The Environmental Law and Policy Center hosted a teleconference about the Clean Renewable Energy bonds that were included in last summer's federal energy bill. At this link: http://www.elpc.org/energy/CREBsummary.htm and pasted below is a summary of the call.

Summary of Briefing on Clean Renewable Energy Bonds (CREBs)
Hosted by Environmental Law & Policy Center on November 2, 2005

The CREB regulations are scheduled to be issued in January 2006. For more information on these new renewable energy bonds, please contact Charles Kubert, ELPC Environmental Business Specialist, at (312) 795-3716 or at ckubert@elpc.org. ELPC is also planning a second CREB teleconference briefing in early February after the new regulations are issued. Stay tuned.

The teleconference was moderated by ELPC Executive Director Howard Learner. Speakers included:

* David Narefsky, Partner with the law firm of Mayer, Brown, Rowe & Maw. Narefsky specializes in public finance law and has experience with QZABs (the school finance equivalent of CREBs).
* Susan Pettit, Principal, Government Relations, National Rural Electric Cooperative Association (NRECA).
* Joe McLiney of McLiney & Co., a leading underwriter of QZABs, the school finance equivalent of CREBs.
* Joe Nipper - Senior Vice President, Governmental Relations, American Public Power Association (APPA).

Other sponsors of the teleconference include: National Association of State Energy Officials (NASEO); American Wind Energy Association (AWEA) and Interstate Renewable Energy Council (IREC).

The call was extremely informative and brought to light the many issues and questions surrounding CREBs. The program authorizes up to $800 million in bonds to be issued by municipal power authorities, rural electric cooperatives and other units of government, tribal authorities or non-profits for financing renewable energy projects. Purchasers of these bonds will receive federal tax credits in lieu of interest payments from the issuer.

During the call, the speakers shed light on the purpose of the bonds, how the bonds are to be issued, who will purchase them and other topics. Also discussed were how QZABs are serving as a model for CREBs. Other key points made by the various speakers:

* The program is patterned after the Qualified Zone Academy Bonds (QZABs) used to finance school improvements.

* $800 million in bonds are authorized over two years. Bonds can be issued by any public entity or rural electric co-op.

* Congress had in mind an incentive for investment in clean, renewable energy. These tax credit bonds will benefit public power agencies and electric coops.

* Proceeds of the bonds can be used to fund a wide variety of clean energy projects, not just wind.

* CREBs are like having an interest-free loan to finance projects. However, there are issuance costs of 1-2% associated with the bonds.

* Tax credits will be received by purchasers. These credits are taxable to the purchasers.

* The bonds will have a twelve to fifteen year repayment term.

* Whereas QZABs could only be bought by institutional investors, almost anyone can buy CREBs.

* The legislative intent of these bonds is to provide an incentive for publicly-owned projects that do not qualify for federal Production Tax Credits (PTCs). You cannot use dollars raised by CREBs to support privately-owned projects. These bonds are available to any governmental or public entity, not just utilities.

* Smaller projects can be pooled to lower bond issuance costs.

Here's an updated link to ELPC's Clean Renewable Energy Bond information page:
http://www.elpc.org/energy/farm/crebs.php

Information to Note:
-CREB regulations are due this month.
-Applications for CREB allocations are due April 26, 2006.

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