§ 45.  Electricity produced from certain renewable resources, etc.

26 USCS § 45

a) Gen­er­al rule. For pur­pos­es of sec­tion 38 [26 USCS § 38], the renew­able elec­tric­i­ty pro­duc­tion cred­it for any tax­able year is an amount equal to the prod­uct of–
   (1) 1.5 cents, mul­ti­plied by
(2) the kilo­watt hours of elec­tric­i­ty–
(A) pro­duced by the tax­pay­er–
(i) from qual­i­fied ener­gy resources, and
(ii) at a qual­i­fied facil­i­ty dur­ing the 10-year peri­od begin­ning on the date the facil­i­ty was orig­i­nal­ly placed in ser­vice, and
(B) sold by the tax­pay­er to an unre­lat­ed per­son dur­ing the tax­able year.

(b) Lim­i­ta­tions and adjust­ments.
(1) Phase­out of cred­it. The amount of the cred­it deter­mined under sub­sec­tion (a) shall be reduced by an amount which bears the same ratio to the amount of the cred­it (deter­mined with­out regard to this para­graph) as–
(A) the amount by which the ref­er­ence price for the cal­en­dar year in which the sale occurs exceeds 8 cents, bears to
(B) 3 cents.
(2) Cred­it and phase­out adjust­ment based on infla­tion. The 1.5 cent amount in sub­sec­tion (a), the 8 cent amount in para­graph (1), the $ 4.375 amount in sub­sec­tion (e)(8)(A), and in sub­sec­tion (e)(8)(B)(i) the ref­er­ence price of fuel used as a feed­stock (with­in the mean­ing of sub­sec­tion ©(7)(A)) in 2002 shall each be adjust­ed by mul­ti­ply­ing such amount by the infla­tion adjust­ment fac­tor for the cal­en­dar year in which the sale occurs. If any amount as increased under the pre­ced­ing sen­tence is not a mul­ti­ple of 0.1 cent, such amount shall be round­ed to the near­est mul­ti­ple of 0.1 cent.
(3) Cred­it reduced for grants, tax-exempt bonds, sub­si­dized ener­gy financ­ing, and oth­er cred­its. The amount of the cred­it deter­mined under sub­sec­tion (a) with respect to any project for any tax­able year (deter­mined after the appli­ca­tion of para­graphs (1) and (2)) shall be reduced by the amount which is the prod­uct of the amount so deter­mined for such year and the less­er of 1/2 or a frac­tion–
(A) the numer­a­tor of which is the sum, for the tax­able year and all pri­or tax­able years, of–
(i) grants pro­vid­ed by the Unit­ed States, a State, or a polit­i­cal sub­di­vi­sion of a State for use in con­nec­tion with the project,
(ii) pro­ceeds of an issue of State or local gov­ern­ment oblig­a­tions used to pro­vide financ­ing for the project the inter­est on which is exempt from tax under sec­tion 103 [26 USCS § 103],
         (iii) the aggre­gate amount of sub­si­dized ener­gy financ­ing pro­vid­ed (direct­ly or indi­rect­ly) under a Fed­er­al, State, or local pro­gram pro­vid­ed in con­nec­tion with the project, and
(iv) the amount of any oth­er cred­it allow­able with respect to any prop­er­ty which is part of the project, and
(B) the denom­i­na­tor of which is the aggre­gate amount of addi­tions to the cap­i­tal account for the project for the tax­able year and all pri­or tax­able years.
   The amounts under the pre­ced­ing sen­tence for any tax­able year shall be deter­mined as of the close of the tax­able year. This para­graph shall not apply with respect to any facil­i­ty described in sub­sec­tion (d)(2)(A)(ii).
(4) Cred­it rate and peri­od for elec­tric­i­ty pro­duced and sold from cer­tain facil­i­ties.
(A) Cred­it rate. In the case of elec­tric­i­ty pro­duced and sold in any cal­en­dar year after 2003 at any qual­i­fied facil­i­ty described in para­graph (3), (5), (6), (7), or (9) of sub­sec­tion (d), the amount in effect under sub­sec­tion (a)(1) for such cal­en­dar year (deter­mined before the appli­ca­tion of the last sen­tence of para­graph (2) of this sub­sec­tion) shall be reduced by one-half.
(B) Cred­it peri­od.
