[Congressional Record Volume 156, Number 132 (Tuesday, September 28, 2010)]
[Senate]
[Pages S7632-S7633]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. CANTWELL (for herself, Mr. Nelson of Nebraska, Mrs. 
        Murray, and Mr. Sanders):
  S. 3855. A bill to amend the Internal Revenue Code of 1986 to repeal 
the limitation on the issuance of new clean renewable energy bonds and 
to terminate eligibility of governmental bodies to issue such bonds, 
and for other purposes; to the Committee on Finance.
  Ms. CANTWELL. Mr. President, today I am introducing legislation that 
will unleash a wave of investment in clean renewable energy. The Clean 
Renewable Energy Investment Act of 2010 will remove the arbitrary cap 
on the amount of Clean Renewable Energy Bonds that can be issued by our 
Nation's consumer-owned public power providers and cooperative electric 
companies. This legislation will generate significant private 
investment in renewable energy projects that will create thousands of 
jobs nationwide.
  Congress first created Clean Renewable Energy Bonds, or ``CREBs'' in 
2005 in an attempt to parallel the tax incentive offered by the Section 
45 tax credit for electricity produced from renewable resources. 
However, the incentives for consumer-owned utilities have never been 
truly comparable to the subsidy we provide to for-profit, investor-
owned utilities because unlike the section 45 tax credit, CREBs have 
always been subject to an overall cap on the amount of bonds that can 
be issued nationwide.
  Since consumer-owned utilities operate on a not-for-profit basis and 
incur no Federal income tax liability, traditional production tax 
credits otherwise available to for-profit utilities simply do not 
work--because there is no Federal tax liability to offset with the 
credit. Yet the nearly 3,000 public power utilities and rural electric 
cooperatives collectively serve 25 percent of the Nation's electricity 
customers. These utilities are often ideally situated in terms of both 
geography and size to integrate clean and renewable technologies into 
their systems.
  The original CREB program has been extended twice and was modified in 
the Emergency Economic Stabilization Act of 2008 to make it more 
workable for public power and more attractive to institutional 
investors. The Emergency Economic Stabilization Act and the American 
Recovery and Reinvestment Act of 2009 provided for an additional $2.4 
billion in CREB funding split equally between public power providers, 
rural electric cooperatives, and other governmental bodies. In March 
2010, Congress passed another very useful modification to the CREB 
program by giving issuers of CREBs the option to issue the bonds as 
``direct-pay bonds'', similar to the structure of Build America Bonds.
  In the last round of CREBs, the demand for projects significantly 
exceeded the availability of the limited $800 million for each category 
of issuer. Public power and electric cooperative utilities have 
billions of dollars in projects awaiting these incentives--with some 
even having the potential to use $800 million for a single project if 
given the opportunity.
  This means we have an opportunity to unleash a wave of investments in 
clean energy. In Washington State, 50 percent of customers are served 
by public power providers. Nationwide, public power and cooperatives 
serve one in four electricity customers. Yet, if we look back over the 
history of the Section 45 tax credit and CREBs, Congress typically 
shortchanges the consumer-owned sector. Looking at the Joint Committee 
on Taxations estimates of the cost of all the major energy tax 
legislation since 2005, the resources allocated to CREBs have been 
roughly \1/10\ of the cost of extending or expanding, section 45.
  My legislation would correct this inconsistency in our energy policy 
by removing the arbitrary cap on the volume of CREBs that can be 
issued, and would instead sunset the CREB program at the end of 2013, 
which is consistent with the expiration of most components of the 
section 45 credit.
  It would also remove the ``governmental bodies'' category from 
eligibility for the bonds. The CREB program was originally developed 
for utility-scale projects and this amendment reflects that intent and 
puts the program in line with the Production Tax Credit for investor-
owned utilities. Since passage of the American Recovery and 
Reinvestment Act, Governmental bodies now have their own bond program. 
They are eligible for the new Qualified Energy Conservation Bonds,

[[Page S7633]]

QECBs, which is a more suitable program for these entities as they can 
finance both renewable and energy efficiency projects with QECBs. Under 
this legislation, Tribal utilities would remain eligible issuers of 
CREBs.
  In addition, the bill clarifies that any reimbursement with bond 
proceeds is governed by the reimbursement rules applicable to tax-
exempt bonds. It is widely recognized in the public finance community 
that the existing wording in Section 54A(d)(2)(D) is at best unclear, 
and at worst incorrect. State and local government issuers of bonds are 
familiar with the reimbursement rules applicable to tax-exempt bonds 
and there is no tax policy reason to have two sets of reimbursement 
rules.
  Finally, the bill insures that any new CREBs allocated before the 
date of enactment of this bill are not affected by any of these 
amendments. The intent is to ensure that the ``government bodies'' 
category is still able to issue previously allocated CREBs and will not 
be retroactively cut out of the program.
  This bill is good energy policy because it will lead to the 
development of thousands of megawatts of renewable power. It is good 
tax policy because it maintains the integrity of the CREBs program, and 
it is overall good public policy because it provides parity between 
investor-owned and consumer-owned utilities.
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