U.S. grants renewable energy bonding to 18 hydro projects

The Internal Revenue Service announced 18 hydroelectric projects are among 312 projects eligible for more than $400 million in tax-credit bond allocations under the federal government’s Clean Renewable Energy Bonds program.

Divided among the 18 hydro projects is about $40 million in CREBs bonding authority. The largest single identified hydro recipient is American Municipal Power-Ohio Inc. with four Ohio River projects totaling $16 million.

The IRS said Feb. 8 it reviewed applications of all types for $897 million in CREBs financing, examining 342 applications from 33 states for 395 projects. Applications ranged from $15,000 to $38.5 million. Applications filed by government borrowers and cooperative borrowers were considered separately.

About $477 million of CREBs bonding authority was available for allocation to qualified issuers in this, the second round of CREBs allocations. A total of $406 million was allocated, with about 10 percent of that going to hydropower projects.

Local government borrowers submitted applications totaling $728 million to finance 367 projects with an average project size of about $2 million. Of the total $406 million allocated, governmental borrowers in 28 states will receive $263 million of allocations ranging from $15,000 to $2.95 million, the IRS said.

Cooperative borrowers submitted applications totaling about $170 million to finance 28 projects with an average project size of $6.1 million. They will receive $143 million of allocations for projects in 13 states ranging from $300,000 to $30 million.

Bonding of at least US$39.9 million allotted to hydro

Local government borrowers received approval for bond financing of 12 hydropower facilities. Four projects were not identified because applicants did not sign consents for public disclosure.

However, IRS identified the other eight, which received a total of $8.045 million in bond financing, by name of issuer, project city, and allocation amount:
o Baker County, Baker City, Ore., $1 million;
o City of Norway, Mich., $1 million;
o City of Rock Island, Ill., $700,000 (HNN 9/12/07);
o Merced Irrigation District, Snelling, Calif., $1.34 million;
o Pend Oreille Public Utility District, Ione, Wash., $1.34 million (HNN 7/17/07);
o Portland Water District, Gorham, Maine, $265,000; and
o Southern Nevada Water Authority, Las Vegas, Nev., two projects of $1.2 million each.

Bonding totaling $31.93 million was approved for six hydro projects proposed by co-ops. Of those, American Municipal Power�Ohio Inc. sponsored four projects identified as:
o 84-MW Cannelton Lock Dam, Kentucky, $4.9 million;
o 72-MW Smithland Lock and Dam, Kentucky, $2.1 million (HNN 11/5/07);
o 48-MW Robert C. Byrd, West Virginia, $8 million; and
o 35-MW Willow Island, West Virginia, $1 million (HNN 8/8/07).

The National Rural Utilities Cooperative Finance Corp. was allocated bonding authority on behalf of the two remaining co-op hydro projects:
o Livingston, Texas, $10.2 million (HNN 5/19/06); and
o Afton, Wyo., $5.73 million.

The U.S. Treasury is authorized to distribute bonding authority under the volume cap through the CREBs program. The program was created by the Energy Policy Act of 2005 as an incentive to entities that are exempt from taxation and, therefore, cannot use a production tax credit incentive offered to other owners of projects powered by renewables.

The IRS announced the first round of volume cap allocations in November 2006, allocating $800 million to 610 projects, including 14 hydroelectric projects. (HNN 11/22/06) While disclosure restrictions prohibited the IRS from releasing taxpayer-specific information for the first round, some project owners later made their own announcements. For example, Oglethorpe Power Corp. disclosed it plans to finance an upgrade of its 904-MW Rocky Mountain pumped-storage project with a $24 million federal cooperative loan funded by the CREBs program. (HNN 1/28/08)

Congress failed in February to extend the renewable energy production tax credits and CREBs program beyond Dec. 31, 2008. (HNN 2/8/08)

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