Great Plains Gasification Associates, A Partnership, Transco Coal Gas Company, A Partner Other Than The Tax Matters Partner - Page 15

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          all this gas at specified prices or else to pay for gas tendered            
          but not taken.9                                                             
          Plant Is Built and Begins Operation                                         
               Construction of the project began in 1981.  The project was            
          placed in service for tax purposes in 1984.  On July 28, 1984,              
          the plant delivered its first synthetic natural gas to the                  
          interconnecting gas pipeline.  Since then, the plant has                    
          continuously produced and delivered synthetic natural gas.                  
          Initial Eligibility for Investment and Energy Tax Credits                   
               A substantial part of the project’s assets constituted new             
          section 38 property, qualifying for general business credits                
          (sometimes referred to as investment credits).  In addition, a              
          substantial part of the project’s assets constituted alternative            
          energy property within the meaning of section 48(l)(3) and                  
          constituted energy property eligible for the energy percentage              
          under section 46(b)(2)(A).  The partners and DOE relied on the              
          availability of the investment and energy tax credits as a key              

               9 These contracts obligated the pipeline affiliates to a               
          payment rate substantially above the market price for the gas               
          produced; the price was to be reduced in periodic increments over           
          a 25-year period.  Economic analyses indicated to the partnership           
          that the gas purchase agreements would result in an assured                 
          market for the synthetic natural gas produced during the                    
          project’s life and that revenues would be adequate to service the           
          debt and also contribute toward the return of invested equity.              
          By separate agreement, in the event a default by the partnership            
          led to the termination of the gas purchase agreements, those                
          agreements could be reinstated between the pipeline affiliates              
          and DOE on the same terms.                                                  

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