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30 COLORADO RIVER STORAGE PROJECT Determin~tion oj firm energy production Assumptions ~s to whether energy produced is firm or nonfirm are very important pecause, in the repayment section of the analysis, firm energy is expected to b~ sold at an average rate of 6 mills a kwh com- pared to an average of 2,5 mills a kwh for nonfirm energy, During the period of the filling of the reservoirs (1961 through 1971), the Bureau has: considered firm energy for each year to be all the energy that can' be utilized within the monthly load pattern to meet the annual load growth estimated by the Federal Power Oommission. After the filling operation of the reservoirs, annual firm energy was determined for ,each snbsequent 10-year period to be the average annual generati9n for each period within the monthly load pattern estimated by the Federal Power Oommission. Determination oj non firm energy production In the months when thereleases of the minimum water needed to generate the reqpirements of the monthly load pattern would result in spills of the excess inflows into the reservoir, the Bureau assumed that the generators would be operated up to 100 percent of their capacity and that the energy generated in excess of the energy needed to supply the monthly load pattern wonld be sold at nonfirm rates. Interest rates used in the analyses Four different' interest rates were used in preparing various sections of the December 1958 analysis. The interest rates used were estab- lished by the Bvreau of ,the Budget, the Federal Power Oommission, and the Department of the Treasury. '['he economic' desirability of developing the projects was measured by a comparison of benefits from a national standpoint and the Federal costs of development (benefit-cost section of analysis), In this comparison, both benefits and costs were converted to average annual equivalent values at 2)\ percent interest, The 2% percent interest rate was also used in alloeating prime eonstruetion eosts to purposes, The ,use of a 2% pereent interest rate was in conformanee with Bureau of the Budget instruetions for fiscal year 1958 presenta- tions on water rbsourees projeets, Annual powet benefits nsed in the benefit-eost analysis and in alloeating constj'uetion eosts to purposes were determined by esti- mating the ave~a~e annual east of obtaining equivalent power from the most economlO alternative souree likely to be developed in tjle absenee of theprojeets. The total annual costs of the alternate power development were estimated on the basis of private financing with interest at the rate of 6)( percent, The interest rate of 6)( per- cent covers both interest eosts on borrowed money and return on the investment made by stockholders, This rate was established for use in studies of thi~ type by the Federal Power Oommission, In the section of the analyses pertaining to repayment of the Government's investment in the projects, an interest rate of 2% percel\t was used in computing repayment requirements for construe- tion costs alloeated to power and to municipal and industrial water purposes, exeept that 3)i percent' was used in the repayment of municipal and industrial water eosts of the Vernal Unit at the Oentral Utah partieipatihg project. The 2% percent interest rate is the rate established by the Secretary of the Treasury for application to the