,,ii #aaith ,,congress #ast ,session ,s4 #ceca ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #ag1 #bjbe,mrs4 ,blackburn introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to establish a tax credit for qualified combined heat and power system property1 and for other purposes4 #a4 ,tax credit for qualified combined heat and power system property 7a7 ,establishment of credit 7#a7 ,in general ,subpart ,e of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #dh;,e the following new section3 #dh;,f4 ,credit for qualified combined heat and power system property 7a7 ,credit for qualified combined heat and power system property 7#a7 ,in general ,for purposes of section #df1 except as provided in subsection 7c77#a77;,b71 the credit for qualified combined heat and power system property for any taxable year is an amount equal to #aj percent of the basis of each qualified combined heat and power system property placed in service during such taxable year4 7#b7 ,coordination with rehabilitation credit ,the percentage specified in paragraph 7#a7 shall not apply to that portion of the basis of any property which is attributable to qualified rehabilitation expenditures 7as defined in section #dg7;c77#b774 7#c7 ,qualified combined heat and power system property ,for purposes of this section1 the term qualified combined heat and power system property means any property-- 7,a7 which is combined heat and power system property1 7,b7 7i7 the construction1 reconstruction1 or erection of which is completed by the taxpayer1 or 7ii7 which is acquired by the taxpayer if the original use of such property commences with the taxpayer1 7,c7 with respect to which depreciation 7or amortization in lieu of depreciation7 is allowable1 and 7,d7 which meets the performance and quality standards 7if any7 which-- 7i7 have been prescribed by the ,secretary by regulations 7after consultation with the ,secretary of ,energy71 and 7ii7 are in effect at the time of the acquisition of the property4 ,such term shall not include any property which is part of a facility the production from which is allowed as a credit under section #de for the taxable year or any prior taxable year4 7#d7 ,special rule for property financed by tax-exempt bonds ,rules similar to the rule under section #de7;b77#c7 shall apply for purposes of this section4 7#e7 ,domestic content bonus credit amount 7,a7 ,in general ,in the case of any energy project which satisfies the requirement under subparagraph 7,b71 for purposes of applying paragraph 7#a7 with respect to qualified combined heat and power system property that is part of such project1 the percentage specified in paragraph 7#a7 shall be increased by #aj percentage points4 7,b7 ,requirement ,rules similar to the rules of section #de7;b77#i77;,b7 shall apply4 7#f7 ,increase in credit rate for energy communities ,in the case of any energy project that is placed in service within an energy community 7as defined in section #de7;b77#aa77;,b71 as applied by substituting energy project for qualified facility each place it appears71 for purposes of applying paragraph 7#a7 with respect to qualified combined heat and power system property which is part of such project1 the percentage specified in paragraph 7#a7 shall be increased by #aj percentage points4 7#g7 ,regulations and guidance ,the ,secretary shall issue such regulations or other guidance as the ,secretary determines necessary to carry out the purposes of this subsection1 including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection4 7b7 ,certain progress expenditure rules made applicable ,rules similar to the rules of subsections 7c77#d7 and 7d7 of section #df 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij7 shall apply for purposes of subsection 7a74 7c7 ,definitions ,for purposes of this section-- 7#a7 ,combined heat and power system property 7,a7 ,combined heat and power system property ,the term combined heat and power system property means property comprising a system-- 7i7 which uses the same energy source for the simultaneous or sequential generation of electrical power1 mechanical shaft power1 or both1 in combination with the generation of steam or other forms of useful thermal energy 7including heating and cooling applications71 7ii7 which produces-- 7,i7 at least #bj percent of its total useful energy in the form of thermal energy which is not used to produce electrical or mechanical power 7or combination thereof71 and 7,,ii7 at least #bj percent of its total useful energy in the form of electrical or mechanical power 7or combination thereof71 7iii7 the energy efficiency percentage of which exceeds #fj percent1 and 7iv7 the construction of which begins on or after ,january #a1 #bjbe4 7,b7 ,limitation 7i7 ,in general ,in the case of combined heat and power system property with an electrical capacity in excess of the applicable capacity placed in service during the taxable year1 the credit under subsection 7a77#a7 7determined