Rural Energy for America Act of 2006

Rural Energy for America Act of 2006 - Amends the Farm Security and Rural Investment Act of 2002 to rename the renewable energy systems and energy efficiency improvements program as the rural energy for America program (REAP).

Makes rural school districts eligible for REAP.

Authorizes: (1) production-based incentives in lieu of grants for electricity production from renewable energy systems contingent upon third-party sales; and (2) matching assistance for feasibility studies.

Directs the Secretary of Agriculture to make grants to eligible entities to provide rebates for farmers, ranchers, rural school districts, and rural small businesses to purchase renewable energy systems and make energy efficiency improvements. Defines eligible entities as: (1) a state energy or agriculture office; (2) a nonprofit state-based energy efficiency or renewable energy organization that uses public funds provided directly or under contract with a state agency; (3) any other nonprofit organization with a demonstrated ability to administer a statewide energy efficiency or renewable energy rebate program; or (4) a consortium of such entities. Limits rebates to the lower of $10,000 or 50% of the cost to purchase a renewable energy system or an energy efficiency improvement.

Extends REAP funding through FY 2012 with set-asides for the rebate program.

Expresses the sense of the Senate that the Secretary should implement a direct loan program to complement REAP grants.