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<br />2 <br /> <br />., <br /> <br />2. Advise the District and other interested parties of what options are <br />being considered induding the most likely action that will be taken if <br />acceptable contract terms are not agreed to by that specific date. <br /> <br />The second unresolved issue pertains to the method of apportioning storage revenues <br />to Colorado, New Mexico, Wyoming, and Utah in accord with the provisions of P.L. <br />84-485. <br /> <br />The Service has taken the poSltlOn that the amount of funds needed to repay <br />investment costs of power facilities installed in participating projects located in <br />Wyoming ana Utah should be deducted from storage project revenues before such <br />revenues are apportioned. <br /> <br />In our view, P.L. 84-485 requires apportionment of storage project revenues without a <br />deduction for repayment of participating project costs and each state, in turn, should <br />have available its share of apportioned storage project revenues to aid in the <br />repayment of its participating projects. <br /> <br />The potential significance of this issue is that if the Service'S position is not in accord <br />with P.L. 84-485, proposed storage project power rates are inadequate. Based on <br />Service power repayment studies, such rates will be inadequate to produce about $234 <br />million of required revenue during the project's repayment period. <br /> <br />We have recommended that the Service refer this issue to the Department's Solicitor <br />for resolution. The Assistant Secretary, Land and Water Resources (A/S-LW) advised <br />us that, although he believes the Service's position is proper, an opinion from the <br />Office of the Solicitor on the legal sufficiency of the present apportionment method <br />would be obtained. <br /> <br />In adaition, the report discussed three issues which should be resolved if the actions <br />contemplated by the Service are implemented. These actions are: <br /> <br />1. To the extent possible, unpublished current cost date will be used by <br />the Service in determining required power rates. <br /> <br />2. The Solicitor will be requested to review the Service's policy and <br />provide an opinion on the appropriate interest rate to be applied to <br />project replacements and additions. <br /> <br />3. At every feasible opportunity the Service will establish water rates <br />based on periodic aeterminations of irrigators' ability to pay under <br />repayment type contracts as is currently done under water service <br />type contracts. <br />