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. . ; . In accordance with Public Law (P.L.) 84-485, power revenues must be sufficient to: (1) pay all operation, maintenance, and replacement costs (OMIIR) allocated to power; (2) pay all OM&R costs of storage units allocated to irrigation, except for the portion paid by municipal and industrial (M&J) revenues; (3) repay with interest ,within 50 years the capital investments all ocated to power; (4) repay wi thout interestwithi n 50 years the i rri gati on investment of the storage units, except for the portion repaid by M&I revenues; (5) repay without interest within 50 years plus development periods all irrigation investments of the participating projects beyond the ability of the irrigators to repay and which are not repaid by M&I revenues. Al so, in accordance with Public Law 93-320, power revenues must be sufficient to pay the sa 1 in'ity control construction and OM&R costs whi ch are allocated to the Upper Colorado River Basin. Repayment studies were made by Western in February 1980 to determine the power revenues needed to accomplish timely repayment of the investment costs assigned to the power function. The studies indicated that a rate increase of 25.8 percent will be needed. A comparison of the existing rates under Rate Schedules UC-F2 and UC-FP2 effective June I, 1977, and the proposed rates under Rate Schedules SP-Fl and SP-FPl is as follows: Firm Capacity and Energy Exi st i ng Proposed Demand charge $1.34 per kW-month $1.76 per kW-month Energy charge $0.0034 per kWh $0.0041 per kWh Composite rate @58.2% L.F. $0.00655 per kWh $0.00824 per kWh Peaking Capacity wi thout energy $1.34 per kW-month $1.76 per kW-month At 58.2 percent load factor, the proposed rate is 8.24 mills per kWh, an increase of 1.69 mills/kWh or 25.8 percent over the existing rate. For contract violations involving unauthorized overruns, the rate will be 10 times the above rates. II I. Alternatives to the proposed rate adjustment 1. Do not adjust the power rates. Discussion: Consideration was given to the alternative of not adjusting the power rates. However, P.L. 84-485 requires that power revenues must be sufficient to pay a substantial portion of the operation, maintenance and replacement costs and repay much of both the interest-bearing and interest- free investment for the storage units. Power revenues must also pay a substantial portion of the interest-free investment of the participating projects. Public Law 93-320 requires that CRSP power revenues pay the salinity control construction, and OM&R costs which are allocated to the Upper Colorado River Basin. Based on the legislation, Western must pursue the rate adjustment that is needed, and option 1 is not a viable alternative. " 2