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, , " The Basin Electric arrangement has estabUshed that low-cost electric power can be maintained in the'region. Equally important, the region's lignite and other low-grade coals will be established as an energy source of local and national importance. The Basin Electric transmission arrangement increases the Federal return on existing investment by $980,000 annually. However, the region will not make its full potential contribution to the Nation's economic health and well-being until the water has been developed and put to use for agricultural, municipal and industrial, fish and wildlife, and recreation purposes. Before additional works are authorized and constructed, it is appropriate, however, to make certain that a sound financial structure has been established. The attached report has been prepared by the Department so that Congress and its conmittees may establish the guidelines for the project's future financial management. Although the basic objective is a financial structure consistent with current Congressional standards" it must be remembered that we are attempting to apply these standards to a project that, was conceived, planned, and in large part constructed under different, more liberal, and less well defined criteria. Today, we are attempting to apply financial "yardsticks" that did not exist at the time decisions were made to construct the major storage facilities and when rates for the marketing of power,were first established. Four major changes in financial management have occurred since the, Missouri River Basin Project was authorized and construction started. The most significant and restrictive of these changes is the decision that the repayment goal for all reimbursable costs shall be 50 years after the completion of any division, unit, or feature of the project. The only exception .being a development period, of up to 10 years which may be made available for irrigation investments. This criterion has been applied on the Colorado River Storage Project, the Fryingpan- Arkansas Project, Colorado, and other recent major Federal Reclamation project authorizations. " Other changes are: (1) the adoption of the separable costs-remaining benefits method of cost allocation pursuant to interagency agreement of the Departments of the Army and the Interior and the Federal Power Conmission in 1954, (2) inclusion of interest during construction as a component of commercial power investment, and (3) abandonment of the accounting concept permitting use of the interest component of power revenues in the repayment of authorized irrigation assistance. 3