Clean Renewable Energy Bonds “CREBs” - 20090331030257.pdfVIP

Clean Renewable Energy Bonds (“CREBs”) Clean Renewable Energy Bonds (“CREBs”) The Energy Policy Act of 2005 (P.L. 109-58) Qualified Issuers Entities qualified to issue CREBs include provides electric cooperatives and public governmental bodies, Indian tribal power systems with the ability to issue “Clean governments, mutual or cooperative electric Renewable Energy Bonds” (“CREBs”). The companies and clean energy bond lenders – CREBs program is further described in Internal namely, the National Rural Utilities Revenue Service (“IRS”) Notice 2005-98 Cooperative Finance Corporation (“CFC”) and (“Notice”). The Notice will eventually be Cobank. followed by “temporary and proposed” regulations that invite public comment, but How CREBs Work may be relied upon immediately. The The electric cooperative or cooperative lender “temporary and proposed” regulations may add (“Issuer”) would issue the CREBs and sell detail to the program but will not alter the them to bondholders. With a conventional general terms of the Notice. bond, the Issuer must pay interest to the bondholder. But with a tax credit bond, the CREBs deliver an incentive comparable to the Issuer does not make interest payments. The Production Tax Credit (“PTC”) that is federal government provides a tax credit to the available to private developers and investor- bondholder in lieu of the Issuer paying interest owned utilities (“IOUs”). A CREB is a special to the bondholder. type of bond, known as a “tax credit bond,” that offers cooperatives the equivalent of an Treasury sets the rate of the credit on a daily interest-free loan for financing qualified energy basis, at a leve