HR 6 EAS1S/PP
(b) C
LARIFICATION OF
T
REATMENT OF
F
UND
T
RANS
-
1
FERS
.—Subsection (e) of section 468A is amended by add-
2
ing at the end the following new paragraph:
3
‘‘(8) T
REATMENT OF FUND TRANSFERS
.—If, in
4
connection with the transfer of the taxpayer’s interest
5
in a nuclear power plant, the taxpayer transfers the
6
Fund with respect to such power plant to the trans-
7
feree of such interest and the transferee elects to con-
8
tinue the application of this section to such Fund—
9
‘‘(A) the transfer of such Fund shall not
10
cause such Fund to be disqualified from the ap-
11
plication of this section, and
12
‘‘(B) no amount shall be treated as distrib-
13
uted from such Fund, or be includible in gross
14
income, by reason of such transfer.’’.
15
(c) D
EDUCTION
FOR
N
UCLEAR
D
ECOMMISSIONING
16
C
OSTS
W
HEN
P
AID
.—Paragraph (2) of section 468A(c) is
17
amended to read as follows:
18
‘‘(2) D
EDUCTION OF NUCLEAR DECOMMISSIONING
19
COSTS
.—In addition to any deduction under sub-
20
section (a), nuclear decommissioning costs paid or in-
21
curred by the taxpayer during any taxable year shall
22
constitute ordinary and necessary expenses in car-
23
rying on a trade or business under section 162.’’.
24
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HR 6 EAS1S/PP
(d) E
FFECTIVE
D
ATE
.—The amendments made by this
1
section shall apply to taxable years beginning after Decem-
2
ber 31, 2002.
3
SEC. 2403. TREATMENT OF CERTAIN INCOME OF COOPERA-
4
TIVES.
5
(a) I
NCOME
F
ROM
O
PEN
A
CCESS AND
N
UCLEAR
D
E
-
6
COMMISSIONING
T
RANSACTIONS
.—
7
(1) I
N GENERAL
.—Subparagraph (C) of section
8
501(c)(12) is amended by striking ‘‘or’’ at the end of
9
clause (i), by striking clause (ii), and by adding at
10
the end the following new clauses:
11
‘‘(ii) from any open access transaction
12
(other than income received or accrued di-
13
rectly or indirectly from a member),
14
‘‘(iii) from any nuclear decommis-
15
sioning transaction,
16
‘‘(iv) from any asset exchange or con-
17
version transaction, or
18
‘‘(v) from the prepayment of any loan,
19
debt, or obligation made, insured, or guar-
20
anteed under the Rural Electrification Act
21
of 1936.’’.
22
(2) D
EFINITIONS AND SPECIAL RULES
.—Para-
23
graph (12) of section 501(c) is amended by adding at
24
the end the following new subparagraphs:
25
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HR 6 EAS1S/PP
‘‘(E)
For
purposes
of
subparagraph
1
(C)(ii)—
2
‘‘(i) The term ‘open access transaction’
3
means any transaction meeting the open ac-
4
cess requirements of any of the following
5
subclauses with respect to a mutual or coop-
6
erative electric company:
7
‘‘(I) The provision or sale of
8
transmission service or ancillary serv-
9
ices meets the open access requirements
10
of this subclause only if such services
11
are provided on a nondiscriminatory
12
open access basis pursuant to an open
13
access transmission tariff filed with
14
and approved by FERC, including an
15
acceptable reciprocity tariff, or under a
16
regional
transmission
organization
17
agreement approved by FERC.
18
‘‘(II) The provision or sale of elec-
19
tric energy distribution services or an-
20
cillary services meets the open access
21
requirements of this subclause only if
22
such services are provided on a non-
23
discriminatory open access basis to
24
end-users served by distribution facili-
25
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HR 6 EAS1S/PP
ties owned by the mutual or coopera-
1
tive electric company (or its members).
2
‘‘(III) The delivery or sale of elec-
3
tric energy generated by a generation
4
facility meets the open access require-
5
ments of this subclause only if such fa-
6
cility is directly connected to distribu-
7
tion facilities owned by the mutual or
8
cooperative electric company (or its
9
members) which owns the generation
10
facility, and such distribution facilities
11
meet the open access requirements of
12
subclause (II).
