WSP01155 - Laserfiche WebLink

Home Browse Search

OFFICE OF INSPECTOR GENERAL WASHINGTON, D,C. 20240 United States Department of the Interior April 25, 1989 MEMORANDUM AUDIT REPORT To: Assistant Secretary - Water and Science From: Assistant Inspector General for Audits Subject: Final Audit Report, "Review of the Timely Recovery of Irrigation Investment Costs, Colorado River Storage Project, Upper Colorado Region, Bureau of Reclamation" (No, 89-67) This report addresses the Colorado River Storage Project and is the second of a series of audits regarding the timely recovery of Federal irrigation investment costs in Bureau of Reclamation projects. The objective of our Bureauwide review was to determine the financial impact on the U,S. Treasury of the current repayment policy, which provides that recovery of noninterest.bearing irrigation investment costs be deferred until after repayment of the interest-bearing investments, We concluded that this long-standing repayment policy does not adequately protect the Government's interest, A sound business approach requiring amortized repayment of the Storage Project's noninterest-bearing irrigation assistance costs concurrent with repayment of the interest-bearing debt would allow the Government to accelerate repayment and collect $660 million of additional revenues over the life of the Storage Project's repayment period, Under this approach, revenues would increase by a present value of $80 million, INTRODUCTION BACKGROUND The Colorado River Storage Project is a multipurpose project with 4 main storage facilities and 20 participating projects which benefit the states of Colorado, New Mexico, Utah, and Wyoming, In general, the reimbursable Storage Project costs include interest-bearing municipal and industrial water and power investments and interest-free irrigation investments, Storage Project water users enter into contracts with the Bureau for repayment of reimbursable project water costs before project construction. The irrigation water users repay the irrigation investment costs based on their ability to pay, - As of September 30, 1987, the Bureau estimated that the total irrigation debt will exceed the irrigators' ability to pay by almost $2,3 billion, The municipal and industrial water users fully return their allocated costs plus interest, The power users, through power sales by the Western Area Power Administration of the U,S. Department of Energy, return the power costs with interest plus the irrigation debt exceeding the irrigators' ability to pay (irrigation assistance). Repayment of this irrigation assistance,