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<br /> <br />EXHIBIT II <br />Page 2 of 6 <br /> <br />, <br /> <br />sufficient to repay costs allocatedl to commercial power, and the <br />costs of past and anticipated futur~ irrigation development <br />assignable to power, within the est!ablished repayment periods. <br />The Chairman of the House Committeel on Interior and Insular Affairs <br />wrote the Secretary asking him to study the problem and present a <br />financial plan wl1ich would put the project in a sound financial <br />position. <br /> <br />After an extensive review and cons~derationof ~y alternatives, <br />the Departll!eIlt decided upon a finan:cial plan wl1ich was reported <br />to Congress in December 1963 in a document entitled "Report on <br />Financial Position, Missouri River :Basin Proj ect", accompanied <br />by a second volume entitled "Appendix and Exhibits". The finan- .. <br />cial viability of the plan was ver:U:ied by a repayment study "B-51!' <br />dated November 26, 1963. <br /> <br />The report explained the policies W;hich ,were embodied in the <br />financial plan and highlighted the itwo major changes from prior <br />policy. The first was that an int~rest rate of 2-1/2 percent <br />would be applied on the repayment ~f the Ul1alllQrtized balance of <br />the invesonent allocated to commer4ial power in Army facilities. <br />This constituted a reduction of on.-half of one percent fr01l1 the <br />three percent rate on such costs that was applied 'in earlier <br />repayment studies in accordancewillh Reclamation law. . However, <br />the three percent rate would contiI1ue to apply 'to the invest:ment <br />allocated to commercial power in f4cilities',construct,ed by the. <br />Bureau of Reclamation. The second lmajor change was a power rate . <br />increase averaging ,25 ad.lls per k~lowatt hour wl1ich the Secretary - <br />explained would be instituted if Cqngress approved the financial- <br />report and enacted the required legislation to permit reducing the <br />interest rate on the commercial po4'er ili.vest:ment in Army facilities. <br /> <br />Bills were then pending to authori;l:e the Garrison'Diversion unit <br />of the Missouri ltiver Basin projecf. Since authorization of the <br />Ul1it qepended upon the availability of power revenues n-01l1 the ., . <br />proj ect to repay irrigation cos ts ~eyond the abiliryof the ' . <br />inigators to repay, the congressi~nal action ou 'the. Secreury I s <br />report was cousoUdated with the a~tion on the unit. .The House <br />committee held a hearing bu both sj1bjects and reported the bill <br />in 196'4, ,but final action was not taken. Consideration was <br />renewed, the following.year, leading to the Act of August 5, 1965, <br />79 Stat. 433, wl1ich authorized con~truction of the Garrison <br /> <br />2 <br />