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<br />0389 <br /> <br />. <br /> <br />. <br /> <br />Repayreent Study and Revenue Determination <br /> <br />BuRec has prepared several repayment studies in the past <br />four years. The pre-audit July 1980 repayment study was used <br />to determine the project's initial power rate. The July 1981 <br />repayment study used data collected before BuRec agreed to the <br />cost reallocations, and an official in BuRec's Denver Regional <br />Office referred to the June 1982 study as "not very good...no <br />solid numbers." In September 1983 BuRec completed a second <br />repayment study for Fiscal Year 1982, and determined that an <br />additional $80,000- in annual income was needed to repay the <br />interest-bearing. investment allocated to power. <br /> <br />Power Rate Increase <br /> <br />On March 27, 1~81 the Western Area Power Administration <br />(WAPA) proposed an initial rate for Fry-Ark power, based on the <br />July 1980 repayment study. The rate for capacity without <br />energy was $3.11 per kilowatt (kW) per month on the contract <br />rate of delivery (CHOD). Customers are required to provide the <br />necessary pumping energy. WAPA reported that if the <br />recommended cost reallocations were to occur, then the rate <br />would have to increase to $3.55 per kW. <br /> <br />On July 10, 1981 Assistant Secretary for Conservation and <br />Renewable Energy (DOE) Joseph J. Tribble approved the lower <br />$3.11 rate on an interim basis. The rate became effective on <br />July 11, 1981 and was to remain in effect for up to twelve <br />months. Tribble noted that a subsequent rate adjustment would <br />be necessary if the recommended cost allocation changes were <br />allowed. Also on July 10, 1981, Tribble submitted the rate to <br />the Federal Energy Regulatory Commission (FERC) for approval on <br />a final basis. <br /> <br />By May 21, 1~82 FERC had not acted on the rate schedule, so <br />Tribble extended the rate on an interim basis, effective <br />July H, 1~82. <br /> <br />On June 24, 1982 FERC confirmed and approved the $3.11 rate <br />on a final basis for the period ending July 1, 1986. In regard <br />to the audit recommendations, FERC commented that "In the ell.ent <br />a higher rate is required because of a higher allocation of <br />joint costs to power, such rate should be promptly filed to <br />avoid a possible deficit situation." FERC also noted "certain <br />minor problems" in the Fry-Ark repayment study, which produced <br />a "minimal impact on required revenue levels." The problems <br />were a $200,000 deficit, use of an incorrect interest rate in <br />assessing interest expense on project replacements, and the <br />failure to assess interest expense in FY 2032. FERC <br />recommended that WAPA correct these problems in future filings. <br /> <br />64 <br />