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TITLE 26-INTERNAL REVENUE CODE credit allowable by section 38 (determined without regard to this subsection). Subparagraph (B) shall not apply If the re- duction in the rate base is restored not less rapidly than ratably. If the taxpayer makes an election under this sentence within 90 days after the date of the enactment of this paragraph in the manner prescribed by the Secretary, the immediately preceding sen- tence shall not apply to property described in paragraph (5)(B) if any agency or instrumen. tality of the United States having jurisdiction for ratemaking purposes with respect to such taxpayer's trade or business referred to in paragraph (5)(B) determines that the natural domestic supply of the product furnished by the taxpayer in the course of such trade or business is insufficient to meet the present and future requirements of the domestic economy. (2) Special rule for ratable flow-through If the taxpayer makes an election under this paragraph within 90 days after the date of the enactment of this paragraph in the manner prescribed by the Secretary, para- graph (1) shall not apply, but no credit shall be allowed by section 38 with respect to any property described in section 50 which is public utility property (as defined in para- graph (5)) of the taxpayer- (A) Cost of service reduction If the taxpayer's cost of service for rate- making purposes or in its regulated books of account is reduced by more than a ratable portion of the credit allowable by section 38 (determined without regard to this subsec- tion), or (B) Rate base reduction If the base to which the taxpayer's rate of return for ratemaking purposes is applied is reduced by reason of any portion of the credit allowable by section 38 (determined without regard to this subsection). (3) Special rule for immediate flow-through in cer- tain cases In the case of property to which section 167(l)(2)(C) applies, if the taxpayer makes an election under this paragraph within 90 days after the date of the enactment of this para- graph in the manner prescribed by the Secre- tary, paragraphs (1) and (2) shall not apply to such property. (4) Limitation (A) In general The requirements of paragraphs (1), (2), and (9) regarding cost of service and rate base adjustments shall not be applied to public utility property of the taxpayer to disallow the credit with respect to such property before the first final determina- tion which is inconsistent with paragraph (1), (2), or (9) (as the case may be) is put into effect with respect to public utility property (to which this subsection applies) of the taxpayer. Thereupon, paragraph (1), (2), or (9) shall apply to disallow the credit with respect to public utility property (to which this subsection applies) placed in ser- vice by the taxpayer- (i) before the date that the first final determination, or a subsequent determi- nation, which is inconsistent with para- graph (1), (2), or (9) (as the case may be) is put into effect, and (ii) on or after the date that a determi- nation referred to in clause (I) is put into effect and before the date that a subse- quent determination thereafter which is consistent with paragraph (1), (2), or (9) (as the case may be) is put into effect. (B) Determinations For purposes of this paragraph, a deter- mination is a determination made with re- spect to public utility property (to which this subsection applies) by a governmental unit, agency, instrumentality, or commis- sion or similar body described in subsection (c)(3)(B) which determines the effect of the credit allowed by section 38 (determined without regard to this subsection)- (i) on the taxpayer's cost of service or rate base for ratemaking purposes, or (ii) in the case of a taxpayer which made an election under paragraph (2) or the election described in paragraph (9), on the taxpayer's cost of setvice for ratemak- ing purposes or in its regulated books of account or rate base for ratemaking pur- poses. (C) Special rules For purposes of this paragraph- (i) a determination is final if all rights to appeal or to request a review, a rehear- ing, or a redetermination, have been ex- hausted or have lapsed. (ii) the first final determination is the first final determination made after the date of the enactment of this subsection, and (fii) a subsequent determinaion is a de- termination subsequent to a final determi- nation. (5) Public utility property For purposes of this subsection, the term "public utility property" means- (A) property which is public utility prop- erty within the meaning of subsection (c)(3)(B), and (B) property used predominantly in the trade or business of the furnishing or sale of (I) steam through a local distribution system or (ii) the transportation of gas or steam by pipeline, if the rates for such fur- nishing or sale are established or approved by a governmental unit, agency, instrumen- tality, or commission described in subsec- tion (c)(3)(B). (6) Ratable portion For purposes of determining ratable resto- rations to base under paragraph (1) and for purposes of determining ratable portions under paragraph (2)(A), the period of time used in computing depreciation expense for purposes of reflecting operating results in the taxpayer's regulated books of account shall be used. (7) Reorganizations, assets acquisitions, etc. If by reason of a corporate reorganization, by reason of any other acquisition of the Page 58