(i) In gen­er­al. Except as pro­vid­ed in clause (ii) or clause (iii), in the case of any facil­i­ty described in para­graph (3), (4), (5), (6), or (7) of sub­sec­tion (d), the 5‑year peri­od begin­ning on the date the facil­i­ty was orig­i­nal­ly placed in ser­vice shall be sub­sti­tut­ed for the 10-year peri­od in sub­sec­tion (a)(2)(A)(ii).
(ii) Cer­tain open-loop bio­mass facil­i­ties. In the case of any facil­i­ty described in sub­sec­tion (d)(3)(A)(ii) placed in ser­vice before the date of the enact­ment of this para­graph [enact­ed Oct. 22, 2004], the 5‑year peri­od begin­ning on Jan­u­ary 1, 2005, shall be sub­sti­tut­ed for the 10-year peri­od in sub­sec­tion (a)(2)(A)(ii).
(iii) Ter­mi­na­tion. Clause (i) shall not apply to any facil­i­ty placed in ser­vice after the date of the enact­ment of this clause [enact­ed Aug. 8, 2005].

© Resources. For pur­pos­es of this sec­tion:
(1) In gen­er­al. The term “qual­i­fied ener­gy resources” means–
(A) wind,
(B) closed-loop bio­mass,
© open-loop bio­mass,
(D) geot­her­mal ener­gy,
(E) solar ener­gy,
(F) small irri­ga­tion pow­er,
(G) munic­i­pal sol­id waste, and
(H) qual­i­fied hydropow­er pro­duc­tion.
(2) Closed-loop bio­mass. The term “closed-loop bio­mass” means any organ­ic mate­r­i­al from a plant which is plant­ed exclu­sive­ly for pur­pos­es of being used at a qual­i­fied facil­i­ty to pro­duce elec­tric­i­ty.
(3) Open-loop bio­mass.
(A) In gen­er­al. The term “open-loop bio­mass” means–
(i) any agri­cul­tur­al live­stock waste nutri­ents, or
(ii) any sol­id, non­haz­ardous, cel­lu­losic waste mate­r­i­al or any lignin mate­r­i­al which is seg­re­gat­ed from oth­er waste mate­ri­als and which is derived from–
(I) any of the fol­low­ing for­est-relat­ed resources: mill and har­vest­ing residues, pre­com­mer­cial thin­nings, slash, and brush,
(II) sol­id wood waste mate­ri­als, includ­ing waste pal­lets, crates, dun­nage, man­u­fac­tur­ing and con­struc­tion wood wastes (oth­er than pres­sure-treat­ed, chem­i­cal­ly-treat­ed, or paint­ed wood wastes), and land­scape or right-of-way tree trim­mings, but not includ­ing munic­i­pal sol­id waste, gas derived from the biodegra­da­tion of sol­id waste, or paper which is com­mon­ly recy­cled, or
(III) agri­cul­ture sources, includ­ing orchard tree crops, vine­yard, grain, legumes, sug­ar, and oth­er crop by-prod­ucts or residues.
      Such term shall not include closed-loop bio­mass or bio­mass burned in con­junc­tion with fos­sil fuel (cofir­ing) beyond such fos­sil fuel required for start­up and flame sta­bi­liza­tion.
(B) Agri­cul­tur­al live­stock waste nutri­ents.
(i) In gen­er­al. The term “agri­cul­tur­al live­stock waste nutri­ents” means agri­cul­tur­al live­stock manure and lit­ter, includ­ing wood shav­ings, straw, rice hulls, and oth­er bed­ding mate­r­i­al for the dis­po­si­tion of manure.
(ii) Agri­cul­tur­al live­stock. The term “agri­cul­tur­al live­stock” includes bovine, swine, poul­try, and sheep.
(4) Geot­her­mal ener­gy. The term “geot­her­mal ener­gy” means ener­gy derived from a geot­her­mal deposit (with­in the mean­ing of sec­tion 613(e)(2) [26 USCS § 613(e)(2)]).
   (5) Small irri­ga­tion pow­er. The term “small irri­ga­tion pow­er” means pow­er–
(A) gen­er­at­ed with­out any dam or impound­ment of water through an irri­ga­tion sys­tem canal or ditch, and
(B) the name­plate capac­i­ty rat­ing of which is not less than 150 kilo­watts but is less than 5 megawatts.
(6) Munic­i­pal sol­id waste. The term “munic­i­pal sol­id waste” has the mean­ing giv­en the term “sol­id waste” under sec­tion 2(27) of the Sol­id Waste Dis­pos­al Act (42 U.S.C. 6903).
   (7) Refined coal.
