WSP01155 - Laserfiche WebLink

Home Browse Search

By comparison, amortization would require the apportionment of revenues for repayment of the irrigation assistance to start in the year 1989, with the power investment repaid in 2035. To cover this earlier requirement for apportioned revenues and the additional interest costs on the power investment, the minimum power rate would be increased from 8,64 millsjkWh to 9,80 milUjkWh, a net change of 1.16 mills/kWh, or 13,4 percent. However, Western's current power rate is greater than the minimum power rate that would be required (9.80 mills/kWh), so an immediate rate increase may not be necessary, Nevertheless, it is likely that a future power rate increase will be required to accommodate amortization of the irrigation debt. We recognize that power rate increases have to be applied judiciously so they do not result in economic disruption for customers, It appears, however, the future rate increase that will be required to cover amortization is relatively small and would not significantly affect the consumers' monthly electric bills because the cost of Federal power is generally only one of several factors that make up consumers' bills, Consumers must also pay for costs necessary to transmit and distribute power to them, and the costs of any other power sources necessary to supply their total electric demands, In our opinion, the annual amortization of the irrigation debt over each participating project's repayment period provides a sound business approach for repaying that portion of the irrigation investment beyond the irrigators' ability to pay, Based on our reading of the Colorado River Storage Project's legislative history, it appears that the Congress intended that the noninterest,bearing debt be returned in equal annual installments concurrently with the interest-bearing debt. Further, a repayment policy requiring this debt to be repaid on an annual basis beginning in the first year of a project repayment period would be consistent with the policy requiring irrigators to make annual payments based on their ability to pay, As demonstrated above, this procedure could provide substantial benefits to the U,S. Treasury, Inclusion of Bonneville Unit in Current Power Reoavment Studv Period Completion of the Bonneville Unit is uncertain because the Congress has not yet authorized expenditures necessary to complete the Unit's irrigation facilities, However, since the Bonneville Unit represents a substantial future requirement for irrigation assistance from Storage Project power revenues, we requested Western to prepare the following alternative power repayment studies assuming that Federal funding is continued: (1) the Bonneville Unit is added to the existing irrigation assistance requirements and repaid under current repayment policies (that is, interest-bearing debt paid first) and (2) the Bonneville Unit and the existing irrigation assistance requirements are all repaid on an amortized basis. The results of these studies are shown in Appendix 2, Without additional authorization to increase Federal funding of the Storage Project by over $700 million, construction of the Bonneville Unit irrigation facilities by the United States may not be realized. Because continued Federal financing is uncertain, proposed legislation drafted in 1988 to increase the authorized ceiling contained language to allow 5