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<br />. <br /> <br />. <br /> <br />Il-12 <br /> <br />Determination of Replacement Costs <br /> <br />Estimated replacement costs for the FY 1981 PRS are based on the most <br /> <br />current program budget documents for FY 1982 through FY 1986. Estimated re- <br /> <br />placement costs for the years after FY 1986 are based on projections that use <br /> <br />service lives of facilities established in August 1981, and on original invest- <br /> <br />ment costs adjusted to January 1981 cost levels. To determine the electric <br /> <br />plant investment used for estimating replacement costs, Western, in its 1982 <br /> <br />Rate Brochure, includes all electric facility costs plus an allocated portion <br /> <br />of the multi-purpose plant investment. The basis used for estimating service <br /> <br />lives is an August 1981 publication issued by the Bureau of Reclamation and <br /> <br />Western Area Power Administration titled Replacements: Units, Service Lives, <br /> <br />Factors. <br /> <br />Our concerns with respect to the way Western uses replacement costs in <br /> <br />its FY 1981 PRS are twofold: (1) the large and cyclic variation in estimated <br /> <br />replacement costs from year to year; and (2) the apparent non-capitalization of I, / <br />. Ii: <br /> <br />replacement costs after FY 2008, except for FY 2014. or' <br /> <br />The estimated replacement costs from year to year fluctuate greatly as <br /> <br />shown below for the five-year period from FY 2013 to FY 2017. <br /> <br />FY <br /> <br />Annual Cost ($000) <br /> <br />$ 3,421 <br />5,488 <br />28,625 <br />16,757 <br />2,600 <br /> <br />2013 <br />2014 <br />2015 <br />2016 <br />2017 <br /> <br />The annual cost exceeds $20 million on a cyclic basis every 25 years <br /> <br />after the initial occurrence in FY 2015. The reason for questioning these <br /> <br />large variations in estimated replacement costs is that they greatly affect Jh~,- <br />