(A) In gen­er­al. The term “refined coal” means a fuel which–
(i) is a liq­uid, gaseous, or sol­id fuel pro­duced from coal (includ­ing lig­nite) or high car­bon fly ash, includ­ing such fuel used as a feed­stock,
(ii) is sold by the tax­pay­er with the rea­son­able expec­ta­tion that it will be used for pur­pose of pro­duc­ing steam,
(iii) is cer­ti­fied by the tax­pay­er as result­ing (when used in the pro­duc­tion of steam) in a qual­i­fied emis­sion reduc­tion, and
(iv) is pro­duced in such a man­ner as to result in an increase of at least 50 per­cent in the mar­ket val­ue of the refined coal (exclud­ing any increase caused by mate­ri­als com­bined or added dur­ing the pro­duc­tion process), as com­pared to the val­ue of the feed­stock coal.
(B) Qual­i­fied emis­sion reduc­tion. The term “qual­i­fied emis­sion reduc­tion” means a reduc­tion of at least 20 per­cent of the emis­sions of nitro­gen oxide and either sul­fur diox­ide or mer­cury released when burn­ing the refined coal (exclud­ing any dilu­tion caused by mate­ri­als com­bined or added dur­ing the pro­duc­tion process), as com­pared to the emis­sions released when burn­ing the feed­stock coal or com­pa­ra­ble coal pre­dom­i­nant­ly avail­able in the mar­ket­place as of Jan­u­ary 1, 2003.
(8) Qual­i­fied hydropow­er pro­duc­tion.
(A) In gen­er­al. The term “qual­i­fied hydropow­er pro­duc­tion” means–
(i) in the case of any hydro­elec­tric dam which was placed in ser­vice on or before the date of the enact­ment of this para­graph [enact­ed Aug. 8, 2005], the incre­men­tal hydropow­er pro­duc­tion for the tax­able year, and
(ii) in the case of any non­hy­dro­elec­tric dam described in sub­para­graph ©, the hydropow­er pro­duc­tion from the facil­i­ty for the tax­able year.
(B) Deter­mi­na­tion of incre­men­tal hydropow­er pro­duc­tion.
(i) In gen­er­al. For pur­pos­es of sub­para­graph (A), incre­men­tal hydropow­er pro­duc­tion for any tax­able year shall be equal to the per­cent­age of aver­age annu­al hydropow­er pro­duc­tion at the facil­i­ty attrib­ut­able to the effi­cien­cy improve­ments or addi­tions of capac­i­ty placed in ser­vice after the date of the enact­ment of this para­graph, deter­mined by using the same water flow infor­ma­tion used to deter­mine an his­toric aver­age annu­al hydropow­er pro­duc­tion base­line for such facil­i­ty. Such per­cent­age and base­line shall be cer­ti­fied by the Fed­er­al Ener­gy Reg­u­la­to­ry Com­mis­sion.
(ii) Oper­a­tional changes dis­re­gard­ed. For pur­pos­es of clause (i), the deter­mi­na­tion of incre­men­tal hydropow­er pro­duc­tion shall not be based on any oper­a­tional changes at such facil­i­ty not direct­ly asso­ci­at­ed with the effi­cien­cy improve­ments or addi­tions of capac­i­ty.
© Non­hy­dro­elec­tric dam. For pur­pos­es of sub­para­graph (A), a facil­i­ty is described in this sub­para­graph if–
(i) the facil­i­ty is licensed by the Fed­er­al Ener­gy Reg­u­la­to­ry Com­mis­sion and meets all oth­er applic­a­ble envi­ron­men­tal, licens­ing, and reg­u­la­to­ry require­ments,
(ii) the facil­i­ty was placed in ser­vice before the date of the enact­ment of this para­graph [enact­ed Aug. 8, 2005] and did not pro­duce hydro­elec­tric pow­er on the date of the enact­ment of this para­graph [enact­ed Aug. 8, 2005], and
(iii) tur­bines or oth­er gen­er­at­ing devices are to be added to the facil­i­ty after such date to pro­duce hydro­elec­tric pow­er, but only if there is not any enlarge­ment of the diver­sion struc­ture, or con­struc­tion or enlarge­ment of a bypass chan­nel, or the impound­ment or any with­hold­ing of any addi­tion­al water from the nat­ur­al stream chan­nel.
(9) Indi­an coal.
