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<br />. <br /> <br />. <br /> <br />" <br /> <br />0399 <br /> <br />Therefore. storage project power rates must be set at levels to <br />produce sufficient total net revenues which. when credited to <br />the states. will provide the amount of financial assistance <br />required to repay the costs of participating projects in each <br />respective state. <br /> <br />In September 1979 BuRec decided that the amount of funds <br />needed to repay investment costs of power facilities installed <br />in participating projects located in Wyoming and Utah (mostly <br />Utah) should also be deducted from storage project revenues <br />before such revenues are apportioned. The result of this <br />decision to switch apportionment procedures is to allow power <br />rates that are insuffi~ient to repay the costs of participating <br />projects in Utah. Inspector General Brown questioned whether <br />this revised apportionment method, which BuRec used to <br />determine proposed power rates. was in accord with <br />CRS~'s authorization. If the method is inappropriate, the pro- <br />po~ed power rates would be inadequate and the result would be a <br />$234 million shortage of required revenue during the projects' <br />repayment periods. However, by March 1982 when Inspector <br />General Richard Mulberry considered the audit resolved. the <br />proposed power rate had been reduced even fu;ther, resulting in <br />a $288 million .shortage of required revenue._/ <br /> <br />(3) Repayment of Irrigation Costs <br /> <br />BuRec limits its water charges to irrigators to an amount <br />based on "ability to pay." In 1978 BuRec decided that <br />contracts would provide for recalculation and renegotiation of <br />ability to pay every five years. BuRec indicated that this <br />procedure applied to wqter service contracts and not to <br />**/ <br />repayment contracts.__ <br /> <br />Inspector General Brown believed that this policy should <br />apply to repayment contracts. The 1965 repayment contract with <br />CUWCD set forth $16.4 million as the irrigator's ability to <br />pay. By lY78 the irrigator's ability to pay had risen to $69 <br />million, yet BuRec's policy prohibited adjustment of the <br />repayment contract to reflect this change. <br /> <br />:/NrIF staff computation (see Appendix VI). <br /> <br />**/ <br />__ A repayment contract establishes provisions for pay- <br />ment to the Treasury of construction costs connected with M&I <br />and irrigation water features. This type of contract requires <br />fixed annual payments over a given number of years with no re- <br />newal provisions. A water service contract establishes provi- <br />sions for delivering water. This type of contract has a term <br />of 40 years with provision for renewal and requires payments <br />based on a charge for each acre-foot of water used. <br /> <br />84 <br />