Laserfiche WebLink
<br /> <br /><, <br /> <br />EXHIBIT II <br />Page 4 of 6 <br /> <br />'. <br /> <br />. <br />separable costs-remaining benefits method of cost allocation. In <br />mald.ng this allocation the project is treated as a whole, that is, <br />it is assumed that the entire project, including units which are <br />shawn to be economically justified :Ln the IIlClst recent economic <br />analysis, will be constructed. Thei second step involves a further'- <br />breakdown or suballocation. Of thei costs allocated to the power <br />purpose, a portiDn is suballocated ~o irrigation pumping based upon <br />the pumping demand under conditions, of ultimate development; these <br />costs are returnable without interest. The remaining power invest'tllent <br />is suballocated to cOllllllercial power, and is returnable with interast. .. <br /> <br />As provided in section 4(b) of the c;arrison Act, the investment <br />"allocated to c01lll1\ercial power" in Army facilities "constructed or <br />under cons truction on June 30, 1965:," bears a '2:-1/2 percent,repayment.. <br />interest rate. The term "allocated; to co1lllllercial power" means <br />"suballocated to c01lllllercial power",; because it. is only after the <br />suballocation step that an allocation to "'co1llllercial" powElr, as ." ;;' <br />distinguished from non-c01lll1\ercial irrigation PUlllping power,", is '-' <br />known. All of the Army's mainstem hydroelectric power projects were <br />"constructed or under construction pn June 30, 1965." The Secretary's <br />report indicates that approximatelYi 81 percent of the power investment <br />was allocated to the interest-bearijlg cOllllllercial power purpose, with <br />about 19 percent allocated to non-i#terest bearing irr.l.gation pumping, <br />based upon ultimate development. (see pp. 6, 9, 18-20). <br /> <br />The legislative purpose in reducing; the interest rate from 3 ,to <br />2-1/2 percent was to make the one-half percent interest saving on <br />the 81 percent of power'invest1llent available over the years as a <br />sourc>! of revenue to assist in the ~epaY1llent of i,rr:igation facilities, <br />included in the plan of ultimate deyeloplllent. This objective is <br />repeatedly indicated in the cougres~ional hearings and c01lllllittee <br />reports; its attainment is what is jindicated by' the reference to <br />placing the project in a sound fina:iJ.cial position. A demonstration <br />of this objective is contained in the concomitant "'-t!thotization of <br />the Garrison unit itself. The 1964, House committee report, for <br />example, on page 7, points out that; $183 million of the irr.l.gation <br />alloca'tion is expected "to be repaijl, from Missouri River Basin power <br />re'1enues." The same purpose was rejaffirmed in subsequent years in <br />the aut'hotizetion of additional uni~s or divisions of the Pick.-Sloan::, <br />Missour.l. River Basin Prog::am: Nebrjaska Mid-State division, <br />Pub. L. 90-136; Oahe unit, Pub. L. ~0-453; NarTows \mit, Pub. L. 91-389; <br />Rivertou buit, Pub. L. 91-409; Minot extension, Pub. L. 91-415; aud <br />O'Neill 'unit and North Loup division, Pub. L. 92-514. <br /> <br />4 <br />