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<br />" '1 <br /> <br />. <br /> <br />. <br /> <br />0382 <br /> <br />CHAPTER 6 <br /> <br />FRYINGPAN - ARKANSAS PROJECT <br /> <br />Using obsolete methodology and incorrect data, the Bureau of <br />Reclamation has misallocated a significant share of the costs of <br />the project. The net effect of the errors uncovered by the <br />Inspector General was to shift major portions of project costs from <br />reimbursable co non-reimbursable accounts. Power rates have been <br />inadequate from the day the project began power operations, and the <br />Bureau committed to deliver water in full knowledge that its cost <br />allocation decisions will cost the Treasury more than ~200 million <br />during the project's repayment period. <br /> <br />BACKGROUND <br /> <br />Description of the Project <br /> <br />The Fryingpan-Arkansas Project (Fry-Ark) was authorized by <br />Public Law 87-590, in August 1962, and funds to initiate <br />construction were first appropriated in Fiscal Year 1964. <br />Fry-Ark is a multipurpose project in southeastern Colorado, <br />which diverts water from the tributaries of Colorado's <br />Fryingpan River on the Western Slope of the Continental Divide <br />to the more populated, arid, and agricultural Eastern Slope. <br /> <br />The Western Slope portion of the project includes a <br />collection and delivery system that involves a series of <br />canals, conduits, and tunnels. The collected water is <br />delivered via a 5.4-mile tunnel through the Continental Divide <br />where it eventually merges with the east-flowing Arkansas <br />River. <br /> <br />To compensate the affected West Slope citizens for the loss <br />of diverted water, the project provides storage behind the <br />Ruedi Dam on the west-flowing Fryingpan River. The Ruedi <br />Reservoir is used primarily to provide replacement water and to <br />regulate the flow of the Fryingpan River. <br /> <br />The Eastern Slope portion of the project includes five <br />dams; the 200-megawatt Mt. Elbert pumped-storage plant located <br />at Twin Lakes; and two extensive, large capacity conduits for <br />delivery of municipal and industrial (M&I) water to the <br />Foundation and Arkansas Valleys. The second unit of the Mt. <br />Elbert power plant was separately authorized by Congress in <br />1974, and construction began in 1976. <br /> <br />57 <br />