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RESULTS OF AUDIT The present method of recovering the irrigation assistance portion of the Colorado River Storage Project substantially limits revenues to the U,S, Treasury, This method, which allows the Western Area Power Administration to recover the interest-free irrigation debt after first recovering all other interest-bearing debts, is part of a long-standing water proj ect repayment policy, This policy of repaying the highest interest-bearing debts first was developed by the Bureau of Reclamation and Federal power marketing administrations to provide for recovery of all investment costs within authorized repayment periods while minimizing power rates to the extent possible, However, the deferral of interest-free irrigation assistance payments also minimizes revenues to the U.S, Treasury, We examined the impact of the present irrigation assistance repayment policy in two phases: (1) the irrigation costs to be recovered based on the participating projects currently in Western's power repayment study period and (2) the costs to be recovered based on the inclusion of the Bonneville Unit in the repayment study period, Our review disclosed that amortizing the participating projects' irrigation assistance for repayment in equal annual installments over each proj ect' s repayment period would significantly increase revenues to the U.S, Treasury while requiring only minor increases in consumer power costs. Current Power Renavment Study Period Amortizing the $1,116 billion of irrigation assistance included in the rate-setting years of the 1987 power repayment study would accelerate recovery of the irrigation debt and increase Colorado River Storage Project revenue collections by $660 million over the life of the repayment period, The additional revenues would come from (1) an increase of $478 million because of the apportionment requirement and (2) additional interest of $182 million because of delaying repayment of the interest-bearing power facilities, The present value of accelerating repayment and the additional revenues is $80 million (see Appendix 2). In order to determine the impact of amortizing the $1,116 billion of irrigation assistance, we requested Western to provide us a copy of its most current (1987) repayment study and prepare an alternative repayment study amortizing the irrigation assistance, Western's 1987 repayment study called for the apportionment of Colorado River Storage Project revenues to repay the irrigation assistance starting in the year 2002 after repayment of the power facilities, Using the formula set forth in the apportionment requirement of the authorizing legislation, Western determined that power revenues of $1, q21 billion would be required to repay the $1,116 billion of irrigation assistance, The minimum power rate necessary to cover this revenue requirement is 8,64 mills(kWh,l lA mill is a monetary unit equaling one-tenth of a cent ($,001), and a kilowatt-hour (kWh) is a basic unit of electrical energy which equals 1 kilowatt of power applied for 1 hour. 4