CERTAIN RENEW-
ABLE RESOURCES.
(a) IN GENERAL.—Paragraph (3) of section 45(c)
(defining qualified facility) is amended by striking ‘‘owned
by the taxpayer’’ and inserting ‘‘operated by the tax-
payer’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1993.
SEC. 104. CLARIFICATION OF APPLICATION OF ENERGY
CREDIT TO PROPERTY USING SOLAR EN-
ERGY.
(a) IN GENERAL.—Paragraph (3) of section 48(a)
(relating to energy credit) is amended by adding at the
end thereof the following: ‘‘Equipment shall be treated as
satisfying the requirement of subparagraph (A)(i) that it
use solar energy if its average annual use of energy from
sources other than solar energy does not exceed 50 percent
of its total energy input.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to property placed in service
after December 31, 1993.
TITLE II—INCENTIVES TO
PROMOTE ENERGY EFFICIENCY
SEC. 201. LARGE ELECTRIC TRUCKS, VANS, AND BUSES ELI-
GIBLE FOR DEDUCTION FOR CLEAN-FUEL VE-
HICLES.
(a) IN GENERAL.—Paragraph (3) of section 179A(c)
(defining qualified clean-fuel vehicle property) is amended
by adding at the end thereof the following: ‘‘The preceding
sentence shall not apply to any vehicle described in
subclause (I) or (II) of subsection (b)(1)(A)(iii).’’
(b) DENIAL OF CREDIT.—Subsection (c) of section
30 is amended by adding at the end thereof the following
new paragraph:
‘‘(3) DENIAL OF CREDIT FOR VEHICLES FOR
WHICH DEDUCTION ALLOWABLE.—The term ‘quali-
fied electric vehicle’ shall not include any vehicle de-
scribed in subclause (I) or (II) of section
179A(b)(1)(A)(iii).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
December 31, 1993.
SEC. 202. DEDUCTION FOR ENERGY CONSERVATION EX-
PENDITURES BY CERTAIN UTILITIES.
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 (relating to itemized deductions for individuals and
corporations) is amended by inserting after section 196
the following new section:
‘‘SEC. 197. ENERGY CONSERVATION EXPENDITURES BY
ELECTRIC AND GAS UTILITIES.
‘‘(a) GENERAL RULE.—In the case of an electric or
gas utility, there shall be allowed as a deduction for the
taxable year an amount equal to the energy conservation
expenditures paid or incurred by the taxpayer during such
taxable year.
‘‘(b) ENERGY CONSERVATION EXPENDITURES.—For
purposes of this section, the term ‘energy conservation ex-
penditures’ means expenditures for—
‘‘(1) subsidies provided directly or indirectly to
customers for the purchase, installation, or modifica-
tion of—
‘‘(A) any device or service primarily de-
signed to reduce consumption of electricity, nat-
ural gas, or steam or to improve the manage-
ment of energy demand, or
‘‘(B) any specially defined energy property
(as defined in section 136(c)(2)(A)),
‘‘(2) energy use consulting and audits of com-
mercial, residential, and industrial properties, or
‘‘(3) administrative, promotional, and other
costs associated with expenditures described in para-
graph (1) or (2).
Such term shall not include any expenditure taken into
account in determining the basis of any tangible property
which is owned by the taxpayer and which is of a character
subject to the allowance for depreciation.
‘‘(c) ELECTRIC OR GAS UTILITY.—For purposes of
this section, the term ‘electric or gas utility’ means any
corporation engaged in the furnishing or sale of electric
energy, natural gas, or steam if the rates for such furnish-
ing or sale have been established or approved by a State
or political subdivision thereof, by any agency or instru-
mentality of the United States, or by a public utility or
public service commission or other similar body of any
State or political subdivision thereof or of the District of
Columbia.’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 263(a) is amended
by striking ‘‘; or’’ at the end of subparagraph (F)
and inserting a comma, by striking the period at the
end of subparagraph (G) and inserting ‘‘, or’’, and
by adding at the end thereof the following new sub-
paragraph:
‘‘(H) expenditures for which a deduction is
allowed under section 197.’’
