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<br />0400 <br /> <br />. <br /> <br />. <br /> <br />(4) Interest Rate for Replacements and Additions <br /> <br />Inspector General Brown determined that BuRec understated <br />interest costs on future replacements and additions to CRSP <br />facilities by basing such costs on the project interest rate <br />(~ 5(f) of the CRSP Act) rather than the rate fotmula set forth <br />by Secretarial Order 2929 (January 29, 1970). In order to more <br />closely reflect the current interest cost on government bor- <br />rowings and establish a standard formula for fixing interest <br />rates on new federal power projects and transmission facili- <br />ties, the Secretary of the Interior issued Order 2929. However, <br />on October 29, 1973, the BuRec Commissioner issued a directive <br />entitled "Implementatiori of Uniform Power Repayment Procedures," <br />exempting CRSP from the requirements of the Secretarial Order. <br />Inspector General Brown questioned whether this directive con- <br />formed with Secretarial Order 2929, and whether it was a neces- <br />sary interpretation of CRSP's authorization. <br /> <br />Shortfall as a Result of Inspector General's Findings <br /> <br />(1) <br /> <br />Shortfall due <br />limitations: <br />has now risen <br />cost) . <br /> <br />to Bonneville Unit repayment contract <br />$198 million at the time of the audit, <br />to approximately $228 million (initial <br /> <br />(2) Inadequate power revenues due to apportionment <br />policy: $234 million at the time of the audit, $288 <br />million at the time the audit was considered resolved <br />(over the life of the project). <br /> <br />(3) Failure to increase irrigator's ability to pay' $52.6 <br />million (over the life of the project). <br /> <br />Audit Recommendations <br /> <br />(1) BuRec should advise CUWCD of the date by which a <br />repayment contract, which ensures full repayment by water users <br />of federal investment costs, must be executed. BuRec should <br />also outline the options for CU\,CD and the most likely action <br />that will be taken if contract terms are not agreed upon. <br /> <br />(2) The Solicitor (Dept. of Interior) should issue an <br />opinion to determine if BuRec's method of apportioning storage <br />project revenues complies with the requirements of the CRSP <br />authorization. If found improper, BuRec should request WAPA to <br />implement power rates which will produce sufficient revenues to <br />repay participating project costs within the time period <br />established by law. <br /> <br />85 <br />