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<br />nJ"J'J'<? <br />u v._.. <br /> <br />storage reservoir which serves both reimbursable and <br />non-reimbursable purposes, the reimbursable purposes <br />do not, of course, repay all the costs. <br /> <br />4. Power rates (Ed. Set by PMA's for power generated at <br />federal reservoirs) are established on the basis of what <br />are called average rate and repayment studies (Ed. <br />Also referred to as power repayment studies -- PRS's). <br />Basically, an average rate and repayment study takes <br />account of the reimbursable costs already incurred and <br />the costs estimated to be incurred to complete the <br />project, allocated as among the project purposes. The <br />study includes both the buildup of such costs over the <br />years and their payout periods. .... The object <br />of the study is to determine what the average power <br />rate will have to be over the life of the project to <br />accomplish payout (Ed. Total repayment of project <br />features reim.bursable by power revenues). . . . <br />Typically, the study covers a period of years beginning <br />with the year in which construction is expected to <br />commence (or has already commenced) and ends with <br />the year in which the last increment of reimbursable <br />costs are repaid. In any project other than a single <br />purpose project consisting of only one feature, this <br />overall repayment period is made up of a series of <br />overlapping periods for particular units or features. <br /> <br />5. Average rate and repayment studies are made at <br />period intervals to test the adequacy of the forecasts <br />and rates and to take account of changes in <br />conditions. .... Estimates of costs change because <br />of inflation, or changes in plans or the availability of <br />appropriations, or because of unanticipated physical <br />conditions, or because units are added to a project, or <br />because Congress may deauthorize some work . . . or <br />for some other reason. <br /> <br />6. As an essential element of persuading Congress to <br />authorize a given project or program, not only does its <br />economic feasibility have to be shown, but the actual <br />return of the dollars expected to be invested in <br />reimbursable functions has to be demonstrated under <br />the principles I have already described. .... <br />(Weinberg, 1983, pp. 5-8) <br /> <br />In a recent address in Des Moines, Iowa, Jim Davies, Area Manager of the <br /> <br />Billings, Montana, Area Office of the Western Area Power Administration (the PMA <br /> <br /> <br />for most of the western United States), further clarified the use of the ultimate <br /> <br />development concept in power repayment studies and rate-setting for power generated <br /> <br />-3- <br />