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<br /> <br />--" <br />Jr,. . <br /> <br />.' <br /> <br />Colorado River Storage Project <br />Power Rates and Apportionment <br />November 22, 1994 . <br /> <br />Rate Setting Period <br /> <br />Fir.m rates for Colorado River Storage Project (CRSP) power are <br />based on future revenue requirements. Since CRSP is an ultimate <br />development project, it must be able to meet repayment obligations <br />well into the next century. Unlike most utilities, Western's <br />ratesetting period currently extends through the year 2057. This <br />is because obligations that CRSP power has toward repayment of <br />Central Utah Project's Bonneville Unit come due at that time and <br />have an effect on the fir.m power rate. Wi thin this 63 year <br />ratestetting period (1995-2057), the CRSP must meet its annual <br />expenses as well as its lump sum obligations. <br /> <br />Revenue Requirements <br /> <br />Revenue requirements for the CRSP include operations, maintenance, <br />and replacement costs {OM&R}; purchased power and wheeling; <br />interest; plant; aid tomainstem irrigation; and aid to <br />participating projects including apportionment (Chart I). The <br />annual costs of OM&R, purchased power and wheeling, and interest <br />are due each year. Repayment obligations to plant and irrigation <br />assistance are due within 50 years from the time the facilities <br />become operational. A rate (lowest possible) must be set for the <br />sale of fir.m power which is sufficient to meet these obligations by <br />the time they are due. <br /> <br />Pinchpoint <br /> <br /> <br />Since one rate must be deter.mined to meet all obligations as they <br />come due throughout the rate setting period, prepayments to lumpsum <br />obligations must be made. The cumulative revenue chart <br />demonstrates how the power repayment study solves for a rate which <br />meets these variable repayment obligations (Chart II). The chart <br />shows revenue requirements cumulatively as they come due. Annual <br />costs are characterized by more of a straight line while the <br />repayment obligations of plant, aid to mainstem irrigation, and aid <br />to participating projects including apportionment create an uneven <br />line due to their timing. A single rate is set which when applied <br />to projected generation provides enough cumulative income to assure <br />repayment of all obligations. As can be seen in Chart II, <br />cumulative income equals cumulative revenue requirements in the <br />year 2057.. This is called the pinchpoint year because a rate must <br />be found which creates this exact cumulative revenue--no more or no <br />less. <br /> <br />,- -', ...,_..._,...v....:_:c.."'~).:.~~"'~_'!~~r:(;K.ool;~:...~...';.-.~ .~-:-----~.__.. - <br />