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Clean energy bonds to help fund upgrade at 904-MW Rocky Mountain

Oglethorpe Power Corp. plans to finance an upgrade of its 904-MW Rocky Mountain pumped-storage project with a $24 million federal co-op loan funded by Clean Renewable Energy Bonds.

Oglethorpe, a power supplier owned by 38 Georgia electric cooperatives, said it anticipates closing the loan from the National Rural Utilities Cooperative Finance Corp. in 2008.

Under terms of the Energy Policy Act of 2005, CFC submitted Clean Renewable Energy Bond applications to the Internal Revenue Service on behalf of clean renewable energy projects by Oglethorpe and by 50 other electric cooperatives. The Internal Revenue Service allocated the $24 million bonding approval for Rocky Mountain in 2006.

As a qualified issuer under the bond program, CFC will issue bonds and lend the proceeds to Oglethorpe at 1 percent interest. Instead of CFC paying interest to the bond purchaser, the federal government provides the purchaser a tax credit.

Oglethorpe and Georgia Power Co. are co-licensees of Rocky Mountain (No. 2725), on Heath Creek in Floyd County, Ga. Oglethorpe announced plans several years ago to increase Rocky Mountain's capacity by replacing pump-turbine runners.

Clean Renewable Energy Bonds were created to provide tax-exempt state and local governments and electric cooperatives with a federal incentive to invest in renewable energy generation projects. They are to provide an incentive similar to the production tax credits available to investor-owned utilities that invest in such projects.

Congress authorized a total of $1.2 billion in bonding authority for the program, which is scheduled to expire Dec. 31, 2008. (HNN 1/25/08)

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