13
‘‘(ii) Clause (i)(I) shall apply in the
14
case of a voluntarily filed tariff only if the
15
mutual or cooperative electric company files
16
a report with FERC within 90 days after
17
the date of the enactment of this subpara-
18
graph relating to whether or not such com-
19
pany will join a regional transmission or-
20
ganization.
21
‘‘(iii) A mutual or cooperative electric
22
company shall be treated as meeting the
23
open access requirements of clause (i)(I) if
24
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HR 6 EAS1S/PP
a regional transmission organization con-
1
trols the transmission facilities.
2
‘‘(iv) References to FERC in this sub-
3
paragraph shall be treated as including ref-
4
erences to the Public Utility Commission of
5
Texas with respect to any ERCOT utility
6
(as defined in section 212(k)(2)(B) of the
7
Federal
Power
Act
(16
U.S.C.
8
824k(k)(2)(B))) or references to the Rural
9
Utilities Service with respect to any other
10
facility not subject to FERC jurisdiction.
11
‘‘(v)
For
purposes
of
this
12
subparagraph—
13
‘‘(I) The term ‘transmission facil-
14
ity’ means an electric output facility
15
(other than a generation facility) that
16
operates at an electric voltage of 69 kV
17
or greater. To the extent provided in
18
regulations, such term includes any
19
output facility that FERC determines
20
is a transmission facility under stand-
21
ards applied by FERC under the Fed-
22
eral Power Act (as in effect on the date
23
of the enactment of the Energy Tax In-
24
centives Act of 2003).
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HR 6 EAS1S/PP
‘‘(II) The term ‘regional trans-
1
mission organization’ includes an
2
independent system operator.
3
‘‘(III) The term ‘FERC’ means
4
the Federal Energy Regulatory Com-
5
mission.
6
‘‘(F) The term ‘nuclear decommissioning
7
transaction’ means—
8
‘‘(i) any transfer into a trust, fund, or
9
instrument established to pay any nuclear
10
decommissioning costs if the transfer is in
11
connection with the transfer of the mutual
12
or cooperative electric company’s interest in
13
a nuclear power plant or nuclear power
14
plant unit,
15
‘‘(ii) any distribution from any trust,
16
fund, or instrument established to pay any
17
nuclear decommissioning costs, or
18
‘‘(iii) any earnings from any trust,
19
fund, or instrument established to pay any
20
nuclear decommissioning costs.
21
‘‘(G) The term ‘asset exchange or conversion
22
transaction’ means any voluntary exchange or
23
involuntary conversion of any property related
24
to generating, transmitting, distributing, or sell-
25
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HR 6 EAS1S/PP
ing electric energy by a mutual or cooperative
1
electric company, the gain from which qualifies
2
for deferred recognition under section 1031 or
3
1033, but only if the replacement property ac-
4
quired by such company pursuant to such sec-
5
tion constitutes property which is used, or to be
6
used, for—
7
‘‘(i) generating, transmitting, distrib-
8
uting, or selling electric energy, or
9
‘‘(ii) producing, transmitting, distrib-
10
uting, or selling natural gas.’’.
11
(b) T
REATMENT OF
I
NCOME
F
ROM
L
OAD
L
OSS
T
RANS
-
12
ACTIONS
.—Paragraph (12) of section 501(c), as amended
13
by subsection (a)(2), is amended by adding after subpara-
14
graph (G) the following new subparagraph:
15
‘‘(H)(i) In the case of a mutual or coopera-
16
tive electric company described in this para-
17
graph or an organization described in section
18
1381(a)(2)(C), income received or accrued from a
19
load loss transaction shall be treated as an
20
amount collected from members for the sole pur-
21
pose of meeting losses and expenses.
22
‘‘(ii) For purposes of clause (i), the term
23
‘load loss transaction’ means any wholesale or
24
retail sale of electric energy (other than to mem-
25
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HR 6 EAS1S/PP
bers) to the extent that the aggregate sales during
1
the recovery period does not exceed the load loss
2
mitigation sales limit for such period.
3
‘‘(iii) For purposes of clause (ii), the load
4
loss mitigation sales limit for the recovery period
5
is the sum of the annual load losses for each year
6
of such period.
7
‘‘(iv) For purposes of clause (iii), a mutual
8
or cooperative electric company’s annual load
9
loss for each year of the recovery period is the
10
amount (if any) by which—
11
‘‘(I) the megawatt hours of electric en-
12
ergy sold during such year to members of
13
such electric company are less than
14
‘‘(II) the megawatt hours of electric en-
15
ergy sold during the base year to such mem-
16
bers.
