INVESTMENT TAX CREDITS were denied to a utility
Commonwealth Energy System in Massachusetts lost a bid for investment tax credits on spending in the late 1980’s to upgrade a power plant. The investment tax credit was repealed at the end of 1985. However, companies could still claim credits through 1990 under various transition rules, including one for investments that had to be made to perform an existing “service or supply contract.”
The utility argued it had to make the improvements to its power plant because of a contract it signed in 1965 to supply electricity from the power plant to neighboring utilities for 33 years. A US appeals court said in February the link was too attenuated.