Short title; etc

(a)

Short title

This Act may be cited as the

Clean Energy Investment Assurance Act of 2007

. (b)

Amendment of 1986 Code

Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. (c)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; etc.

Sec. 2. Expansion and modification of renewable electricity production credit.

Sec. 3. Extension and expansion of credit to holders of clean renewable energy bonds.

Sec. 4. Extension and modification of residential energy efficient property credit.

Sec. 5. Extension and modification of energy credit.

Sec. 6. Extension and modification of nonbusiness energy property credit.

Sec. 7. Extension of new energy efficient home credit.

Sec. 8. Extension and modification of deduction for energy efficient commercial buildings.

Sec. 9. Five-year applicable recovery period for depreciation of qualified energy management devices.

Expansion and modification of renewable electricity production credit

(a)

Credit To include production of thermal energy

(1)

In general

Section 45 is amended by adding at the end the following new subsection:

(f)

Credit for production of thermal energy

(1)

In general

In the case of a taxpayer who— (A)produces thermal energy from closed-loop biomass, open-loop biomass, or geothermal energy at a qualified facility, and (B)makes an election under this subsection with respect to such facility,

subsection (a) shall be applied by substituting each 3,413 Btus of thermal energy (or fraction thereof) for the kilowatt hours of electricity in paragraph (2) thereof.

(2)

Denial of double benefit

If an election under this subsection is in effect with respect to any facility, no credit shall be allowed under subsection (a) with respect to the production of electricity at such facility. (3)

Election

(A)

In general

An election under this subsection shall specify the facility to which the election applies and shall be in such manner as the Secretary may by regulations prescribe. (B)

Election irrevocable

Any election made under this subsection may not be revoked except with the consent of the Secretary.

(2)

Conforming amendments

(A)Section 45(c)(2) is amended by inserting or thermal energy after electricity. (B)Section 45(d) is amended by inserting or thermal energy after electricity each place it appears in paragraphs (2), (3), and (4). (C)Section 45(e) is amended by inserting or thermal energy after electricity each place it appears in paragraphs (1) and (4). (D)The heading of section 45 is amended by inserting

and thermal energy

after

Electricity

. (E)The item relating to section 45 in the table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by inserting and thermal energy after Electricity. (b)

Extension

Paragraphs (1), (2), (3), (4), (5), (6), (7), and (9) of section 45(d) (relating to qualified facilities) is amended by striking January 1, 2009 each place it appears and inserting January 1, 2014. (c)

Credit allowed for zero-carbon emissions resource facilities

(1)

In general

Section 45(c)(1) (defining qualified energy resources) is amended by striking and at the end of subparagraph (G), by striking the period at the end of subparagraph (H) and inserting , and, and by adding at the end the following new subparagraph:

(I)zero-carbon emissions resources.

(2)

Definition of resources

Section 45(c) is amended by adding at the end the following new paragraph:

(10)

Zero-carbon emissions resource

The term zero-carbon emission resource means any resource— (A)not described in paragraphs (2) through (9), (B)from which electricity can be produced without producing carbon emissions, and (C)which is approved by the Secretary.

(3)

Facilities

Section 45(d) is amended by adding at the end the following new paragraph:

(11)

Zero-carbon emissions resource facility

In the case of a facility using a zero-carbon emissions resource 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 and before January 1, 2014.

(d)

Repeal of reduction for grants, tax-exempt bonds, subsidized energy financing, etc

Subsection (b) of section 45 is amended by striking paragraph (3) and by redesignating paragraph (4) as paragraph (3). (e)

Elimination of reduced credit rate for electricity produced and sold from certain facilities

Paragraph (3) of section 45(b), as redesignated by subsection (d), is amended to read as follows:

(3)

Credit period for electricity produced and sold from certain facilities

(A)

In general

Except as provided in subparagraph (B) or subparagraph (C), 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). (B)

Certain open-loop biomass facilities

In the case of any facility described in subsection (d)(3)(A)(ii) placed in service before October 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). (C)

Termination

Subparagraph (A) shall not apply to any facility placed in service after August 8, 2005.

