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.......';'1' .- 0.1369 Colorado River. Storage Project Power Rates and Apportionment November 22, 1994 Rate Setting Period Firm rates for Colorado River Storage Project (CRSP) power are based on future revenue requirements. Since CRSP is an ultimate development project, it must be able to meet repayment obligations well into the next century. Unlike most utilities, Western's ratesetting period currently extends through the year 2057. This is because obligations that CRSP power has toward repayment of Central Utah Project's Bonneville Unit come due at that time and have an effect on the firm power rate. Within this 63 year ratestetting period (1995-2057), the CRSP must meet its annual expenses as well as its lump sum obligations. Revenue Requirements Revenue requirements for the CRSP include operations, maintenance, and replacement costs (OM&R); purchased power and wheeling; interest; plant; aid to mainstem irrigation; and aid to participating projects including apportionment (Chart I). The annual costs of OM&R, purchased power and wheeling, and interest are due each year. Repayment obligations to plant and irrigation assistance are due within 50 years from the time the facilities become operational. A rate (lowest possible) must be set for the sale of firm power which is sufficient to meet these obligations by the time they are due. Pinchpoint Since one rate must be determined to meet all obligations as they come due throughout the rate setting period, prepayments to lumpsum obligations must be made. The cumulative revenue chart demonstrates how the power repayment study solves for a rate which meets these variable repayment obligations (Chart II). The chart shows revenue requirements cumulatively as they come due. Annual costs are characterized by more of a straight line while the repayment obligations of plant, aid to mainstem irrigation, and aid to participating projects including apportionment create an uneven line due to their timing. A single rate is set which when applied to projected generation provides enough cumulative income to assure repayment of all obligations. As can be seen in Chart II, cumulative income equals cumulative revenue requirements in the year 2057. This is called the pinchpoint year because a rate must be found which creates this exact cumulative revenue--no more or no less. . __-:-___.-,._._~_:.-:..,..-- -:."";._-:-_~r_~_ .._.___ ._' .'i.'_'~'., .$._:' :'...~~..._._._....__r._. -----....