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<br />available as of the end of FY 1977, a repayment study was made using the existing <br />power rates. The study showed that the existing rates would not be adequate to <br />repay all the power investment costs within the allowable time frame and would <br />not provide any revenues to assist in the repayment of irrigation features. <br /> <br />8ased on the FY 1977 PRS, the DOE determined that a power rate increase of <br />about 33 percent would be needed by October 1979 to accomplish the repayment <br />required by the Act. Based on customer comments on the proposed rate increase, <br />DOE revised the study and issued a revised rate brochure dated September 5, 1979, <br />which indicated a rate increase of 23.3 percent was required. The DOE involve- <br />ment stemmed from the Department of Energy Organization Act (P.L. 95-91) dated <br />August II, 1977, which transferred the power marketing functions of the Service to <br />DOE, effective October 1, 1977. With the proposed power rate increase, the PRS <br />forecasts that investment costs for storage project power and M&:I facilities will be <br />repaid by 1992 and 1985, respectively. <br /> <br />Our review of the Service's' 1977 PR5 disclosed that in most cases cost data were <br />based upon reasonably sound forecasting techniques. We noted, however, that: (1) <br />interest costs were understated because such costs applicable to future replace- <br />ments and additions were based on authorized project rates rather than the rate <br />formula set forth by Secretarial Order (5.0,) 2929; and (2) a substantial amount of <br />reimbursable participating project costs were not included in the reimbursable <br />costs forecasted in the PRS. <br /> <br />To more closely reflect the current interest cost on Government borrowings and <br /> <br /> <br />establish a standard formula for fixing interest rates on new Federal power <br /> <br />22 <br />