WSP06943

• File Number: 8220.106
• Description: Animas-La Plata
• State: CO
• Basin: San Juan/Dolores
• Water Division: 7
• Date: 7/1/1994
• Author: USDOI-OIG
• Title: Audit Report - Development Status of the Dolores and the Animas-La Plata Projects - Bureau of Reclamation
• Water Supply Pro - Doc Type: Report/Study

requiring full recovery of the incremental5 operation and maintenance costs related
to providing water service prior to project completion,

PRIOR AUDIT COVERAGE

Since 1988, the Office of Inspector General has issued two audit reports on cost
allocation and repayment issues on the Colorado River Storage Project and its
participating projects, which include the Dolores and Animas-La Plata Project The
reports are as follows:

- "Review of the Timely Recovery of Irrigation Investment Costs - Colorado River
Storage Project, Bureau of Reclarnation" (No. 89-67), issued in April 1989, concluded
that the Bureau's policy of repaying interest-bearing power debt before recovery of
interest-free irrigation-assistance obligations has substantially reduced repayment
revenues to the U.S, Treasury, The Bureau stated that legislation would be required
to implement our recommendation for concurrent debt repayment; however, no
legislation had been introduced as of the completion of our current review,

'.

t.
~

- "Review of the Financial Management of the Colorado River Storage Project,
Bureau of Reclamation" (No. 88-45), issued in February 1988, concluded that the
Bureau had (1) allowed cost overruns on participating projects, including the Dolores
Project, to go unnoticed by indexing the costs and reporting project authorized
ceilings as a group rather than on an individual basis; (2) reduced future cost
recoveries on participating projects through modifying cost allocations to
accommodate power development; and (3) extended repayment periods from 50 to
60 years to recover costs allocated to municipal and industrial supplies. Although
the Bureau did not agree to change its policies regarding project cost ceilings and
cost allocations, it did agree to provide the Congress with additional information
regarding participating project costs and changes in cost allocation methodologies.
In addition, while the Bureau stated that it could not unilaterally change the cost
recovery periods in existing contr?cts, it did agree to limit recovery periods to
50 years in future contracts.

F,

N
(~
..,
..
,.
'.'

~
~t:.

The Office of Inspector General and the General Accounting Office have also issued
reports on cost allocation issues of the Central Arizona and Central Utah Projects
as follows:

'.'
..
.,
10,
:,':.:
,.,
\4
~
?-'~
'1.

"Cost Allocation and Repayment, Central Arizona Project, Bureau of
Reclamation" (No. 92-1-1151), issued in August 1992, concluded that continued
inclusion of indirect irrigation benefits in the cost allocation of the Project

5Incremental costs are defined as the normal operation, maintenance, and racility replacement costs
associated with the delivery or water. Such costs include the cost or power ror pumping and all
increased labor and administrative costs associated with interim water deliveries.

7