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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.
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.