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and the percentages under subparagraph
1
(A)(iii) shall be determined on a Btu basis.
2
‘‘(iii) I
NPUT AND OUTPUT PROPERTY
3
NOT INCLUDED
.—The term ‘combined heat
4
and power system property’ does not in-
5
clude property used to transport the energy
6
source to the facility or to distribute energy
7
produced by the facility.
8
‘‘(iv) P
UBLIC UTILITY PROPERTY
.—
9
‘‘(I) A
CCOUNTING RULE FOR PUB
-
10
LIC UTILITY PROPERTY
.—If the com-
11
bined heat and power system property
12
is public utility property (as defined
13
in section 168(i)(10)), the taxpayer
14
may only claim the credit under the
15
subsection if, with respect to such prop-
16
erty, the taxpayer uses a normalization
17
method of accounting.
18
‘‘(II) C
ERTAIN EXCEPTION NOT TO
19
APPLY
.—The matter following para-
20
graph (3)(D) shall not apply to com-
21
bined heat and power system property.
22
‘‘(v) N
ONAPPLICATION
OF
CERTAIN
23
RULES
.—For purposes of determining if the
24
term ‘combined heat and power system
25
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HR 6 EAS1S/PP
property’ includes technologies which gen-
1
erate electricity or mechanical power using
2
back-pressure steam turbines in place of ex-
3
isting pressure-reducing valves or which
4
make use of waste heat from industrial
5
processes such as by using organic rankin,
6
stirling, or kalina heat engine systems, sub-
7
paragraph (A) shall be applied without re-
8
gard to clauses (iii) and (iv) thereof.
9
‘‘(C) E
XTENSION OF DEPRECIATION RECOV
-
10
ERY PERIOD
.—If a taxpayer is allowed credit
11
under this section for combined heat and power
12
system property and such property would (but
13
for this subparagraph) have a class life of 15
14
years or less under section 168, such property
15
shall be treated as having a 22-year class life for
16
purposes of section 168.’’.
17
(c) N
O
C
ARRYBACK OF
E
NERGY
C
REDIT
B
EFORE
E
F
-
18
FECTIVE
D
ATE
.—Subsection (d) of section 39, as amended
19
by this Act, is amended by adding at the end the following
20
new paragraph:
21
‘‘(15) N
O CARRYBACK OF ENERGY CREDIT BE
-
22
FORE EFFECTIVE DATE
.—No portion of the unused
23
business credit for any taxable year which is attrib-
24
utable to the energy credit with respect to property
25
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HR 6 EAS1S/PP
described in section 48(a)(5) may be carried back to
1
a taxable year ending before January 1, 2003.’’.
2
(d) C
ONFORMING
A
MENDMENTS
.—
3
(A) Section 25C(e)(6), as added by this Act,
4
is amended by striking ‘‘section 48(a)(5)(C)’’
5
and inserting ‘‘section 48(a)(6)(C)’’.
6
(B) Section 29(b)(3)(A)(i)(III), as amended
7
by this Act, is amended by striking ‘‘section
8
48(a)(5)(C)’’
and
inserting
‘‘section
9
48(a)(6)(C)’’.
10
(e) E
FFECTIVE
D
ATE
.—The amendments made by this
11
section shall apply to property placed in service after De-
12
cember 31, 2002, in taxable years ending after such date.
13
SEC. 2109. CREDIT FOR ENERGY EFFICIENCY IMPROVE-
14
MENTS TO EXISTING HOMES.
15
(a) I
N
G
ENERAL
.—Subpart A of part IV of subchapter
16
A of chapter 1 (relating to nonrefundable personal credits),
17
as amended by this Act, is amended by inserting after sec-
18
tion 25C the following new section:
19
‘‘SEC. 25D. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST-
20
ING HOMES.
21
‘‘(a) A
LLOWANCE OF
C
REDIT
.—In the case of an indi-
22
vidual, there shall be allowed as a credit against the tax
23
imposed by this chapter for the taxable year an amount
24
equal to 10 percent of the amount paid or incurred by the
25
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HR 6 EAS1S/PP
taxpayer for qualified energy efficiency improvements in-
1
stalled during such taxable year.
2
‘‘(b) L
IMITATIONS
.—
3
‘‘(1) M
AXIMUM CREDIT
.—The credit allowed by
4
this section with respect to a dwelling shall not exceed
5
$300.
