SECTION 4. UNITS OF PROPERTY FOR HYDROELECTRIC POWER STATIONS

.01 In general . For hydroelectric power stations, the Service will not challenge any of the following unit of property or major component determinations for purposes of the application of § 263(a) and the regulations thereunder.

.02 Station Property . (1) Station property serving a hydroelectric generating unit constitutes a single unit of property. Station property is each structure that physically supports and/or encloses the generating unit equipment, and associated systems and support facilities. It does not include accessory buildings (such as administrative, training, or laboratory buildings) or administrative office sections of the power station and systems that support administrative space (such as heating, air conditioning and ventilation, plumbing, and the electrical system within the administrative space). As noted in Appendix A, section 1.01 above, if a unit of property is shared by more than one generating unit, the unit of property is a single unit of property. However, in a power station with two generating units, if a single structure and its associated systems solely supports generating unit 1, another structure and its associated systems solely supports generating unit 2, and a third structure and its associated systems supports both generating units 1 and 2, there are three separate units of station property (the structure and its associated systems solely supporting generating unit 1, the structure and its associated systems solely supporting generating unit 2, and the structure and its associated systems supporting both generating units 1 and 2).

(2) Station property contains the following major components: (a) turbine room crane, (b) all other overhead cranes, and (c) all compressed air systems. .03 Dam . (1) Each dam constitutes a single unit of property. The dam is the equipment that forms a barrier that impounds water and manages its flow.

(2) The dam contains the following major components: (a) spillway, (b) each spillway gate, (c) intakes, including trash racks and rakes, (d) fish passage system ( e.g., fish ladders, elevators, and similar items), and (e) instrumentation and controls. .04 Water control system . (1) Each water control system constitutes an individual unit of property. The water control system is the equipment that controls the flow of water through the dam and to a water turbine. Within the water control system, a penstock carries

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water from a starting point, such as a reservoir intake, to a subsequent location, such as a turbine or a point of branching to multiple turbines or other penstocks. If the latter point is a branch, then that is the point of beginning of another penstock.

(2) The water control system contains the following major components: (a) each penstock, including tunnels, flumes, and canals, (b) each primary shut-off gate, (c) surge shafts, tanks, and chambers associated with each penstock, (d) navigation locks, and (e) instrumentation and controls. .05 Water turbine . (1) Each water turbine constitutes an individual unit of property. The water turbine is the equipment that converts the kinetic energy of moving water into a rotary motion, which motion is used to power the generator.

(2) The water turbine contains the following major components: (a) nozzles, (b) each complete water wheel or runner, (c) turbine shaft, (d) turbine shell and casing, (e) each wicket gate set, and (f) instrumentation and control. .06 Generator . (1) Each generator constitutes a single unit of property. The generator is the equipment that converts the mechanical energy produced by the water turbine to electrical energy.

(2) The generator contains the following major components: (a) stator, including the windings, shell, and casing, (b) rotor, including core and windings, and (c) instrumentation and controls. .07 Water treatment system (e.g., at pumped storage facility) . (1) Each water treatment system constitutes a single unit of property. The water treatment system is generally the equipment that removes minerals and other impurities in the water to produce higher purity water for industrial cooling, which, if present, is used for cooling the turbines and generators.

(2) The water treatment system contains the following major components: (a) filtration system, (b) demineralization system, and (c) instrumentation and controls. .08 Cooling and utility water system . (1) Each cooling and utility water system constitutes a single unit of property. The cooling and utility water system is the equipment that supplies cooling water or utility water to a generating unit.

(2) The cooling and utility water system contains the following major components: (a) tanks, (b) piping system, and (c) instrumentation and controls. .09 Auxiliary power system . (1) Each auxiliary power system constitutes a single unit of property. The auxiliary power system is the equipment that provides back-up electrical power for the generation plant.

(2) The auxiliary power system contains one major component: each auxiliary generator. .10 Main step-up transformer . (1) Each main step-up transformer constitutes a single unit of property. The main step-up transformer is equipment that increases the voltage of the electricity generated at the generation plant to a voltage level needed for the transmission of the electricity.

(2) The main step-up transformer has no major components. .11 Ventilation System . (1) Each ventilation system serving a unit of station property, as defined in subsection 4.02 above, constitutes a single unit of property. The ventilation system is the equipment that circulates and filters the air in the station property.

(2) No special rule is provided under this revenue procedure for the major components of the ventilation system. The major components of the ventilation system are determined under the general principles of § 263(a).

.12 Station electrical delivery system . (1) A power station’s electrical delivery system constitutes a single unit of property. The station electrical delivery system is the equipment that distributes electrical power in the power plant.

(2) No special rule is provided under this revenue procedure for the major components of the station electrical system. The major components of the station electrical system are determined under the general principles of § 263(a).

.13 Safety system . (1) A power station’s safety equipment constitutes a single unit of property. The safety system is the equipment that alerts generation plant personnel to potentially hazardous conditions (including sirens, alarms, and evacuation systems).

(2) No special rule is provided under this revenue procedure for the major components of the safety system. The major components of the safety system are determined under the general principles of § 263(a).

.14 Fire Protection System . (1) A power station’s fire protection system constitutes a single unit of property. The fire protection system is the equipment that detects, suppresses, and extinguishes fires.

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(2) No special rule is provided under this revenue procedure for the major components of the fire protection system. The major components of the fire protection system are determined under the general principles of § 263(a).

.15 Accessory Buildings . (1) Each accessory building constitutes a single unit of property. An accessory building is a building located at a hydroelectric power plant that is not station property. For example, laboratory buildings, training buildings, warehouses, administrative buildings, pre-admittance buildings, and maintenance shops are accessory buildings.

(2) No special rule is provided under this revenue procedure for the major components of the accessory buildings, The major components or substantial structural parts of an accessory building are determined under the general principles of § 263(a).