(f)

Modification of definition of closed-loop biomass

Paragraph (2) of section 45(c), as amended by subsection (a)(2)(A), is amended by adding at the end the following new sentence: For purposes of the preceding sentence, a plant shall not fail to be considered as having been planted exclusively for purposes of being used at a qualified facility to produce electricity or thermal energy solely because any portion of such plant is used to produce alcohol (as defined in section 40(d)(1)), biodiesel (as defined in section 40A(d)(1)), or a fuel described in section 6426(d)(2)(F).. (g)

Modification to qualified hydropower facilities

(1)

Nonhydroelectric dams

Clause (iii) of section 45(c)(8)(C) is amended to read as follows:

(iii)turbines or other generating devices are to be added to the facility after such date to produce hydroelectric power, but only if any enlargement of the diversion structure, or construction or enlargement of a bypass channel, is completed in compliance with the Federal Energy Regulatory Commission license of the facility and there is no additional impoundment or any withholding of any additional water from the natural stream channel.

(2)

Qualified hydropower facility

Paragraph (9) of section 45(d), as amended by subsection (b), is amended to read as follows:

(9)

Qualified hydropower facility

(A)

In general

In the case of a facility producing qualified hydroelectric production described in subsection (c)(8), the term qualified facility means— (i)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 of capacity described in subsection (c)(8)(B) placed in service after August 8, 2005, and before January 1, 2014, and (ii)any other facility placed in service after August 8, 2005, and before January 1, 2014. (B)

Credit period

In the case of a qualified facility described in subparagraph (A)(i), the 10-year period referred to in subsection (a) shall be treated as beginning on the date the efficiency improvements or additions of capacity are placed in service.

(h)

Repeal of netting rule for simultaneous sales and purchases of electricity produced from open-loop biomass

Subsection (e) of section 45 is amended by adding at the end the following new paragraph:

(12)

Special rule relating to simultaneous sale and purchase of electricity produced from open-loop biomass

Electricity or thermal energy produced from open-loop biomass by the taxpayer at any location and sold to an unrelated party shall be taken into account under subsection (a) notwithstanding whether such taxpayer simultaneously purchased electricity or thermal energy from an unrelated person for use at the same location.

(i)

Effective dates

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to electricity and thermal energy produced and sold after the date of the enactment of this Act, in taxable years ending after such date. (2)

Subsection (c)

The amendment made by subsection (c) shall apply to electricity produced and sold after December 31, 2008, in taxable years ending after such date.

Extension and expansion of credit to holders of clean renewable energy bonds

(a)

Extension

Section 54(m) (relating to termination) is amended by striking 2008 and inserting 2013. (b)

Annual volume cap for bonds issued during extension period

Paragraph (1) of section 54(f) (relating to limitation on amount of bonds designated) is amended to read as follows:

(1)

National limitation

(A)

Initial national limitation

With respect to bonds issued after December 31, 2005, and before January 1, 2009, there is a national clean renewable energy bond limitation of $1,200,000,000. (B)

Annual national limitation

With respect to bonds issued after December 31, 2008, and before January 1, 2014, there is a national clean renewable energy bond limitation for each calendar year of $5,000,000,000.

(c)

Effective date

The amendments made by this section shall apply to bonds issued after December 31, 2007.

Extension and modification of residential energy efficient property credit

(a)

Extension

Subsection (g) of section 25D (relating to termination) is amended by striking December 31, 2008 and inserting December 31, 2016. (b)

Solar electric property

Paragraph (1) of section 25D(a) is amended by striking 30 percent of. (c)

Inclusion of energy storage air conditioner property

(1)

In general

Subsection (a) of section 25D is amended by striking and at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting , and, and by adding at the end the following new paragraph:

(4)30 percent of the qualified energy storage air conditioner property expenditures made by the taxpayer during such year.