6
‘‘(2) P
RIOR CREDIT AMOUNTS FOR TAXPAYER ON
7
SAME DWELLING TAKEN INTO ACCOUNT
.—If a credit
8
was allowed to the taxpayer under subsection (a) with
9
respect to a dwelling in 1 or more prior taxable years,
10
the amount of the credit otherwise allowable for the
11
taxable year with respect to that dwelling shall not
12
exceed the amount of $300 reduced by the sum of the
13
credits allowed under subsection (a) to the taxpayer
14
with respect to the dwelling for all prior taxable
15
years.
16
‘‘(c) C
ARRYFORWARD OF
U
NUSED
C
REDIT
.—If the
17
credit allowable under subsection (a) exceeds the limitation
18
imposed by section 26(a) for such taxable year reduced by
19
the sum of the credits allowable under this subpart (other
20
than this section) for any taxable year, such excess shall
21
be carried to the succeeding taxable year and added to the
22
credit allowable under subsection (a) for such succeeding
23
taxable year.
24
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HR 6 EAS1S/PP
‘‘(d) Q
UALIFIED
E
NERGY
E
FFICIENCY
I
MPROVE
-
1
MENTS
.—For purposes of this section, the term ‘qualified
2
energy efficiency improvements’ means any energy efficient
3
building envelope component which is certified to meet or
4
exceed the prescriptive criteria for such component in the
5
2000 International Energy Conservation Code, any energy
6
efficient building envelope component which is described in
7
subsection (f)(4)(B) and is certified by the Energy Star pro-
8
gram managed jointly by the Environmental Protection
9
Agency and the Department of Energy, or any combination
10
of energy efficiency measures which are certified as achiev-
11
ing at least a 30 percent reduction in heating and cooling
12
energy usage for the dwelling (as measured in terms of en-
13
ergy cost to the taxpayer), if—
14
‘‘(1) such component or combination of measures
15
is installed in or on a dwelling—
16
‘‘(A) located in the United States, and
17
‘‘(B) owned and used by the taxpayer as the
18
taxpayer’s principal residence (within the mean-
19
ing of section 121),
20
‘‘(2) the original use of such component or com-
21
bination of measures commences with the taxpayer,
22
and
23
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HR 6 EAS1S/PP
‘‘(3) such component or combination of measures
1
reasonably can be expected to remain in use for at
2
least 5 years.
3
‘‘(e) C
ERTIFICATION
.—
4
‘‘(1) M
ETHODS OF CERTIFICATION
.—
5
‘‘(A)
C
OMPONENT
-
BASED
METHOD
.—The
6
certification described in subsection (d) for any
7
component described in such subsection shall be
8
determined on the basis of applicable energy effi-
9
ciency ratings (including product labeling re-
10
quirements) for affected building envelope compo-
11
nents.
12
‘‘(B) P
ERFORMANCE
-
BASED METHOD
.—
13
‘‘(i) I
N
GENERAL
.—The certification
14
described in subsection (d) for any combina-
15
tion of measures described in such sub-
16
section shall be—
17
‘‘(I) determined by comparing the
18
projected heating and cooling energy
19
usage for the dwelling to such usage for
20
such dwelling in its original condition,
21
and
22
‘‘(II) accompanied by a written
23
analysis documenting the proper ap-
24
plication of a permissible energy per-
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HR 6 EAS1S/PP
formance calculation method to the
1
specific circumstances of such dwelling.
2
‘‘(ii) C
OMPUTER
SOFTWARE
.—Com-
3
puter software shall be used in support of a
4
performance-based
method
certification
5
under clause (i). Such software shall meet
6
procedures and methods for calculating en-
7
ergy and cost savings in regulations pro-
8
mulgated by the Secretary of Energy. Such
9
regulations on the specifications for software
10
and verification protocols shall be based on
11
the 2001 California Residential Alternative
12
Calculation Method Approval Manual.
13
‘‘(2) P
ROVIDER
.—A certification described in
14
subsection (d) shall be provided by—
15
‘‘(A) in the case of the method described in
16
paragraph (1)(A), by a third party, such as a
17
local building regulatory authority, a utility, a
18
manufactured home production inspection pri-
19
mary inspection agency (IPIA), or a home en-
20
ergy rating organization, or
21
‘‘(B) in the case of the method described in
22
paragraph (1)(B), an individual recognized by
23
an organization designated by the Secretary for
24
such purposes.
25
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HR 6 EAS1S/PP
‘‘(3) F
ORM
.—A certification described in sub-
1
section (d) shall be made in writing on forms which
2
specify in readily inspectable fashion the energy effi-
3
cient components and other measures and their re-
4
spective efficiency ratings, and which include a per-
5
manent label affixed to the electrical distribution
6
panel of the dwelling.
