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the language of the conference report quoted above and stated
that "[t]o allow a supply contract to implicitly require the
acquisition of property means that the transition rule exception
would swallow the rule eliminating the ITC."
In the third case, United States v. Commonwealth Energy
Sys., 49 F. Supp. 2d 57 (D. Mass. 1999), the taxpayer sought
transition ITC for post-1985 capital additions to its existing
power plant in connection with its performance of four pre-1986
power supply contracts. The contracts specifically required the
taxpayer "to cause to be built a new conventional steam plant
* * * of an expected net economic capability of approximately
560 megawatts". Id. at 59. Because the contracts specified both
the primary energy source and the total generating capacity, the
Court reasoned that the facts of the case were precisely the
facts of the following colloquy that occurred during Senate
debate of the ITC transition rule for supply or service
contracts:
MR. MATSUNAGA: I would like to ask the bill
managers to clarify another point. The supply or
service contract transition rule requires that the
property be readily identifiable with and necessary to
carry out the contract. The committee report explains
that the specifications and the amount of the property
must be readily ascertainable from the terms of the
contract or from related documents.
Is this Senator’s understanding correct that the
requirement is met when a binding power purchase
contract specifies the type of generating equipment in
terms of primary energy source and specifies the amount
of generating equipment in terms of total generating
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