On February 3, the Internal Revenue Service (IRS) released Notice 2015-12 (the Notice) which solicited applications for a third round of allocations of volume cap for new clean renewable energy bonds (New CREBs) under Section 54C of the Internal Revenue Code.

The IRS has identified a volume cap of $280,778,469 that is available to fund projects for cooperative electric companies. Cooperative electric companies may begin submitting applications under the Notice on March 5, 2015.

The requirements for New CREBs under Section 54C of the Code remain substantially similar to the allocations issued under the prior notice; however, a few notable differences include:

• Allocations under the Notice will be awarded on a first-come, first-served basis by order of submission date (rather than based on the relative size of the project).
• The maximum allocation available to any cooperative electric company is the greater of (i) 20% of the volume cap remaining for all cooperative electric companies as of the first day of the applicable period, or (ii) $40 million. The IRS will update the remaining volume cap for each period noted in (i) above approximately every 60 days and will post the updated amounts on its website. An application must state an amount within the maximum allocation to be considered complete.
• The New CREBs must be issued within 180 days from the date of the allocation letter. This is a significantly shorter time period than the three-year issuance window under the prior notice. Allocations that are not utilized within the 180-day window will be treated as forfeited and will revert to the IRS for reallocation.

Given that the IRS will award allocations based on the time an application is submitted, cooperative electric companies that expect to seek financing for eligible projects through the issuance of New CREBs should begin analyzing their eligibility immediately, in order to submit a volume cap application as close to March 5, 2015, as possible.

The full text of the Notice, which includes an application form and general eligibility requirements, is available from the IRS at http://www.irs.gov/pub/irs-drop/n-15-12.pdf.