7
‘‘(4) R
EGULATIONS
.—
8
‘‘(A) I
N GENERAL
.—In prescribing regula-
9
tions under this subsection for certification meth-
10
ods described in paragraph (1)(B), the Secretary,
11
after examining the requirements for energy con-
12
sultants and home energy ratings providers spec-
13
ified by the Mortgage Industry National Accredi-
14
tation Procedures for Home Energy Rating Sys-
15
tems, shall prescribe procedures for calculating
16
annual energy usage and cost reductions for
17
heating and cooling and for the reporting of the
18
results. Such regulations shall—
19
‘‘(i) provide that any calculation pro-
20
cedures be fuel neutral such that the same
21
energy efficiency measures allow a dwelling
22
to be eligible for the credit under this sec-
23
tion regardless of whether such dwelling uses
24
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HR 6 EAS1S/PP
a gas or oil furnace or boiler or an electric
1
heat pump, and
2
‘‘(ii) require that any computer soft-
3
ware allow for the printing of the Federal
4
tax forms necessary for the credit under this
5
section and for the printing of forms for
6
disclosure to the owner of the dwelling.
7
‘‘(B) P
ROVIDERS
.—For purposes of para-
8
graph (2)(B), the Secretary shall establish re-
9
quirements for the designation of individuals
10
based on the requirements for energy consultants
11
and home energy raters specified by the Mort-
12
gage Industry National Accreditation Procedures
13
for Home Energy Rating Systems.
14
‘‘(f) D
EFINITIONS AND
S
PECIAL
R
ULES
.—For pur-
15
poses of this section—
16
‘‘(1) D
OLLAR AMOUNTS IN CASE OF JOINT OCCU
-
17
PANCY
.—In the case of any dwelling unit which is
18
jointly occupied and used during any calendar year
19
as a residence by 2 or more individuals the following
20
shall apply:
21
‘‘(A) The amount of the credit allowable
22
under subsection (a) by reason of expenditures
23
for the qualified energy efficiency improvements
24
made during such calendar year by any of such
25
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HR 6 EAS1S/PP
individuals with respect to such dwelling unit
1
shall be determined by treating all of such indi-
2
viduals as 1 taxpayer whose taxable year is such
3
calendar year.
4
‘‘(B) There shall be allowable, with respect
5
to such expenditures to each of such individuals,
6
a credit under subsection (a) for the taxable year
7
in which such calendar year ends in an amount
8
which bears the same ratio to the amount deter-
9
mined under subparagraph (A) as the amount of
10
such expenditures made by such individual dur-
11
ing such calendar year bears to the aggregate of
12
such expenditures made by all of such individ-
13
uals during such calendar year.
14
‘‘(2) T
ENANT
-
STOCKHOLDER
IN
COOPERATIVE
15
HOUSING
CORPORATION
.—In the case of an indi-
16
vidual who is a tenant-stockholder (as defined in sec-
17
tion 216) in a cooperative housing corporation (as de-
18
fined in such section), such individual shall be treated
19
as having paid his tenant-stockholder’s proportionate
20
share (as defined in section 216(b)(3)) of the cost of
21
qualified energy efficiency improvements made by
22
such corporation.
23
‘‘(3) C
ONDOMINIUMS
.—
24
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HR 6 EAS1S/PP
‘‘(A) I
N GENERAL
.—In the case of an indi-
1
vidual who is a member of a condominium man-
2
agement association with respect to a condo-
3
minium which the individual owns, such indi-
4
vidual shall be treated as having paid the indi-
5
vidual’s proportionate share of the cost of quali-
6
fied energy efficiency improvements made by
7
such association.
8
‘‘(B) C
ONDOMINIUM MANAGEMENT ASSOCIA
-
9
TION
.—For purposes of this paragraph, the term
10
‘condominium management association’ means
11
an organization which meets the requirements of
12
paragraph (1) of section 528(c) (other than sub-
13
paragraph (E) thereof) with respect to a condo-
14
minium project substantially all of the units of
15
which are used as residences.
16
‘‘(4) B
UILDING
ENVELOPE
COMPONENT
.—The
17
term ‘building envelope component’ means—
18
‘‘(A) insulation material or system which is
19
specifically and primarily designed to reduce the
20
heat loss or gain or a dwelling when installed in
21
or on such dwelling,
22
‘‘(B) exterior windows (including skylights),
23
and
24
‘‘(C) exterior doors.
25
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