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<br />Fiscal Interest <br />Year Rate (%) <br />1941-70 3.0 <br />1971 5.375 <br />1972 5.875 <br />1973 5.5 <br />1974 5.625 <br />1975 6.125 <br />1976 6.625 <br />1977 7.0 <br />1978 7.5 <br />1979 8.0 <br />1980 & after 8.5 <br /> <br />I. Cost Allocations. The method for allocation of RGP costs as <br />used in the power repayment study for this rate adjustment was developed <br />in a report approved July 1949 by J.A. Krug, then Secretary of the <br />Interior. That report provided for allocations of project joint costs <br />based on an average of the alternative-justifiable-expenditure and <br />priority-of-use methods. The alternative-justifiable-expenditure method <br />assumed the cost of a federally financed alternative steamplant for power <br />and assumed for irrigation the cost of a reservoir slightly smaller than <br />Elephant Butte, plus the existing cost of all irrigation features, exclu- <br />sive of storage. Under the priority-of-use method, the total cost of <br />Elephant Butte Reservoir was charged to irrigation since power is inci- <br />dental and secondary in priority to the use of water for irrigation. The <br />average of the two methods resulted in an allocation of joint costs of <br />20.8 percent to power and 79.2 percent to irrigation. <br /> <br />J, Investments Allocated to Power. In 1940, the power investment <br />was $2,827,468. Since that time, various additions have been made, <br />mostly consisting of transmission facilities. In the years 1941 through <br />1950, power revenues were sufficient to pay the annual operating expenses <br />and interest, and to repay some of the principal costs. After 1950, <br />power revenues have not been sufficient to pay all the annual expenses <br />and interest, nor to repay any of the prinCipal costs. For the 1951 <br />through 1971 period, the annual expense and interest deficits were capi- <br />talized and added to the investment costs to be repaid at 3 percent <br />interest. For each year after 1971, the current interest rates were <br />used. As a result of capitalizing the deficits in this manner, the power <br />investment increased to a maximum of $10,631,727 by 1972. This decreased <br />to $4,840,386 as of the end of Fiscal Year 1980, due to the sale of the <br />transmission system, excluding the Elephant Butte Switchyard and the Hot <br />Springs Substation. After 1980, the power investment (principal) is <br />estimated to increase slightly each year to a maximum of $5,625,386 in <br />1985, due mainly to converting the powerplant from manual to unattended <br />operation. The original power investment of $2,827,468 must be repaid by <br />Fiscal Year 1990, and this is the "rate setting point" that detennines <br />the power rate. <br /> <br />K. Irrigation Investments to be Repaid b~ Power Revenues. As of <br />1940, power revenues were asslgned to repay $3,3 2,195 of the irrigation <br /> <br />30 <br /> <br />C (j 1 'L .) <br />