(2)

Qualified energy storage air conditioner property expenditure

Section 25D(d) is amended by adding at the end the following new paragraph:

(4)

Qualified energy storage air conditioner property expenditure

The term qualified energy storage air conditioner property expenditure means an expenditure for qualified energy storage air conditioner property (as defined in section 48(d)) installed on or in connection with a dwelling unit located in the United States and used as a principal residence (within the meaning of section 121) by the taxpayer.

(d)

Modification of maximum credit

(1)

In general

Paragraph (1) of section 25D(b) is amended to read as follows:

(1)

Maximum credit

The credit allowed under subsection (a) for any taxable year shall not exceed— (A)$1,500 with respect to each half kilowatt of direct current of installed capacity of qualified solar electric property for which qualified solar electric property expenditures are made, (B)$2,000 with respect to any qualified solar heating and cooling property expenditures, (C)$500 with respect to each half kilowatt of capacity of qualified fuel cell property (as defined in section 48(c)(1)) for which qualified fuel cell property expenditures are made, and (D)$500 with respect to each half kilowatt hour of peak reduction of qualified energy storage air conditioner property (as defined in section 48(d)) for which qualified energy storage air conditioner expenditures are made.

(2)

Conforming amendments

Section 25D(e)(4)(A) is amended— (A)by striking $6,667 in the case of any qualified solar electric property expenditures in clause (i) and inserting $5,000 in the case of each half kilowatt of direct current of installed capacity of qualified solar electric property for which qualified electric solar property expenditures are made, (B)by striking and at the end of clause (ii), (C)by striking the period at the end of clause (iii) and inserting , and, and (D)by adding at the end the following new clause:

(iv)$1,667 in the case of each half kilowatt hour of peak reduction of qualified energy storage air conditioner property (as defined in section 48(d)) for which qualified energy storage air conditioner expenditures are made.

(e)

Definition of qualified solar heating and cooling property expenditure

(1)

In general

Paragraph (1) of section 25D(d) is amended to read as follows:

(1)

Qualified solar heating and cooling property expenditure

The term qualified solar heating and cooling property expenditure means an expenditure for property to heat or cool (or provide hot water for use in) a dwelling unit located in the United States and used as a residence by the taxpayer if at least half of the energy used by such property for such purpose is derived from the sun. Such term shall not include an expenditure which is a qualified solar electric property expenditure.

(2)

Conforming amendments

Subsections (a)(2) and (e)(4)(A)(ii) of section 25D are each amended by striking qualified solar water heating and inserting qualified solar heating and cooling (f)

Definition of qualified photovoltaic property expenditure

Paragraph (2) of section 25D(d) is amended by inserting , including advanced energy storage systems installed as an integrated component of the foregoing after taxpayer. (g)

Credit allowed against alternative minimum tax

(1)

In general

Section 25D(b) is amended by adding at the end the following new paragraph:

(3)

Credit allowed against alternative minimum tax

The credit allowed under subsection (a) for the taxable year shall not exceed the excess of— (A)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (B)the sum of the credits allowable under subpart A of part IV of subchapter A (other than this section) and section 27 for the taxable year.

(2)

Conforming amendments

(A)Subsection (c) of section 25D is amended to read as follows:

(c)

Carryforward of unused credit

If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by subsection (b)(3) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

(B)Section 23(b)(4)(B) is amended by inserting and section 25D after this section. (C)Section 24(b)(3)(B) is amended by striking sections 23 and 25B and inserting sections 23, 25B, and 25D. (D)Section 26(a)(1) is amended by striking and 25B and inserting 25B, and 25D. (h)

Effective date

The amendments made by this section shall apply to expenditures made in taxable years beginning after December 31, 2006.

Extension and modification of energy credit

(a)

Solar property

(1)

Extension

Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each amended by striking 2009 and inserting 2017. (2)

Solar photovoltaic energy property credit determined solely by kilowatt capacity

(A)

In general

Subsection (a) of section 48 is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph:

(4)

Special rule for energy credit for solar photovoltaic energy property

(A)

In general

For purposes of section 46, the energy credit for any taxable year for solar photovoltaic energy property described in paragraph (3)(A)(i) which is used to generate electricity and which is placed in service during the taxable year shall not exceed $1,500 with respect to each half kilowatt of direct current of installed capacity of such property. Paragraph (2)(A)(ii) shall not apply to property to which the preceding sentence applies. (B)

Application of special rules for rehabilitated or subsidized property

Rules similar to the rules of paragraphs (2)(B) and (5) shall apply to property to which this paragraph applies.