17
‘‘(v) For purposes of clause (iv)(II), the
18
term ‘base year’ means—
19
‘‘(I) the calendar year preceding the
20
start-up year, or
21
‘‘(II) at the election of the electric com-
22
pany, the second or third calendar years
23
preceding the start-up year.
24
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HR 6 EAS1S/PP
‘‘(vi) For purposes of this subparagraph, the
1
recovery period is the 7-year period beginning
2
with the start-up year.
3
‘‘(vii) For purposes of this subparagraph,
4
the start-up year is the calendar year which in-
5
cludes the date of the enactment of this subpara-
6
graph or, if later, at the election of the mutual
7
or cooperative electric company—
8
‘‘(I) the first year that such electric
9
company offers nondiscriminatory open ac-
10
cess, or
11
‘‘(II) the first year in which at least 10
12
percent of such electric company’s sales are
13
not to members of such electric company.
14
‘‘(viii) A company shall not fail to be treat-
15
ed as a mutual or cooperative company for pur-
16
poses of this paragraph or as a corporation oper-
17
ating on a cooperative basis for purposes of sec-
18
tion 1381(a)(2)(C) by reason of the treatment
19
under clause (i).
20
‘‘(ix) In the case of a mutual or cooperative
21
electric company, income from any open access
22
transaction received, or accrued, indirectly from
23
a member shall be treated as an amount collected
24
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HR 6 EAS1S/PP
from members for the sole purpose of meeting
1
losses and expenses.’’.
2
(c) E
XCEPTION
F
ROM
U
NRELATED
B
USINESS
T
AX
-
3
ABLE
I
NCOME
.—Subsection (b) of section 512 (relating to
4
modifications) is amended by adding at the end the fol-
5
lowing new paragraph:
6
‘‘(18) T
REATMENT OF MUTUAL OR COOPERATIVE
7
ELECTRIC COMPANIES
.—In the case of a mutual or
8
cooperative electric company described in section
9
501(c)(12), there shall be excluded income which is
10
treated as member income under subparagraph (H)
11
thereof.’’.
12
(d) C
ROSS
R
EFERENCE
.—Section 1381 is amended by
13
adding at the end the following new subsection:
14
‘‘(c) C
ROSS
R
EFERENCE
.—
15
‘‘For treatment of income from load loss trans-
actions of organizations described in subsection
(a)(2)(C), see section 501(c)(12)(H).’’.
(e) E
FFECTIVE
D
ATE
.—The amendments made by this
16
section shall apply to taxable years beginning after the date
17
of the enactment of this Act.
18
SEC. 2404. SALES OR DISPOSITIONS TO IMPLEMENT FED-
19
ERAL ENERGY REGULATORY COMMISSION OR
20
STATE ELECTRIC RESTRUCTURING POLICY.
21
(a) I
N
G
ENERAL
.—Section 451 (relating to general
22
rule for taxable year of inclusion) is amended by adding
23
at the end the following new subsection:
24
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HR 6 EAS1S/PP
‘‘(i) S
PECIAL
R
ULE FOR
S
ALES OR
D
ISPOSITIONS
T
O
1
I
MPLEMENT
F
EDERAL
E
NERGY
R
EGULATORY
C
OMMISSION
2
OR
S
TATE
E
LECTRIC
R
ESTRUCTURING
P
OLICY
.—
3
‘‘(1) I
N GENERAL
.—For purposes of this subtitle,
4
if a taxpayer elects the application of this subsection
5
to a qualifying electric transmission transaction in
6
any taxable year—
7
‘‘(A) any ordinary income derived from
8
such transaction which would be required to be
9
recognized under section 1245 or 1250 for such
10
taxable year (determined without regard to this
11
subsection), and
12
‘‘(B) any income derived from such trans-
13
action in excess of such ordinary income which
14
is required to be included in gross income for
15
such taxable year,
16
shall be so recognized and included ratably over the
17
8-taxable year period beginning with such taxable
18
year.
19
‘‘(2)
Q
UALIFYING
ELECTRIC
TRANSMISSION
20
TRANSACTION
.—For purposes of this subsection, the
21
term ‘qualifying electric transmission transaction’
22
means any sale or other disposition before January 1,
23
2007, of—
24
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