(A) In gen­er­al. The term “Indi­an coal” means coal which is pro­duced from coal reserves which, on June 14, 2005–
(i) were owned by an Indi­an tribe, or
(ii) were held in trust by the Unit­ed States for the ben­e­fit of an Indi­an tribe or its mem­bers.
(B) Indi­an tribe. For pur­pos­es of this para­graph, the term “Indi­an tribe” has the mean­ing giv­en such term by sec­tion 7871©(3)(E)(ii) [26 USCS § 7871©(3)(E)(ii)].
 
(d) Qual­i­fied facil­i­ties. For pur­pos­es of this sec­tion:
(1) Wind facil­i­ty. In the case of a facil­i­ty using wind to pro­duce elec­tric­i­ty, the term “qual­i­fied facil­i­ty” means any facil­i­ty owned by the tax­pay­er which is orig­i­nal­ly placed in ser­vice after Decem­ber 31, 1993, and before Jan­u­ary 1, 2009.
(2) Closed-loop bio­mass facil­i­ty.
(A) In gen­er­al. In the case of a facil­i­ty using closed-loop bio­mass to pro­duce elec­tric­i­ty, the term “qual­i­fied facil­i­ty” means any facil­i­ty–
(i) owned by the tax­pay­er which is orig­i­nal­ly placed in ser­vice after Decem­ber 31, 1992, and before Jan­u­ary 1, 2009, or
(ii) owned by the tax­pay­er which before Jan­u­ary 1, 2009, is orig­i­nal­ly placed in ser­vice and mod­i­fied to use closed-loop bio­mass to co-fire with coal, with oth­er bio­mass, or with both, but only if the mod­i­fi­ca­tion is approved under the Bio­mass Pow­er for Rur­al Devel­op­ment Pro­grams or is part of a pilot project of the Com­mod­i­ty Cred­it Cor­po­ra­tion as described in 65 Fed. Reg. 63052.
      (B) Spe­cial rules. In the case of a qual­i­fied facil­i­ty described in sub­para­graph (A)(ii)–
(i) the 10-year peri­od referred to in sub­sec­tion (a) shall be treat­ed as begin­ning no ear­li­er than the date of the enact­ment of this clause [enact­ed Oct. 22, 2004],
(ii) the amount of the cred­it deter­mined under sub­sec­tion (a) with respect to the facil­i­ty shall be an amount equal to the amount deter­mined with­out regard to this clause mul­ti­plied by the ratio of the ther­mal con­tent of the closed-loop bio­mass used in such facil­i­ty to the ther­mal con­tent of all fuels used in such facil­i­ty, and
(iii) if the own­er of such facil­i­ty is not the pro­duc­er of the elec­tric­i­ty, the per­son eli­gi­ble for the cred­it allow­able under sub­sec­tion (a) shall be the lessee or the oper­a­tor of such facil­i­ty.
(3) Open-loop bio­mass facil­i­ties.
(A) In gen­er­al. In the case of a facil­i­ty using open-loop bio­mass to pro­duce elec­tric­i­ty, the term “qual­i­fied facil­i­ty” means any facil­i­ty owned by the tax­pay­er which–
(i) in the case of a facil­i­ty using agri­cul­tur­al live­stock waste nutri­ents–
(I) is orig­i­nal­ly placed in ser­vice after the date of the enact­ment of this sub­clause [enact­ed Oct. 22, 2004] and before Jan­u­ary 1, 2009, and
(II) the name­plate capac­i­ty rat­ing of which is not less than 150 kilo­watts, and
(ii) in the case of any oth­er facil­i­ty, is orig­i­nal­ly placed in ser­vice before Jan­u­ary 1, 2009.
(B) Cred­it eli­gi­bil­i­ty. In the case of any facil­i­ty described in sub­para­graph (A), if the own­er of such facil­i­ty is not the pro­duc­er of the elec­tric­i­ty, the per­son eli­gi­ble for the cred­it allow­able under sub­sec­tion (a) shall be the lessee or the oper­a­tor of such facil­i­ty.
(4) Geot­her­mal or solar ener­gy facil­i­ty. In the case of a facil­i­ty using geot­her­mal or solar ener­gy to pro­duce elec­tric­i­ty, the term “qual­i­fied facil­i­ty” means any facil­i­ty owned by the tax­pay­er which is orig­i­nal­ly placed in ser­vice after the date of the enact­ment of this para­graph [enact­ed Oct. 22, 2004] and before Jan­u­ary 1, 2009 (Jan­u­ary 1, 2006, in the case of a facil­i­ty using solar ener­gy). Such term shall not include any prop­er­ty described in sec­tion 48(a)(3) [26 USCS § 48(a)(3)] the basis of which is tak­en into account by the tax­pay­er for pur­pos­es of deter­min­ing the ener­gy cred­it under sec­tion 48 [26 USCS § 48].