(B)

Conforming amendment

Subclause (II) of section 48(a)(2)(A)(i) is amended by striking described in paragraph (3)(A)(i) and inserting which is described in paragraph (3)(A)(i) and to which paragraph (4) does not apply. (b)

Qualified fuel cell property

(1)

Extension

Subparagraph (E) of section 48(c)(1) is amended by striking 2008 and inserting 2016. (2)

Repeal of limitation

Paragraph (1) of section 48(c), as amended by paragraph (1), is amended by striking subparagraph (B) and by redesignating subparagraphs (C), (D), and (E) as subparagraphs (B), (C), and (D), respectively. (c)

Energy credit allowed for energy storage air conditioner property

(1)

In general

Clause (i) of section 48(a)(2)(A) is amended by striking and at the end of subclause (II) and by inserting after subclause (III) the following new subclause:

(IV)qualified energy storage air conditioner property, and

(2)

Qualified energy storage air conditioner property

Section 48 is amended by adding at the end the following new subsection:

(d)

Qualified energy storage air conditioner property

For the purposes of this section— (1)

In general

The term qualified energy storage air conditioner property means a cooling system consisting of components which create, store, and supply cooling energy to reduce peak electricity demand by displacing the electrical demand of conventional mechanical cooling equipment, and all secondary components to integrate with the conventional cooling system, including equipment and controls for operation and performance measuring and reporting, provided that such cooling system— (A)has a nameplate operational capability to deliver a minimum of 36,000 Btu and maximum of 120,000 Btu of cooling capacity for a minimum continuous period of 4 hours, available daily from May 1 through September 30 coincident with local utility designated peak load periods, (B)is designed so as to reduce kilowatt demand by 90 percent for the cooling load served, and (C)is designed so as not to exceed the 24 hour energy consumption of conventional cooling equipment. (2)

Limitation

In the case of qualified energy storage air conditioning property placed in service during the taxable year, the credit otherwise determined under this section for such year with respect to such property shall not exceed an amount equal to $500 for each 0.5 kilowatt of peak reduction capacity of such property. (3)

Termination

The term energy storage air conditioner property shall not include any property for any period after January 1, 2016.

(d)

Repeal of public utility property exclusion

(1)

In general

Paragraph (3) of section 48(a) is amended by striking the first sentence which follows subparagraph (D). (2)

Conforming amendments

(A)Section 48(c)(1), as amended by subsection (b), is amended by striking subparagraph (C) and by redesignating subparagraph (D) as subparagraph (C). (B)Section 48(c)(2) is amended by striking subparagraph (D) and by redesignating subparagraph (E) as subparagraph (D). (e)

Credits allowed against the alternative minimum tax

Section 38(c)(4)(B) is amended by striking and at the end of clause (i), by striking the period at the end of clause (ii)(II) and inserting , and, and by adding at the end the following new clause:

(iii)the portion of the investment credit under section 46 which is determined under section 48(a).

(f)

Effective dates

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act. (2)

Repeal of public utility property exclusion

The amendments made by subsection (d) shall apply to periods after December 31, 2006, in taxable years ending after such date, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

Extension and modification of nonbusiness energy property credit

(a)

In general

Subsection (g) of section 25C (relating to termination) is amended by striking 2007 and inserting 2012. (b)

Labor costs for qualified energy efficiency improvements

Section 25C(c)(1) is amended by adding at the end the following new flush sentence:

The amount taken into account under subsection (a)(1) with respect to qualified energy efficiency improvements shall include expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of any component described in this paragraph.

