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CLEAN RENEWABLE ENERGY BONDS (CREBs)

CLEAN RENEWABLE ENERGY BONDS (CREBs). FINANCING WIND POWER: THE FUTURE OF ENERGY Debt Panel The Institute for Professional and Executive Development, Inc. July 25-27, 2007 Santa Fe, New Mexico. James F. Duffy, Esquire Nixon Peabody LLP 100 Summer Street Boston, MA 02110-2131

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CLEAN RENEWABLE ENERGY BONDS (CREBs)

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  1. CLEAN RENEWABLE ENERGY BONDS (CREBs) FINANCING WIND POWER: THE FUTURE OF ENERGY Debt Panel The Institute for Professional and Executive Development, Inc. July 25-27, 2007 Santa Fe, New Mexico James F. Duffy, Esquire Nixon Peabody LLP 100 Summer Street Boston, MA 02110-2131 Tel.: (617) 345-1129 Fax: (866) 947-1697 jduffy@nixonpeabody.com

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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 10655533.2

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