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. . SECT ION I OVERVIEW AND CONCLUSIONS Introduction At the request of the Colorado River Energy Distributors Association (CREDA), we have analyzed the rate increase proposed by the Western Area Power Administration (Western) as set forth in the "Proposed Adjustment of Transmis- sion and Power Rates" dated October 1982 for the Colorado River Storage Project (CRSP). Based on our analyses, as described herein, it is not clear that a rate increase for the CRSP is warranted at this time. The level of CRSP rates proposed by Western in the "Proposed Adjust- ment of Transmission and Power Rates" (Rate Brochure), is largely predicated on the repayment of participating projects which are not currently in service, and which are not expected to be in service until beyond the fiscal year 1987. Based upon our analyses, present CRSP rates are adequate to pay all operating costs and are adequate to repay, within allowable limits, Federal investment for projects expected to be in service by FY 1987. There are a number of other projections, assumptions and procedures embodied in the Western studies which we believe may not be totally appropri- ate. These include (1) costs associated with storage unit irrigation invest- ment, (2) projections of salable capadty, (3) replacement costs, (4) opera- tion and maintenance expenses, (5) water depletions, (6) revenue projections, and (7) surplus revenues, and are discussed in detail in this report. We have prepared alternative studies with Western's assistance in run- ning the alternative power repayment studies on Western's computers. These alternative studies, which are discussed in detail in this report, are the basis for our conclusion that an increase in CRSP rates is not warranted at this time.