(c)

Modifications for residential energy efficiency property expenditures

(1)

Increased limitation for oil furnaces and natural gas, propane, and oil hot water boilers

(A)

In general

Subparagraphs (B) and (C) of section 25C(b)(3) are amended to read as follows:

(B)$150 for any qualified natural gas furnace or qualified propane furnace, and (C)$300 for— (i)any item of energy-efficient building property, and (ii)any qualified oil furnace, qualified natural gas hot water boiler, qualified propane hot water boiler, or qualified oil hot water boiler.

(B)

Conforming amendment

Clause (ii) of section 25C(d)(2)(A) is amended to read as follows:

(ii)any qualified natural gas furnace, qualified propane furnace, qualified oil furnace, qualified natural gas hot water boiler, qualified propane hot water boiler, or qualified oil hot water boiler, or

(2)

Modifications of standards for energy-efficient building property

(A)

Electric heat pumps

Subparagraph (B) of section 25C(d)(3) is amended to read as follows:

(A)an electric heat pump which achieves the highest efficiency tier established by the Consortium for Energy Efficiency, as in effect on January 1, 2008.

(B)

Central air conditioners

Section 25C(d)(3)(D) is amended by striking 2006 and inserting 2008. (C)

Water Heaters

Subparagraph (E) of section 25C(d) is amended to read as follows:

(E)a natural gas, propane, or oil water heater which has either an energy factor of at least 0.80 or a thermal efficiency of at least 90 percent.

(D)

Oil furnaces and hot water boilers

Paragraph (4) of section 25C(d) is amended to read as follows:

(4)

Qualified natural gas, propane, and oil furnaces and hot water boilers

(A)

Qualified natural gas furnace

The term qualified natural gas furnace means any natural gas furnace which achieves an annual fuel utilization efficiency rate of not less than 95. (B)

Qualified natural gas hot water boiler

The term qualified natural gas hot water boiler means any natural gas hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 90. (C)

Qualified propane furnace

The term qualified propane furnace means any propane furnace which achieves an annual fuel utilization efficiency rate of not less than 95. (D)

Qualified propane hot water boiler

The term qualified propane hot water boiler means any propane hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 90. (E)

Qualified oil furnaces

The term qualified oil furnace means any oil furnace which achieves an annual fuel utilization efficiency rate of not less than 90. (F)

Qualified oil hot water boiler

The term qualified oil hot water boiler means any oil hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 90.

(3)

Elimination of lifetime limitation

Paragraph (1) of section 25C(b) is amended by inserting by reason of subsection (a)(1) after under this section. (d)

Modification of qualified energy efficiency improvements

(1)

In general

Paragraph (1) of section 25C(c) is amended by inserting , or an asphalt roof with appropriate cooling granules, before which meet the Energy Star program requirements. (2)

Building envelope component

Subparagraph (D) of section 25C(c)(2) is amended— (A)by inserting or asphalt roof after metal roof, and (B)by inserting or cooling granules after pigmented coatings. (e)

Natural gas fired heat pumps

Section 25C(d)(3), as amended by this section, is amended by striking and at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting , and, and by adding at the end the following new subparagraph:

(F)a natural gas fired heat pump with a heating coefficient of performance (COP) of at least 1.1.

(f)

Elimination of credit for qualified energy efficiency improvements in 2010

(1)

In general

Subsection (a) of section 25C is amended to read as follows:

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the amount of residential energy property expenditures paid or incurred by the taxpayer during the taxable year.

(2)

Conforming amendments

(A)Section 25C(b), as amended by subsection (b), is amended by striking paragraphs (1) and (2) and by redesignating paragraph (3) as paragraph (1). (B)Section 25C(b)(1), as redesignated by subparagraph (A), is amended by striking by reason of subsection (a)(2). (C)Section 25C is amended by striking subsection (c). (g)

Clarification of eligibility of standards for qualified energy property

Section 25C(d)(2)(C) is amended by striking and at the end of clause (i), by striking the period at the end of clause (ii) and inserting , and, and by adding at the end the following new clause:

(iii)shall allow for the testing of products regardless of the size or capacity of the product.

