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Federal Legislation Would Modify and Extend Clean Renewable Energy Bond Program

| Written by John Farrell | No Comments | Updated on Apr 6, 2007 The content that follows was originally published on the Institute for Local Self-Reliance website at

Rep. Jim McDermott, D-Wash., recently introduced the Clean Renewable Energy for Public Power Act (H.R. 1821), which would extend and reform the Clean Renewable Energy Bond program authorizing government entities, rural cooperatives and municipally-owned electric systems to issue tax-credit bonds for renewable energy projects, as a counterpart to the production tax credit available to investor-owned utilities and other renewable energy project developers.

The American Public Power Association has come out in support of the legislation. According to APPA, the bill "will greatly enhance the ability of community- and state owned electric utilities to invest in renewable generation projects," said Joe Nipper, APPA senior vice president of government relations. "Implementation of the CREB program revealed some problems, and the result was that public power has only limited access to the tax credit bonds … Rep. McDermott’s bill would extend and improve the CREB program, enabling public power systems to develop a much needed new generation of renewable generation to serve their communities."

The original CREBs program in 2005 provided for a total volume cap of $800 million to finance eligible clean renewable energy projects. The program was expanded last year by an additional $400 million.

The program further constrained the issuance so that no more than $500 million (of the original $800 million) could go to qualified borrowers that were governmental bodies – such as those with municipally owned utilities (with the balance to be allocated to cooperative electric utilities). APPA is concerned that future CREB issuance will be follow the trend illustrated in the first batch of projects where APPA estimates that only $66 million of the $500 million available to governmental entities were approved for municipal public power entities. The proposed legislation would set the stage for future modifications that would ensure that a larger percentage of the governmental portion of CREB issuance goes to public power entities.

We here at Democratic Energy are very much in favor of the extension and expansion of the CREBs program but would question any legislative approach that would eliminate the current hierarchy of providing authorization and distribution of CREBs authority to smaller projects before larger projects. Despite our support of the municipally ownecd Our sense is that it is these smaller projects that have the greatest need for this innovative financing tool.

Rep. McDermott’s office says that the CREBs program was meant to provide interest-free borrowing by public power systems as a way to promote investments in renewable projects, but the law was written in a way that made it very difficult for public power utilities to take advantage of the program, and the bonding authority was extremely limited. These bonds are necessary because public power utilities could not take advantage of the tax credits available in the Internal Revenue Code because these utilities were already exempt from federal tax.

The CREBs program allows tax credit bonds to be issued to fund wind, open-loop and closed-loop biomass, geothermal, solar energy, small irrigation power, landfill gas, trash combustion, refined coal production, and certain incremental hydro power facilities.

The Clean Renewable Energy for Public Power Act would institute a number of reforms:

  • Removes the existing cap of $400 million per year.
  • Provides a new definition of "public power entity" as a qualified CREB issuer and borrower that would give larger public power systems with an obligation to serve a larger percentage of CREB benefits if a volume cap were to be put in place in the future.


  • Extends the CREB program for five years and makes some other 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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About John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power. More

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