CLEAN RENEWABLE ENERGY BONDS (CREBs)

James F. Duffy, EsquireJames F. Duffy, EsquireNixon Peabody LLPNixon Peabody LLP100 Summer Street100 Summer StreetBoston, MA 02110-2131Boston, MA 02110-2131Tel.: (617) 345-1129Tel.: (617) 345-1129Fax: (866) 947-1697 Fax: (866) 947-1697 jduffy@nixonpeabody.comjduffy@nixonpeabody.com

FINANCING WIND POWER: THE FUTURE OF ENERGY

Debt PanelDebt Panel

The Institute for Professional and Executive Development, Inc.

July 25-27, 2007July 25-27, 2007Santa Fe, New MexicoSanta Fe, New Mexico

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CREBs

• Clean Renewable Energy Bonds (CREBs)

• Under Section 54 of the Internal Revenue Code, which was added in 2005

• Designed to provide an incentive for governmental bodies (including Indian tribes) and cooperative electric companies to produce renewable energy

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CREBs

• CREBs are “tax credit bonds”

• The borrower gets a 0% loan, as the Federal Government pays interest on the bonds in the form of a tax credit to the bond holder

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CREBs

• A total of $1.2 billion of CREBs has been authorized, to be allocated in 2 rounds

• The first round allocations have occurred, and second round applications were due July 13, 2007 (See IRS Notice 2007-26)

• All CREBs must be issued by December 31, 2008

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CREBs

• CREBs are allocated to applicants beginning with the project with the smallest dollar amount of volume cap requested and then the next-smallest dollar volume cap, until the total volume cap is exhausted

• At most $750 million of the $1.2 billion in CREBs can be allocated to governmental bodies

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CREBs

• There are bills in Congress to extend the CREB program beyond the initial two rounds

– H.R. 1821 is championed by public power

– H.R. 1965 is championed by co-ops

– H.R. 2776 would allocate $2,000,000,000 of “New Clean Renewable Energy Bonds” 60% to public power providers and 40% to cooperative electric companies

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