without regard to this paragraph7 for such year shall be equal to the amount which bears the same ratio to such credit as the applicable capacity bears to the capacity of such property4 7ii7 ,applicable capacity ,for purposes of clause 7i71 the term applicable capacity means #be megawatts or a mechanical energy capacity of more than #cc1ejj horsepower1 or an equivalent combination of electrical and mechanical energy capacities4 7iii7 ,maximum capacity ,the term combined heat and power system property shall not include any property comprising a system if such system has a capacity in excess of #ej megawatts or a mechanical energy capacity in excess of #fg1jjj horsepower1 or an equivalent combination of electrical and mechanical energy capacities4 7iv7 ,clarification regarding capacity determinations ,for purposes of this subparagraph1 the determination of the electrical or mechanical energy capacity of any system shall be based on the normal operating rates of such system4 7,c7 ,special rules 7i7 ,energy efficiency percentage ,for purposes of this paragraph1 the energy efficiency percentage of a system is the fraction-- 7,i7 the numerator of which is the total useful electrical1 thermal1 and mechanical power produced by the system at normal operating rates1 and expected to be consumed in its normal application1 and 7,,ii7 the denominator of which is the lower heating value of the fuel sources for the system4 7ii7 ,determinations made on ,btu basis ,the energy efficiency percentage and the percentages under subparagraph 7,a77ii7 shall be determined on a ,btu basis4 7iii7 ,input and output property not included ,the term combined heat and power system property does not include property used to transport the energy source to the facility or to distribute energy produced by the facility4 7,d7 ,systems using biomass ,if a system is designed to use biomass 7within the meaning of paragraphs 7#b7 and 7#c7 of section #de7;c7 without regard to the last sentence of paragraph 7#c77;,a77 for at least #ij percent of the energy source-- 7i7 subparagraph 7,a77iii7 shall not apply1 but 7ii7 the amount of credit determined under subsection 7a7 with respect to such system shall not exceed the amount which bears the same ratio to such amount of credit 7determined without regard to this subparagraph7 as the energy efficiency percentage of such system bears to #fj percent4 7#b7 ,energy project ,the term energy project means a project consisting of one or more qualified combined heat and power system properties that are part of a single project4 4 7#b7 ,clerical amendment ,the table of sections for subpart ,e of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by inserting after the item relating to section #dh;,e the following new item3 #dh;,f4 ,credit for qualified combined heat and power system property4 4 7b7 ,coordination with energy credit ,section #dh7;c77#c77;,b7 of such ,code is amended by adding at the end the following new clause3 7iv7 ,clarification regarding capacity determinations ,for purposes of this subparagraph1 the determination of the electrical or mechanical energy capacity of any system shall be based on the normal operating rates of such system4 4 7c7 ,conforming amendments 7#a7 ,section #ch7;c77#d77;,b77x7 of such ,code is amended by inserting or the credit for qualified combined heat and power system property determined under section #dh;,f after section #dh4 7#b7 ,section #de,l7f7 of such ,code is amended by striking #dg or #dh7;a7 and inserting #dg1 #dh7;a71 or #dh;,f7a74 7#c7 ,section #df of such ,code is amended by striking and at the end of paragraph 7#f71 by striking the period at the end of paragraph 7#g7 and inserting 1 and1 and by adding at the end the following new paragraph3 7#h7 the credit for qualified combined heat and power system property4 4 7#d7 ,section #dh;,c7f7 of such ,code is amended by inserting #dh;,f1 after #dh;,e14 7#e7 ,section #ej7;a77#b77;,e7 of such ,code is amended by striking or #dh;,e7e7 and inserting #dh;,e7e71 or #dh;,f7b74 7#f7 ,section #ei;,a7b77#c77;,c7 of such ,code is amended by inserting or the credit for qualified combined heat and power system property determined under section #dh;,f after section #dh4 7d7 ,effective date 7#a7 ,in general ,except as otherwise provided in this subsection1 the amendments made by this section shall apply to property the construction of which begins after ,december #ca1 #bjbd4 7#b7 ,coordination with energy credit 7,a7 ,in general ,the amendment made by subsection 7b7 shall apply to property-- 7i7 the construction of which begins before ,january #a1 #bjbe1 and 7ii7 which is placed in service during taxable years beginning after ,december #ca1 #bjbd4 7,b7 ,no inference ,the amendment made by subsection 7b7 shall not be construed to create any inference with respect to the proper application of section #dh7;c77#c77;,b7 of the ,internal ,revenue ,code of #aihf with respect to taxable years beginning before ,january #a1 #bjbe4