   (5) Small irri­ga­tion pow­er facil­i­ty. In the case of a facil­i­ty using small irri­ga­tion pow­er to pro­duce elec­tric­i­ty, the term “qual­i­fied facil­i­ty” means any facil­i­ty owned by the tax­pay­er which is orig­i­nal­ly placed in ser­vice after the date of the enact­ment of this para­graph [enact­ed Oct. 22, 2004] and before Jan­u­ary 1, 2009.
(6) Land­fill gas facil­i­ties. In the case of a facil­i­ty pro­duc­ing elec­tric­i­ty from gas derived from the biodegra­da­tion of munic­i­pal sol­id waste, the term “qual­i­fied facil­i­ty” means any facil­i­ty owned by the tax­pay­er which is orig­i­nal­ly placed in ser­vice after the date of the enact­ment of this para­graph [enact­ed Oct. 22, 2004] and before Jan­u­ary 1, 2009.
(7) Trash com­bus­tion facil­i­ties. In the case of a facil­i­ty which burns munic­i­pal sol­id waste to pro­duce elec­tric­i­ty, the term “qual­i­fied facil­i­ty” means any facil­i­ty owned by the tax­pay­er which is orig­i­nal­ly placed in ser­vice after the date of the enact­ment of this para­graph [enact­ed Oct. 22, 2004] and before Jan­u­ary 1, 2009. Such term shall include a new unit placed in ser­vice in con­nec­tion with a facil­i­ty placed in ser­vice on or before the date of the enact­ment of this para­graph [enact­ed Oct. 22, 2004], but only to the extent of the increased amount of elec­tric­i­ty pro­duced at the facil­i­ty by rea­son of such new unit.
(8) Refined coal pro­duc­tion facil­i­ty. In the case of a facil­i­ty that pro­duces refined coal, the term “refined coal pro­duc­tion facil­i­ty” means a facil­i­ty which is placed in ser­vice after the date of the enact­ment of this para­graph [enact­ed Oct. 22, 2004] and before Jan­u­ary 1, 2009.
(9) Qual­i­fied hydropow­er facil­i­ty. In the case of a facil­i­ty pro­duc­ing qual­i­fied hydro­elec­tric pro­duc­tion described in sub­sec­tion ©(8), the term “qual­i­fied facil­i­ty” means–
(A) in the case of any facil­i­ty pro­duc­ing incre­men­tal hydropow­er pro­duc­tion, such facil­i­ty but only to the extent of its incre­men­tal hydropow­er pro­duc­tion attrib­ut­able to effi­cien­cy improve­ments or addi­tions to capac­i­ty described in sub­sec­tion ©(8)(B) placed in ser­vice after the date of the enact­ment of this para­graph [enact­ed Aug. 8, 2005] and before Jan­u­ary 1, 2009, and
(B) any oth­er facil­i­ty placed in ser­vice after the date of the enact­ment of this para­graph [enact­ed Aug. 8, 2005] and before Jan­u­ary 1, 2009.
© Cred­it peri­od. In the case of a qual­i­fied facil­i­ty described in sub­para­graph (A), the 10-year peri­od referred to in sub­sec­tion (a) shall be treat­ed as begin­ning on the date the effi­cien­cy improve­ments or addi­tions to capac­i­ty are placed in ser­vice.
(10) Indi­an coal pro­duc­tion facil­i­ty. In the case of a facil­i­ty that pro­duces Indi­an coal, the term “Indi­an coal pro­duc­tion facil­i­ty” means a facil­i­ty which is placed in ser­vice before Jan­u­ary 1, 2009.

(e) Def­i­n­i­tions and spe­cial rules. For pur­pos­es of this sec­tion–
(1) Only pro­duc­tion in the Unit­ed States tak­en into account. Sales shall be tak­en into account under this sec­tion only with respect to elec­tric­i­ty the pro­duc­tion of which is with­in–
(A) the Unit­ed States (with­in the mean­ing of sec­tion 638(1) [26 USCS § 638(1)]), or
      (B) a pos­ses­sion of the Unit­ed States (with­in the mean­ing of sec­tion 638(2) [26 USCS § 638(2)]).
