SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Energy Efficiency and Conservation 
Incentives Act of 2001''.

SEC. 2. ALLOWANCE OF DEDUCTION FOR QUALIFIED ENERGY MANAGEMENT DEVICES 
              AND RETROFITTED QUALIFIED METERS.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by inserting after section 
179A the following new section:

``SEC. 179B. DEDUCTION FOR QUALIFIED ENERGY MANAGEMENT DEVICES AND 
              RETROFITTED METERS.

    ``(a) Allowance of Deduction.--There shall be allowed as a 
deduction--
            ``(1) an amount equal to $30 for each qualified energy 
        management device originally placed in service during the 
        taxable year, and
            ``(2) for each qualified retrofitted meter originally 
        placed in service during the taxable year, an amount equal to 
        the lesser of--
                    ``(A) $30, or
                    ``(B) the adjusted basis of such meter.
    ``(b) Definitions.--
            ``(1) Qualified energy management device.--For purposes of 
        this section, the term `qualified energy management device' 
        means any meter or metering device acquired and used by an 
        electric energy or natural gas supplier or service provider to 
        enable consumers or others to manage their purchase, sale, or 
        use of electricity or natural gas in response to energy price 
        and usage signals.
            ``(2) Qualified retrofitted meter.--For purposes of this 
        section, the term `qualified retrofitted meter' means an 
        electric energy or natural gas meter or metering device that 
        has been modified by the addition of equipment designed to 
        enable users to manage the purchase, sale, or use of 
        electricity and natural gas in response to energy price and 
        usage signals.
            ``(3) Placed in service.--For purposes of this section, the 
        term `placed in service' means interconnected with other 
        devices in a manner that permits reading of energy price and 
        usage signals on at least a daily basis.
            ``(4) Cost of meters includes cost of installation.--The 
        cost of any qualified energy management device or qualified 
        retrofitted meter referred to in paragraph (1) or (2) shall 
        include the cost of the original installation of such property.
    ``(c) Devices Installed Outside the United States Not Qualified.--
No deduction shall be allowed under subsection (a) with respect to any 
qualified energy management device or qualified retrofitted meter 
placed in service outside the United States.
    ``(d) Basis Reduction.--
            ``(1) In general.--For purposes of this title, the basis of 
        any property shall be reduced by the amount of the deduction 
        with respect to such property which is allowed by subsection 
        (a).
            ``(2) Ordinary income recapture.--For purposes of section 
        1245, the amount of the deduction allowable under subsection 
        (a) with respect to any property that is of a character subject 
        to the allowance for depreciation shall be treated as a 
        deduction allowed for depreciation under section 167.''.
    (b) Conforming Amendments.--
            (1) Section 263(a)(1) of such Code is amended by striking 
        ``or'' at the end of subparagraph (G), by striking the period 
        at the end of subparagraph (H) and inserting ``, or'', and by 
        inserting after subparagraph (H) the following new 
        subparagraph:
                    ``(I) expenditures for which a deduction is allowed 
                under section 179B.''.
            (2) Section 312(k)(3)(B) of such Code is amended by 
        striking ``or 179A'' each place it appears in the heading and 
        text and inserting ``, 179A, or 179B''.
            (3) Section 1016(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (26), by striking the period at 
        the end of paragraph (27) and inserting ``, and'', and by 
        inserting after paragraph (27) the following new paragraph:
            ``(28) to the extent provided in section 179B(d)(1),''.
            (4) Section 1245(a) of such Code is amended by inserting 
        ``179B,'' after ``179A,'' both places it appears in paragraphs 
        (2)(C) and (3)(C).
            (5) The table of contents for subpart B of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 179A the following new item:

                              ``Sec. 179B. Deduction for qualified 
                                        energy management devices and 
                                        retrofitted meters.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to qualified energy management devices placed in service after 
the date of the enactment of this Act and to qualified retrofitted 
meters that are placed in service after, or that are in use as of, the 
date of the enactment of this Act.

SEC. 3. 3-YEAR APPLICABLE RECOVERY PERIOD FOR DEPRECIATION OF QUALIFIED 
              ENERGY MANAGEMENT DEVICES.

    (a) In General.--Subparagraph (A) of section 168(e)(3) of the 
Internal Revenue Code of 1986 (relating to classification of property) 
is amended by striking ``and'' at the end of clause (ii), by striking 
the period at the end of clause (iii) and inserting ``, and'', and by 
adding at the end the following new clause:
                            ``(iv) any qualified energy management 
                        device.''.
    (b) Definition of Qualified Energy Management Device.--Section 
168(i) of such Code (relating to definitions and special rules) is 
amended by inserting at the end the following new paragraph:
            ``(15) Qualified energy management device.--The term 
        `qualified energy management device' means a meter or metering 
        device that is acquired and used by an electric energy or 
        natural gas supplier or service provider to enable consumers 
        and others to manage their purchase, sale, and use of 
        electricity or natural gas in response to energy price and 
        usage signals that are readable on at least a daily basis. For 
        purposes of the preceding sentence, the cost of any qualified 
        energy management device shall (at the election of the 
        taxpayer) include the cost of the original installation of such 
        property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000.
Output: Energy Efficiency and Conservation Incentives Act of 2001 - Amends the Internal Revenue Code to allow as a deduction: (1) an amount equal to $30 for each qualified energy management device originally placed in service during the taxable year; and (2) for each qualified retrofitted meter originally placed in service during the taxable year, an amount equal to the lesser of $30 or the adjusted basis of such meter.