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long been recognized, of course, by the federal reclamation program. Thus, irrigators are unable to pay the full cost of developing new projects. Likewise, the cost of rehabilitating existing systems often exceeds irrigators' financial abilities. In short, irrigation projects most often cannot generate enough revenues to repay the investment involved, especially at today's interest rates for private capital. Another potential source of project revenues is "excess charges" to one class of project users for the benefit of another class of user. For example, the federal reclamation program has long been premised upon sales of hydropower at rates in excess of that needed to repay the construction costs allocable to a project's power features. These excess charges have then been used to repay that portion of the construction costs allocable to a project's irrigation features which are beyond the irrigator's ability to repay. The upper Colorado River Basin Fund and the repayment provisions of the pick-Sloan Missouri River Basin program are the devices with which we in Colorado are most familiar. In principle, future non~federal water project development in Colorado could use this same approach. It could be implemented either on an ad hoc project.by~project basis or through a centralized fund. It is doubtful, however, that hydropower developments, given current construction costs and the resulting high rates at which power must be sold, could assist with anything more than a small portion of the costs of those multiple-purpose projects which themselves include hydropower features. Furthermore, it is apparently not clear whether rates could be set so as to subsidize other users under existing federal and state laws. It has been suggested from time to time that "excess" power revenues accruing to the Upper Colorado River Basin Fund ought to be accessible to Colorado for its direct uSe as it sees fit. Under the existing law, this is not possible. It would take both amendments to existing law and a very substantial increase in federal power rates before Colorado could realize a direct source of revenueS large enough to be of any consequence. The preference customers of Colorado River Storage proj ect power and other Upper Basin states have voiced strong opposition to any such suggestions. In summary, a significant portion of Colorado's potential future water developments--small, rural municipal water supply projects; irrigation projects; rehabilitation of existing irrigation systems, and flood control projects--cannot, at least in large part, be financed through revenue financing. It is increasingly difficult to find water projects whose outputs are so highly valued that those outputs can generate the revenue necessary to repay a project's cost. Thus, it appears that revenue financing will be a significant source of capital only in -4-