(h)

Effective dates

(1)

In general

Except as provided in paragraphs (2) and (3), the amendments made by this section shall apply to property placed in service after the date of the enactment of this Act. (2)

Standards for electric heat pumps and central air conditioners

The amendments made by subparagraphs (A) and (B) subsection (c)(2) shall apply to property placed in service after December 31, 2007. (3)

Elimination of credit for qualified energy efficiency improvements

The amendments made by subsection (f) shall apply to property placed in service after December 31, 2009.

Extension of new energy efficient home credit

(a)

In general

Subsection (g) of section 45L (relating to termination) is amended by striking 2008 and inserting 2013. (b)

Effective date

The amendment made by subsection (a) shall apply for qualified new energy efficient homes acquired after the date of the enactment of this Act, in taxable years ending after such date.

Extension and modification of deduction for energy efficient commercial buildings

(a)

Extension

Subsection (h) of section 179D (relating to termination) is amended to read as follows:

(h)

Termination

This section shall not apply with respect to property— (1)which is certified under subsection (d)(6) after December 31, 2012, or (2)which is placed in service after December 31, 2014.

A provisional certification shall be treated as meeting the requirements of paragraph (1) if it is based on the building plans, subject to inspection and testing after installation.

(b)

Increase in maximum amount of deduction

(1)

In general

Subparagraph (A) of section 179D(b)(1) is amended by striking $1.80 and inserting $2.25. (2)

Partial allowance

Paragraph (1) of section 179D(d) is amended— (A)by striking $.60 and inserting $0.75, and (B)by striking $1.80 and inserting $2.25. (c)

Modifications to certain special rules

(1)

Methods of calculating energy savings

(A)

In general

Paragraph (2) of section 179D(d) is amended— (i)by striking based on and inserting in accordance with, (ii)by inserting , except as necessary to carry out the requirements of this section, to accommodate a reference to Standard 90.1–2001, to extend the applicability of such manual to national conditions, or to update technical standards based on new information before the period at the end, and (iii)by adding at the end the following new sentence: The calculation methods contained in such regulations shall also provide for the calculation of appropriate energy savings for design methods and technologies not otherwise credited in such manual or standard, including energy savings associated with natural ventilation, evaporative cooling, automatic lighting controls (such as occupancy sensors, photocells, and timeclocks), daylighting, designs utilizing semi-conditioned spaces which maintain adequate comfort conditions without air conditioning or without heating, improved fan system efficiency (including reductions in static pressure), advanced unloading mechanisms for mechanical cooling (such as multiple or variable speed compressors), on-site generation of electricity (including combined heat and power systems, fuel cells, and renewable energy generation such as solar energy), and wiring with lower energy losses than wiring satisfying Standard 90.1–2001 requirements for building power distribution systems.. (B)

Requirements for computer software used in calculating energy and power consumption costs

Paragraph (3)(B) of section 179D(d) 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:

(iv)which automatically— (I)generates the features, energy use, and energy and power consumption costs of a reference building which meets Standard 90.1–2001, (II)generates the features, energy use, and energy and power consumption costs of a compliant building or system which reduces the annual energy and power costs by 50 percent compared to Standard 90.1–2001, and (III)compares such features, energy use, and consumption costs to the features, energy use, and consumption costs of the building or system with respect to which the calculation is being made.

(2)

Targets for partial allowance of credit

Paragraph (1)(B) of section 179D(d) is amended— (A)by striking The Secretary and inserting the following:

(i)

In general

The Secretary

, and

(B)by adding at the end the following:

(ii)

Additional requirements

For purposes of clause (i)— (I)the Secretary shall determine prescriptive criteria that can be modeled explicitly for reference buildings which meet the requirements of subsection (c)(1)(D) for different building types and regions, (II)a system may be certified as meeting the target under subparagraph (A)(ii) if the appropriate reference building either meets the requirements of subsection (c)(1)(D) with such system rather than the comparable reference system (using the calculation under paragraph (2)) or meets the relevant prescriptive criteria under subclause (I), and (III)the lighting system target shall be based on lighting power density, except that it shall allow lighting controls credits that trade off for lighting power density savings based on Section 3.2.2 of the 2005 California Nonresidential Alternative Calculation Method Approval Manual. (iii)

Publication

The Secretary shall publish in the Federal Register the bases for the target levels established in the regulations under clause (i).

