118 STAT. 1472 PUBLIC LAW 108–357—OCT. 22, 2004 energy (other than to members) to the extent that the aggregate sales during the recovery period do not exceed the load loss mitigation sales limit for such period. ‘‘(iii) For purposes of clause (ii), the load loss mitigation sales limit for the recovery period is the sum of the annual load losses for each year of such period. ‘‘(iv) For purposes of clause (iii), a mutual or coopera tive electric company’s annual load loss for each year of the recovery period is the amount (if any) by which— ‘‘(I) the megawatt hours of electric energy sold during such year to members of such electric company are less than ‘‘(II) the megawatt hours of electric energy sold during the base year to such members. ‘‘(v) For purposes of clause (iv)(II), the term ‘base year’ means— ‘‘(I) the calendar year preceding the start up year, or ‘‘(II) at the election of the mutual or cooperative electric company, the second or third calendar years preceding the start up year. ‘‘(vi) For purposes of this subparagraph, the recovery period is the 7 year period beginning with the start up year. ‘‘(vii) For purposes of this subparagraph, the start up year is the first year that the mutual or cooperative electric company offers nondiscriminatory open access or the calendar year which includes the date of the enactment of this subparagraph, if later, at the election of such com pany. ‘‘(viii) A company shall not fail to be treated as a mutual or cooperative electric company for purposes of this paragraph or as a corporation operating on a coopera tive basis for purposes of section 1381(a)(2)(C) by reason of the treatment under clause (i). ‘‘(ix) For purposes of subparagraph (A), in the case of a mutual or cooperative electric company, income received, or accrued, indirectly from a member shall be treated as an amount collected from members for the sole purpose of meeting losses and expenses. ‘‘(x) This subparagraph shall not apply to taxable years beginning after December 31, 2006.’’. (c) EXCEPTION FROM UNRELATED BUSINESS TAXABLE INCOME.— Subsection (b) of section 512 (relating to modifications) is amended by adding at the end the following new paragraph: ‘‘(18) TREATMENT OF MUTUAL OR COOPERATIVE ELECTRIC COMPANIES.—In the case of a mutual or cooperative electric company described in section 501(c)(12), there shall be excluded income which is treated as member income under subparagraph (H) thereof.’’. (d) CROSS REFERENCE.—Section 1381 is amended by adding at the end the following new subsection:
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