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<br />01374 <br /> <br />the start of apportionment under Section 5(e) is compelled by the <br />payout year of 2015 for the Vernal Unit in Utah, the first <br />participating project to reach payout. The timing of this obligation <br />in the near future, combined with the large assistance requirements of <br />the Bonneville Unit in the far future (payout year is 2057) contribute <br />to Utah setting, or "driving", the power rate for the repayment of all <br />participating projects. <br /> <br />Since Utah is the rate driving state, the apportionment formula <br />requires that for every $1 needed to assist projects in Utah, $4.65 <br />(the reciprocal of Utah's 0.215 share) of revenue must be generated <br />from the mainstem. For example, assistance from the mainstem required <br />for the Vernal Unit by the year 2015 is $8,033,000. However, due to <br />the apportionment formula, the mainstem must generate revenues of over <br />$30 million by the year 2015 to meet this requirement. To compensate <br />for the added responsibility, an increase is forced into the power <br />rate. A comparison study based upon Western's 1993 Brochure Power <br />Repayment Study demonstrates that the power rate is increased <br />1.11mill/kWh due to the apportionment requirement associated with all <br />assistance to participating projects. <br /> <br />Apportionment Effects on Revenues <br /> <br />Just as the Section 5(e) apportionment formula affects the rate paid <br />for CRSP hydropower today, by the same token, it also affects the <br />amount of revenues currently returned to the Treasury. The same <br />comparison study by Western which identified an increase of <br />1. 11mill/kWh due to apportionment, also estimated that apportionment <br />increases returns to the Treasury by $6,219,000 per year. Thus, an <br />additional $6 million in revenue is generated in the year 1995 for <br />apportionment requirements that are due through the year 2057. This <br />additional revenue is not held over until needed for apportionment <br />requirements in the year 2015, but applied to current obligations <br />pursuant to Section 5(d) and contributes to an accelerated repayment <br />of existing debt to the Treasury. Using the same comparison study, <br />Exhibits 4 and 5 demonstrate the shift, due to apportionment, in the <br />timing of repayment for mainstem costs allocated to the electric <br />plant, replacements, additions, mainstem costs allocated to <br />irrigation, and assistance to participating projects. For example, <br />under apportionment, payments are made to the electric plant <br />obligation between the years 2009 and 2014. However, without <br />apportionment the repayment of this obligation is extended to the <br />years 2018 through 2024. <br /> <br />Strictly from a with and without apportionment view, the extension of <br />repayment by the elimination of apportionment language is considered a <br />cost to the Treasury in present value terms. Using the most current <br />Treasury borrowing rate of 7.71 percent (September 1994 average, 30- <br />year constant maturities), Exhibits 4 and 5 compare the present value <br />of revenues projected to the year 2060 with and without the <br />apportionment requirement. A summary of the comparison, as provided <br /> <br />3 <br />