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<br />O.'I~'" .. <br />Uv~_J <br /> <br />Association on December 8, 1982, E.d Speare commented on the possible impact of <br /> <br />abandoning the ultimate development concept in favor of the "current use method" of <br /> <br /> <br />calculating repayment needs and PMA power rates. The current use method would in <br /> <br /> <br />effect consider repayment needs only within a five-year "window." That is, it would <br /> <br />consider only the repayment needs of project features already completed, begun or <br /> <br />anticipated to begin within the next five years. This alternative form of repayment <br /> <br /> <br />study has been discussed because, as Speare pointed out in his address, it was <br /> <br />authorized in DOE. regulation RA6120.2 dated September 20, 1979, although it has <br /> <br />never been used. <br /> <br />Speare estimated that to switch from the ultimate development concept to the <br /> <br />current use method of calculating power rates for the Pick-Sloan Missouri Basin <br /> <br />Program (marketed by the Western Area Power Administration) would result in an <br /> <br />initial rate increase of about 2.9 mills per kwh. By comparison, the overall <br /> <br />provisional composite yield for Pick-Sloan Missouri Basin Program power on <br /> <br />August 1, 1982 was 6.1 mills per kwh. Speare detailed his estimate as follows: <br /> <br />To understand it, one has to understand the Pick-Sloan <br />repayment process. An exhibit in the back of W AP A's <br />February 1982 brochure that explains its 1980 repayment <br />study is a financial summary. lt shows that through 1980, <br />power revenues have totaled $1.59 billion. Costs, including <br />interest, have totaled $1.09 billion. The power investment <br />assigned to power totaled $1.03 billion. The balance left to <br />repay was $540.7 million. A total of $489.0 million had <br />been repaid along with $15.3 million for replacement of <br />original facilities. The project had thus repaid a total of <br />$504.3 million of principal along with $433.7 million in <br />interest charges. The total irrigation aid to be repaid was <br />$268.7 million. None of it had been repaid. It was sitting <br />in an account at no interest and would be repaid after all <br />power costs were repaid. <br /> <br />lt is interesting to note that at the end of the study period <br />(2080), total revenues based on a yield of 6.1 mills per kwh <br />after 1981 were $12.06 billion. Costs were $6.97 billion. <br />Original power investments assigned to power were <br /> <br />-17- <br />