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@ EXHIBIT V ."'" Department of Energy Washington, D.C. 20461 May 16, 1978 Mr. Larry Meierotto Deputy Assistant' Secretary Policy, Budget and Administration Office of the Secretary Department of the Interior Washington, D,C, 20240 Dear Mr. Meierotto: We appreciate your courtesy in sending to us for comment the draft audit report entitled, "Review of Repayment Status of Pick-Sloan r~issouri Basin Program and Individually Authorized Projects -, Bureau of Reclamation." The audit report is primarily a critique of the 1974 Power Repayment Study that was used by the Interior Department as the basis for a rate increase for the Pick-Sloan Missouri Basin Program that went into effect in 1977, The Department of Energy plans to prepare a new power repayment study for use in determining if rate changes will be required on the Pick-Sloan Missouri Basin Program. We will consider the audit report in this process before we submit tentative rate proposals for public comment, At that time, the Department of the Interior will have the opportunity to submit to us further comments on the tentative proposals. Meanwhile, it should be noted that several of the recommendations in the audit report require congressional action and, therefore, are beyond our authority to act on administratively. In particular, Section 302 of the Department of Energy Organization Act specifically precludes changes in cost allocation at reclamation projects without congressional approval. Also, the setting of power rates on repayment basis is an integral element of existing law, and no substantial departure from that basis is permissible without congressional sanction. Sincerely, ." / // /lb~(t(/ ~.(~~/-[,) Daniel M. Ogden, Jr. Director, Office of Power Administration Coordination Resource Applications