   (2) Com­pu­ta­tion of infla­tion adjust­ment fac­tor and ref­er­ence price.
(A) In gen­er­al. The Sec­re­tary shall, not lat­er than April 1 of each cal­en­dar year, deter­mine and pub­lish in the Fed­er­al Reg­is­ter the infla­tion adjust­ment fac­tor and the ref­er­ence price for such cal­en­dar year in accor­dance with this para­graph.
(B) Infla­tion adjust­ment fac­tor. The term “infla­tion adjust­ment fac­tor” means, with respect to a cal­en­dar year, a frac­tion the numer­a­tor of which is the GDP implic­it price defla­tor for the pre­ced­ing cal­en­dar year and the denom­i­na­tor of which is the GDP implic­it price defla­tor for the cal­en­dar year 1992. The term “GDP implic­it price defla­tor” means the most recent revi­sion of the implic­it price defla­tor for the gross domes­tic prod­uct as com­put­ed and pub­lished by the Depart­ment of Com­merce before March 15 of the cal­en­dar year.
© Ref­er­ence price. The term “ref­er­ence price” means, with respect to a cal­en­dar year, the Sec­re­tary’s deter­mi­na­tion of the annu­al aver­age con­tract price per kilo­watt hour of elec­tric­i­ty gen­er­at­ed from the same qual­i­fied ener­gy resource and sold in the pre­vi­ous year in the Unit­ed States. For pur­pos­es of the pre­ced­ing sen­tence, only con­tracts entered into after Decem­ber 31, 1989, shall be tak­en into account.
(3) Pro­duc­tion attrib­ut­able to the tax­pay­er. In the case of a facil­i­ty in which more than 1 per­son has an own­er­ship inter­est, except to the extent pro­vid­ed in reg­u­la­tions pre­scribed by the Sec­re­tary, pro­duc­tion from the facil­i­ty shall be allo­cat­ed among such per­sons in pro­por­tion to their respec­tive own­er­ship inter­ests in the gross sales from such facil­i­ty.
(4) Relat­ed per­sons. Per­sons shall be treat­ed as relat­ed to each oth­er if such per­sons would be treat­ed as a sin­gle employ­er under the reg­u­la­tions pre­scribed under sec­tion 52(b) [26 USCS § 52(b)]. In the case of a cor­po­ra­tion which is a mem­ber of an affil­i­at­ed group of cor­po­ra­tions fil­ing a con­sol­i­dat­ed return, such cor­po­ra­tion shall be treat­ed as sell­ing elec­tric­i­ty to an unre­lat­ed per­son if such elec­tric­i­ty is sold to such a per­son by anoth­er mem­ber of such group.
   (5) Pass-thru in the case of estates and trusts. Under reg­u­la­tions pre­scribed by the Sec­re­tary, rules sim­i­lar to the rules of sub­sec­tion (d) of sec­tion 52 [26 USCS § 52] shall apply.
   (6) [Delet­ed]
(7) Cred­it not to apply to elec­tric­i­ty sold to util­i­ties under cer­tain con­tracts.
(A) In gen­er­al. The cred­it deter­mined under sub­sec­tion (a) shall not apply to elec­tric­i­ty–
(i) pro­duced at a qual­i­fied facil­i­ty described in sub­sec­tion (d)(1) which is placed in ser­vice by the tax­pay­er after June 30, 1999, and
(ii) sold to a util­i­ty pur­suant to a con­tract orig­i­nal­ly entered into before Jan­u­ary 1, 1987 (whether or not amend­ed or restat­ed after that date).
(B) Excep­tion. Sub­para­graph (A) shall not apply if–
(i) the prices for ener­gy and capac­i­ty from such facil­i­ty are estab­lished pur­suant to an amend­ment to the con­tract referred to in sub­para­graph (A)(ii),
(ii) such amend­ment pro­vides that the prices set forth in the con­tract which exceed avoid­ed cost prices deter­mined at the time of deliv­ery shall apply only to annu­al quan­ti­ties of elec­tric­i­ty (pro­rat­ed for par­tial years) which do not exceed the greater of–
(I) the aver­age annu­al quan­ti­ty of elec­tric­i­ty sold to the util­i­ty under the con­tract dur­ing cal­en­dar years 1994, 1995, 1996, 1997, and 1998, or
(II) the esti­mate of the annu­al elec­tric­i­ty pro­duc­tion set forth in the con­tract, or, if there is no such esti­mate, the great­est annu­al quan­ti­ty of elec­tric­i­ty sold to the util­i­ty under the con­tract in any of the cal­en­dar years 1996, 1997, or 1998, and
(iii) such amend­ment pro­vides that ener­gy and capac­i­ty in excess of the lim­i­ta­tion in clause (ii) may be–
(I) sold to the util­i­ty only at prices that do not exceed avoid­ed cost prices deter­mined at the time of deliv­ery, or
(II) sold to a third par­ty sub­ject to a mutu­al­ly agreed upon advance notice to the util­i­ty.
