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APPENDIX I APPENDIX I MODIFIED COST ALLOCATION PROCEDURE INCREASED IRRIGATION COSTS AND REDUCED POWER COSTS In 1984, the Bureau's Commissioner allowed the region to modify its procedure for allocating Bonneville Unit costs. The allocation resulting from this change appeared in the supplement to the definite plan report, revised September 1984, and is. being used as the basis for current repayment contract negotiations. What level of approval will be required for this new allocation is unclear. Regional officials told us that only the Bureau's Commissioner will need to approve the revised definite plan report, which includes the modified allocation. They do not intend to submit it to him for some time, until planning for the final phase of Bonneville--the irrigation and drainage system--is complete. However, the Department of Energy Organization Act of 1977 appears to require congressional approval of the reallocation of the costs of multipurpose facilities. This possibility was raised in our letter to the Assistant Secretary of the Interior. We did not analyze how costs were allocatedl rather, we looked at the effect the modified procedure had on allocated costs. The modified procedure increased the irrigation allocation by $381 million and decreased the power allocation by $378 million. This modification will have an impact on repayment. Current cost estimates allocate $915.1 million to irrigation. Of this, $898.7 million will be beyond the irrigators' repayment obligation of $16.4 million and, thus, would be primarily repaid by power revenues from the Colorado River Storage Project. However, these power revenues will be used to repay the costs allocated to Colorado River power development first, before they are used to repay irrigation costs. In addition, since irrigation cost repayment is not subject to interest by law, the value of the eventual repayment will be substantially less than the value of the government's expenditures. 8