Response From the Author

Fortnightly Magazine - May 15 2003
This full article is only accessible by current license holders. Please login to view the full content.
Don't have a license yet? Click here to sign up for Public Utilities Fortnightly, and gain access to the entire Fortnightly article database online.

Mr. Fogarty is correct. According to my legal sources, a literal reading of Section 7704(d)(1)(E) indicates that income from electric properties would not be "qualifying income." The section defines qualifying income as income and gains from the exploration, mining or production, processing, refining, transportation, or marketing of any "mineral or natural resource" [including fertilizer, geothermal energy and timber]. Mineral and natural resources are usually defined as any product for which a depletion deduction is allowable under Section 611. Further, legislative history suggests that qualifying income does not include income from hydroelectric, solar, wind or nuclear power production.

Recharge the Economy with Renewable Energy Tax Credits

However, while income from electric properties is not specifically included within the definition of qualifying income, neither has it been addressed in the Treasury regulations. The interpretation of qualifying income is not statutory in origin, per se. If MLPs make sense for the management of broader classes of assets, then regulations and protocols could be changed to accommodate this need. I'm not aware of any proposed rule changes at this time, but inquiries from the industry could prompt a review of the rules.

This full article is only accessible by current license holders. Please login to view the full content.
Don't have a license yet? Click here to sign up for Public Utilities Fortnightly, and gain access to the entire Fortnightly article database online.