U.S. grants renewable energy bonding to 14 hydro projects

The Internal Revenue Service has announced 14 hydroelectric projects are among 610 projects granted authority to issue $800 million in Clean Renewable Energy Bonds authorized by the Energy Policy Act of 2005.

There are eight hydropower projects among the 532 projects approved for government borrowers — primarily public power utilities — and six hydro projects among the 78 projects approved for rural electric cooperatives, the IRS said.

Disclosure restrictions prohibit the IRS from releasing taxpayer-specific information, but it said other chosen facilities are powered by solar, wind, landfill gas, open-loop biomass, and refined coal.

The IRS made the announcement Nov. 20, and said it is in the process of notifying applicants of the results.

The Energy Policy Act of 2005 created the bonds program as an incentive to cooperatives and other not-for-profit utilities that are exempt from taxation and, therefore, cannot use a production tax credit offered to other project owners. (HNN 11/17/06)

Overall, 709 applications were submitted from 40 states and the District of Columbia for the bonding authority, the IRS said. (HNN 6/2/06) The applications requested allocations for authority to issue about $2.6 billion in the bonds to finance 786 projects. Projects proposed ranged from $23,000 to $80 million.

Government borrowers submitted applications for about $2 billion for bonds to finance 701 projects with an average project size of about $2.9 million. Cooperative borrowers submitted applications for about $554 million of the bonds to finance 85 projects with an average project size of about $6.5 million.

Internal Revenue Code Section 54 authorizes the Treasury secretary to allocate up to $800 million in tax credit bonds to fund projects that can generate clean renewable energy. Of that amount, $500 million may be allocated to qualified projects for borrowers that are state or local government entities. The remaining balance is allocated to projects for borrowers that are cooperative electric companies.

The Energy Policy Act authorized $800 million in Clean Renewable Energy Bonds to be used before Jan. 1, 2008. Bills are pending in Congress that would extend qualifying deadlines for both the production tax credit and Clean Renewable Energy Bonds program.

A Senate bill (S.2401) would authorize another $2.4 billion in Clean Renewable Energy Bonds by allotting $800 million a year in bonding authority for 2008, 2009, and 2010.

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