(2) The table of sections for part VI of sub-
chapter B of chapter 1 is amended by adding at the
end thereof the following new item:
‘‘Sec. 197. Energy conservation expenditures by electric and gas
utilities.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures paid or incurred
in taxable years beginning after December 31, 1980.
SEC. 203. FULL EXCLUSION FOR ENERGY CONSERVATION
SUBSIDIES PROVIDED WITH RESPECT TO
NONRESIDENTIAL PROPERTY.
(a) IN GENERAL.—Subsection (a) of section 136 (re-
lating to energy conservation subsidies provided by public
utilities) is amended to read as follows:
‘‘(a) EXCLUSION.—Gross income shall not include
the value of any subsidy provided (directly or indirectly)
by a public utility to a customer for the purchase or instal-
lation of any energy conservation measure.’’
(b) CONFORMING AMENDMENT.—Paragraph (1) of
section 136(c) (defining energy conservation measure) is
amended by striking ‘‘demand—’’ and all that follows and
inserting ‘‘demand with respect to any property.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to subsidies provided after Decem-
ber 31, 1993.
TITLE III—REVENUE INCREASES
SEC. 301. REDUCTION OF TAX SUBSIDIES FOR ETHANOL
FUEL MIXTURES.
(a) REDUCTION OF CREDIT FOR ETHANOL BLEND-
ERS.—Subsection (h) of section 40 (relating to alcohol
used as fuel) is amended—
(1) by striking ‘‘54 cents’’ each place it appears
and inserting ‘‘35 cents’’, and
(2) by striking ‘‘40 cents’’ each place it appears
and inserting ‘‘21 cents’’.
(b) REDUCTION OF FUEL TAX SUBSIDIES.—
(1) Subparagraph (A) of section 4081(c)(1) (re-
lating to gasoline mixed with alcohol at refinery,
etc.) is amended—
(A) by striking ‘‘6.1 cents’’ each place it
appears and inserting ‘‘8.0 cents’’,
(B) by striking ‘‘7.342 cents’’ each place it
appears and inserting ‘‘8.805 cents’’, and
(C) by striking ‘‘8.422 cents’’ each place it
appears and inserting ‘‘9.505 cents’’
(2) Clause (i) of section 4041(b)(2)(A) (relating
to reduction in special fuels tax for qualified meth-
anol and ethanol fuel) is amended by striking ‘‘5.4
cents’’ and inserting ‘‘3.5 cents’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1994.
SEC. 302. REPEAL OF EXCLUSION FOR INTEREST ON BONDS
ISSUED TO FINANCE ELECTRIC GENERATING
FACILITIES FUELED BY COAL, PETROLEUM,
OR NUCLEAR POWER.
(a) IN GENERAL.—Section 149 (relating to bonds
must be registered to be tax exempt; other requirements)
is amended by adding at the end thereof the following new
subsection:
‘‘(h) BONDS USED TO FINANCE CERTAIN ELECTRIC
GENERATING FACILITIES NOT TAX-EXEMPT.—Nothing
in section 103(a) or in any other provision of law shall
be construed to provide an exemption from Federal income
tax for interest on any bond issued as part of an issue
if any portion of such issue is used to provide facilities
for the furnishing of electricity if such electricity is gener-
ating using nuclear power, coal, crude oil, or any petro-
leum product.’’
(b) CONFORMING AMENDMENT.—Paragraph (8) of
section 142(a) is amended by inserting ‘‘except as pro-
vided in section 149(h),’’ before ‘‘facilities’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to bonds issued after the date of
the enactment of this Act.
SEC. 303. REPEAL OF TAX-EXEMPT STATUS FOR ELECTRIC
COOPERATIVES.
(a) IN GENERAL.—Subparagraph (A) of section
501(c)(12) (relating to list of exempt organizations) is
amended by inserting ‘‘(other than electric companies)’’
after ‘‘like organizations’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (12) of section 501(c) is amend-
ed by striking subparagraph (C) and by redesignat-
ing subparagraph (D) as subparagraph (C).
(2) Subparagraph (C) of section 501(c)(12), as
redesignated by paragraph (1), is amended—
(A) by striking ‘‘or electric’’ each place it
appears, and
(B) by striking ‘‘of electricity or’’.
(3) Subsection (d) of section 513 is amended by
striking ‘‘or electric’’.