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PUBLIC POWER AND THE CREBs PROGRAM

RESULTS of First Round of Allocations. Due to the allocation methodology used by the IRS (smallest to largest projects) and the broad statutory definition of ?governmental borrower," utilities with ?obligations to serve" received approximately $66 million of the $500 million CREB allocations availa

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PUBLIC POWER AND THE CREBs PROGRAM

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    1. PUBLIC POWER AND THE CREBs PROGRAM April 4, 2007

    2. RESULTS of First Round of Allocations Due to the allocation methodology used by the IRS (smallest to largest projects) and the broad statutory definition of governmental borrower, utilities with obligations to serve received approximately $66 million of the $500 million CREB allocations available to governmental borrowers. Non-utility governmental entities received a majority of the $500 million in allocations for small solar projects. While solar projects are worthy recipients of CREB funding, a host of small solar projects are an inefficient use of CREBs, and could deter institutional investors from considering these bonds. Program was oversubscribed. Governmental borrowers submitted applications for 689 projects requesting $2.0 billion of allocation authority; average request was $2.9 million per project. 530 projects received full allocations and 2 projects received partial allocations. 153 projects were denied allocations due to the $500 million cap.

    3. Next Steps Changes to the CREB program are required in order for the CREB program to be a workable incentive for the public power sector. Congress intended that consumer-owned utilities be able to utilize CREBs to finance renewable energy projects to increase the amount of electricity on the grid and to provide comparable treatment that is available to IOUs through the production tax credit (PTC). Definition of governmental borrower must be amended; allocation methodology must be changed. HR 1821, The Clean Renewable Energy for Public Power Act of 2007, was introduced by Representative Jim McDermott (D-WA) on 3/30/07. The bill extends the CREB program for 5 years and enables public utilities to increase their investments in renewable energy projects.

    4. HR1821 The Clean Renewable Energy for Public Power Act of 2007 The bill extends the CREB program for 5 years through 2013 and removes the volume cap. The bill provides a new definition of public power entity as a qualified CREB issuer and borrower that will ensure that public power systems with an obligation to serve will receive a more appropriate percentage of CREB benefits if a volume cap were to be put in place. The bill makes technical corrections to the program to improve its efficiency and ability to attract public entities to invest in renewable energy projects.

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