      For pur­pos­es of this sub­para­graph, avoid­ed cost prices shall be deter­mined as pro­vid­ed for in 18 CFR 292.304(d)(1) or any suc­ces­sor reg­u­la­tion.
(8) Refined coal pro­duc­tion facil­i­ties.
(A) Deter­mi­na­tion of cred­it amount. In the case of a pro­duc­er of refined coal, the cred­it deter­mined under this sec­tion (with­out regard to this para­graph) for any tax­able year shall be increased by an amount equal to $ 4.375 per ton of qual­i­fied refined coal–
(i) pro­duced by the tax­pay­er at a refined coal pro­duc­tion facil­i­ty dur­ing the 10-year peri­od begin­ning on the date the facil­i­ty was orig­i­nal­ly placed in ser­vice, and
(ii) sold by the tax­pay­er–
(I) to an unre­lat­ed per­son, and
(II) dur­ing such 10-year peri­od and such tax­able year.
(B) Phase­out of cred­it. The amount of the increase deter­mined under sub­para­graph (A) shall be reduced by an amount which bears the same ratio to the amount of the increase (deter­mined with­out regard to this sub­para­graph) as–
(i) the amount by which the ref­er­ence price of fuel used as a feed­stock (with­in the mean­ing of sub­sec­tion ©(7)(A)) for the cal­en­dar year in which the sale occurs exceeds an amount equal to 1.7 mul­ti­plied by the ref­er­ence price for such fuel in 2002, bears to
(ii) $ 8.75.
© Appli­ca­tion of rules. Rules sim­i­lar to the rules of the sub­sec­tion (b)(3) and para­graphs (1) through (5) of this sub­sec­tion shall apply for pur­pos­es of deter­min­ing the amount of any increase under this para­graph.
(9) Coor­di­na­tion with cred­it for pro­duc­ing fuel from a non­con­ven­tion­al source.
(A) In gen­er­al. The term “qual­i­fied facil­i­ty” shall not include any facil­i­ty which pro­duces elec­tric­i­ty from gas derived from the biodegra­da­tion of munic­i­pal sol­id waste if such biodegra­da­tion occurred in a facil­i­ty (with­in the mean­ing of sec­tion 45K [26 USCS § 45K]) the pro­duc­tion from which is allowed as a cred­it under sec­tion 45K [26 USCS § 45K] for the tax­able year or any pri­or tax­able year.
      (B) Refined coal facil­i­ties. The term “refined coal pro­duc­tion facil­i­ty” shall not include any facil­i­ty the pro­duc­tion from which is allowed as a cred­it under sec­tion 45K [26 USCS § 45K] for the tax­able year or any pri­or tax­able year (or under sec­tion 29 [for­mer 26 USCS § 29], as in effect on the day before the date of enact­ment of the Ener­gy Tax Incen­tives Act of 2005 [enact­ed Aug. 8, 2005], for any pri­or tax­able year).
   (10) Indi­an coal pro­duc­tion facil­i­ties.
(A) Deter­mi­na­tion of cred­it amount. In the case of a pro­duc­er of Indi­an coal, the cred­it deter­mined under this sec­tion (with­out regard to this para­graph) for any tax­able year shall be increased by an amount equal to the applic­a­ble dol­lar amount per ton of Indi­an coal–
(i) pro­duced by the tax­pay­er at an Indi­an coal pro­duc­tion facil­i­ty dur­ing the 7‑year peri­od begin­ning on Jan­u­ary 1, 2006, and
(ii) sold by the tax­pay­er–
(I) to an unre­lat­ed per­son, and
(II) dur­ing such 7‑year peri­od and such tax­able year.
(B) Applic­a­ble dol­lar amount.
(i) In gen­er­al. The term “applic­a­ble dol­lar amount” for any tax­able year begin­ning in a cal­en­dar year means–
(I) $ 1.50 in the case of cal­en­dar years 2006 through 2009, and
(II) $ 2.00 in the case of cal­en­dar years begin­ning after 2009.
