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<br />oo~.,rHl <br />f.) _ . , <br /> <br />Association on December &, 19&2, Mr. Ed Speare commented on the possible impact <br /> <br /> <br />of abandoning the ultimate development concept in favor of the "current use method" <br /> <br /> <br />of calculating repayment needs and resulting PMA power rates. The current use <br /> <br />method would in effect consider repayment needs only within a five-year "window." <br /> <br />That is, it would consider only the repayment needs of project features already <br /> <br />completed, begun or anticipated to begin within the next five years. This alternative <br /> <br /> <br />for m of repayment study is discussed because, as Speare points out in his address, it <br /> <br />is authorized in DOE regulation RA6120.2 dated September 20, 1979, although it has <br /> <br />never been used. <br /> <br />Speare calculates 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 /> <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, 19&2 was 6.1 mills per kwh. Speare detailed his conclusions as follows: <br /> <br />To understand it, one has to understand the Pick-Sloan <br />repayment process. An exhibit in the back of WAPA's <br />February 19&2 brochure that explains its 19&0 repayment <br />study is a financial summary. It shows that through 19&0, <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 $4&9.0 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 />$26&.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 />It 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 />