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<br /> <br /> <br />TEXT OF FORMER SECRETARY'S STATEMENT <br />The text of form~r Secretary Seaton'e statement aPl'l'oving the <br />recommendations of Oommissioner of Reclamation Floyd E. DQminy, <br />issued on January 151, is as follows: . ' , ' ' ,'.' , <br />C~LORADO STORAGE iPROJl1lCT RATE AND 'TRANSMIBSI~N LINE DEOISIONS <br />, ANNOUNCED <br />Decisions governing '~stabli13hment --of' averitg.e power' rates for the Colorado <br />River storage project ;a;Q.d transmission line arrangements tot wheeling power to <br />preference customers were announced today by Secretary of the Interior Fred A. <br />Seaton. <br />Secretary Seaton approved recommendations of Commissioner of Reolamation <br />Floyd E, Dominy callin~ fo<-- ' <br />1. Establishmen1f of thE) "Financial and Power Rfl,te Analysis of September <br />1960" as the basis.' for developing definitive rate -schedUles for the sale of <br />Colorado River storage project power. <br />2. Construction pf an all~Federal transmission system consistent with the <br />requirements of. t~..'e power-marketing area and criteria approved May 17, <br />1960, ' <br />3. Negotiations by the Bureau 'of Reclamation with eMh private utility to <br />determine the extent to whioh and the oonditions under whioh the Bureau <br />might obtain interconnections between the Federal system .and' th~t utility's <br />system. ; . <br />The rate analysis me;de by. the Burea.u shows that the payout requirements of <br />the Colorado River Storage Project Act can be met by POWel' revenues baaed on <br />average rates of 6 millE.! per kilowatt-hour for firm energy; 2.5 mills per kilowatt- <br />hour for nonfirm energy, ; and $15 per kilowatt~ye" ar for peaking oapacity. <br />The Bureau pointed out that revenues from these avera~e"ratea ac!)omplish <br />payout in somewhat aIlorter time than might be, used in taking full adva,ntage of <br />the discretion 8.ermittefl by the authorizing aot. "Cpnsequently,11 Commissioner <br />Dominy l}aid, an avert\ge rate of 6 mills for firm energy is not the minimupl wWch <br />might b~ established tnitially. However, it js wise to use the above :,average <br />rates be()l1use the project at the present time is in the early, construction stage <br />and it p~ovides a cushion to cover future contingencies." <br />Secretary Seaton anpounced today, approval" of the recommendation made by <br />Commissioner Dominy that: the utility propo$al for cODstrllQtion of most of the <br />transmis8ion lines for the project be rejected. <br />"If the utility proposal is accepted and. power sold at the same power rates as <br />under the all-F(}deral eiy~tem, the projeot could not.~eet the payout,requirements <br />of the authorizing act," Commissioner. Dominy- s~id in.a November 30, 1960, <br />memorandum to the'~ecretary. ..- <br />(/Conseque:ntly," D(Jminy said, llif the proposal is accepted, the power sold <br />must produce larger r,evenues than would be the case unden.the al1~FederalsY8~ <br />tern. Based: upon obtaining the same total irrigation assistance to parti(jipat~l\g <br />projects by the year 2049 as with the' all-Federal system, the: necessary revel,lue <br />mcrease would amoUl\t to about $254 million dver the 8~-year study period. 'l'o <br />produce thi~ increasea revenue--would obviously requite'that a higher aver/lge <br />rate be paid by the Government customers. This would hav'e the result, in,:'the <br />words of the_liouse co:mmittee, of (adversely affe.Qting the consuwer power rates.''' <br />Commissioner Domjny,also states in the memorandum: //If,it is assumed that <br />the firm power would be'sold at the same rate under till-"Federal construction', as <br />that required',under .the:utility proposal, the analysis would more'heavily favor <br />all-Federal constl!ucttou. in . that the power allocation and irriRation allocation <br />would be repaid in l~ss time and the irrigation assistance would be available 'at <br />an earlier date and irj. larger quantities. <br />"Althoug.h the utility proposal ,would result in the United States saving con- <br />struction abd operatton .and maintenance costs, these savings, together with al- <br />lowance for assumed iFederal income-taxes foregone and imputed interest costs on <br />the irriga.tion alloca~ion of storage, units" are' less than the iilcreased costs of <br />power. . ' <br />4 <br />