(ii) Infla­tion adjust­ment. In the case of any cal­en­dar year after 2006, each of the dol­lar amounts under clause (i) shall be equal to the prod­uct of such dol­lar amount and the infla­tion adjust­ment fac­tor deter­mined under para­graph (2)(B) for the cal­en­dar year, except that such para­graph shall be applied by sub­sti­tut­ing “2005” for “1992”.
© Appli­ca­tion of rules. Rules sim­i­lar to the rules of the sub­sec­tion (b)(3) and para­graphs (1), (3), (4), and (5) of this sub­sec­tion shall apply for pur­pos­es of deter­min­ing the amount of any increase under this para­graph.
(D) Treat­ment as spec­i­fied cred­it. The increase in the cred­it deter­mined under sub­sec­tion (a) by rea­son of this para­graph with respect to any facil­i­ty shall be treat­ed as a spec­i­fied cred­it for pur­pos­es of sec­tion 38©(4)(A) [26 USCS § 38©(4)(A)] dur­ing the 4‑year peri­od begin­ning on the lat­er of Jan­u­ary 1, 2006, or the date on which such facil­i­ty is placed in ser­vice by the tax­pay­er.
   (11) Allo­ca­tion of cred­it to patrons of agri­cul­tur­al coop­er­a­tive.
(A) Elec­tion to allo­cate.
(i) In gen­er­al. In the case of an eli­gi­ble coop­er­a­tive orga­ni­za­tion, any por­tion of the cred­it deter­mined under sub­sec­tion (a) for the tax­able year may, at the elec­tion of the orga­ni­za­tion, be appor­tioned among patrons of the orga­ni­za­tion on the basis of the amount of busi­ness done by the patrons dur­ing the tax­able year.
(ii) Form and effect of elec­tion. An elec­tion under clause (i) for any tax­able year shall be made on a time­ly filed return for such year. Such elec­tion, once made, shall be irrev­o­ca­ble for such tax­able year. Such elec­tion shall not take effect unless the orga­ni­za­tion des­ig­nates the appor­tion­ment as such in a writ­ten notice mailed to its patrons dur­ing the pay­ment peri­od described in sec­tion 1382(d) [26 USCS § 1382(d)].
      (B) Treat­ment of orga­ni­za­tions and patrons. The amount of the cred­it appor­tioned to any patrons under sub­para­graph (A)–
(i) shall not be includ­ed in the amount deter­mined under sub­sec­tion (a) with respect to the orga­ni­za­tion for the tax­able year, and
(ii) shall be includ­ed in the amount deter­mined under sub­sec­tion (a) for the first tax­able year of each patron end­ing on or after the last day of the pay­ment peri­od (as defined in sec­tion 1382(d) [26 USCS § 1382(d)]) for the tax­able year of the orga­ni­za­tion or, if ear­li­er, for the tax­able year of each patron end­ing on or after the date on which the patron receives notice from the coop­er­a­tive of the appor­tion­ment.
      © Spe­cial rules for decrease in cred­its for tax­able year. If the amount of the cred­it of a coop­er­a­tive orga­ni­za­tion deter­mined under sub­sec­tion (a) for a tax­able year is less than the amount of such cred­it shown on the return of the coop­er­a­tive orga­ni­za­tion for such year, an amount equal to the excess of–
(i) such reduc­tion, over
(ii) the amount not appor­tioned to such patrons under sub­para­graph (A) for the tax­able year,
      shall be treat­ed as an increase in tax imposed by this chap­ter [26 USCS §§ 1 et seq.] on the orga­ni­za­tion. Such increase shall not be treat­ed as tax imposed by this chap­ter [26 USCS §§ 1 et seq.] for pur­pos­es of deter­min­ing the amount of any cred­it under this chap­ter [26 USCS §§ 1 et seq.].
(D) Eli­gi­ble coop­er­a­tive defined. For pur­pos­es of this sec­tion the term “eli­gi­ble coop­er­a­tive” means a coop­er­a­tive orga­ni­za­tion described in sec­tion 1381(a) [26 USCS § 1381(a)] which is owned more than 50 per­cent by agri­cul­tur­al pro­duc­ers or by enti­ties owned by agri­cul­tur­al pro­duc­ers. For this pur­pose an enti­ty owned by an agri­cul­tur­al pro­duc­er is one that is more than 50 per­cent owned by agri­cul­tur­al producers.