(d)

Alternative standards

Section 179D(d) is amended by adding at the end the following new paragraph:

(7)

Alternative standards pending final regulations

Until such time as the Secretary issues final regulations under paragraph (1)(B)— (A)in the case of property which is part of a building envelope, the building envelope system target under paragraph (1)(A)(ii) shall be a 7 percent reduction in total annual energy and power costs (determined in the same manner as under subsection (c)(1)(D)), and (B)in the case of property which is part of the heating, cooling, ventilation, and hot water systems, the heating, cooling, ventilation, and hot water system shall be treated as meeting the target under paragraph (1)(A)(ii) if it would meet the requirement in subsection (c)(1)(D) if combined with a building envelope system and lighting system which met their respective targets under paragraph(1)(A)(ii) (including interim targets in effect under subsections (f) and subparagraph (A)).

(e)

Modifications to lighting standards

(1)

Standards to be alternate standards

Subsection (f) of section 179D is amended by— (A)striking

Interim

in the heading and inserting

Alternative

, and (B)inserting , or, if the taxpayer elects, in lieu of the target set forth in such final regulations after lighting system at the end of the matter preceding paragraph (1). (2)

Qualified individuals

Section 179D(d)(6)(C) is amended by adding at the end the following: For purposes of certification of whether the alternative target for lighting systems under subsection (f) is met, individuals qualified to determine compliance shall include individuals who are certified as Lighting Certified (LC) by the National Council on Qualifications for the Lighting Professions, Certified Energy Managers (CEM) by the Association of Energy Engineers, and LEED Accredited Professionals (AP) by the U.S. Green Buildings Council.. (3)

Requirement for bilevel switching

Section 179D(f)(2) is amended by adding at the end the following new subparagraph:

(3)

Application of subsection to bilevel switching

(A)

In general

Notwithstanding paragraph (2)(C)(i), this subsection shall apply to a system which does not include provisions for bilevel switching if the reduction in lighting power density is at least 37.5 percent of the minimum requirements in Table 9.3.1.1 or Table 9.3.1.2. (not including additional interior lighting allowances) of Standard 90.1–2001. (B)

Reduction in deduction

In the case of a system to which this subsection applies by reason of subparagraph (A), paragraph (2) shall be applied— (i)by substituting 50 percent for 40 percent in subparagraph (A) thereof, and (ii)in subparagraph (B)(ii) thereof— (I)by substituting 37.5 percentage points for 25 percentage points, and (II)by substituting 12.5 for 15.

(f)

Public property

Paragraph (4) of section 179(d) is amended by striking the Secretary shall promulgate a regulation to allow the allocation of the deduction and inserting the deduction under this section shall be allowed. (g)

Effective date

The amendments made by this section shall apply to property placed in service in taxable years beginning after the date of the enactment of this Act.

Five-year applicable recovery period for depreciation of qualified energy management devices

(a)

In general

Section 168(e)(3)(B) (defining 5-year property) is amended by striking and at the end of clause (v), by striking the period at the end of clause (vi)(III) and inserting , and, and by inserting after clause (vi) the following new clause:

(vii)any qualified energy management device.

(b)

Definition of qualified energy management device

Section 168(i) (relating to definitions and special rules) is amended by inserting at the end the following new paragraph:

(18)

Qualified energy management device

(A)

In general

The term qualified energy management device means any energy management device which is placed in service before January 1, 2012, by a taxpayer who is a supplier of electric energy or a provider of electric energy services. (B)

Energy management device

For purposes of subparagraph (A), the term energy management device means any two-way communications network and associated equipment, including equipment installed on the premises of a consumer, which is used by the taxpayer— (i)to measure and record electricity usage data on a time-differentiated basis of at least 10 minutes, and (ii)to provide such data on demand to both consumers and the taxpayer.