OCR Text |
Show The Situation Power plants constructed in the Central Valley by the Bureau of Reclamation are considered as units in the Central Valley Project. Additional power facilities proposed by the Bureau are con- sidered by it to be extensions of that project. For purposes of financial analysis and for rate making, the costs and revenues from all units in the plan would be combined into a single account. For power plants at reservoir projects under Army control, the power will be marketed by the Secretary of the Interior under terms of the 1944 Flood Control Act.8 That act provides that rate schedules will be drawn with regard for recovering the cost of producing and transmitting electric energy. This method is considered applicable gen- erally on a project-by-project basis. Power from both Bureau of Reclamation and Corps of Engineers projects will be marketed through a xegional transmission network which makes segregation of power as to source imprac- ticable. Establishment of rates on a nonuniform basis, as might result from separate consideration of the projects and their financial requirements, would be undesirable and would make accounting very difficult. Accomplishment of other phases of power planning and administration, such as the scheduling of new plants to supply load growth, budgeting of funds for operation and maintenance, and providing for modification or extension of facil- ities, will be facilitated if Federal hydroelectric projects are treated as parts of a single system in accordance with the regular practice of all utility systems. Conclusions For Federal hydroelectric projects constructed in the Central "Valley, costs and revenues should be combined in a single account for rate making and other purposes. 6. The Use of Power Revenues, Including the In- terest Component, in Financing Irrigation Developm. ents The Problem The use of power revenues, including the interest component,4 -to pay for reimbursable irrigation costs. ' Act of December 22, 1944, § 5, 58 Stat. 887, 890, 16 U.J5. C. 825s. By law int&rest must be included in the power rate for The Situation A repayment schedule was proposed by the Bu- reau of Reclamation for the Central Valley Project including the recommended but not yet authorized unit on the North Fork Kings River.5 The total investment cost allocated to irrigation under this schedule is 286 million dollars, which would be re- paid without interest. Of this 61 million dollars would be repaid by the water users. There would remain 225 million dollars which would be repaid in part from municipal water revenues ($18 mil- lion) and in part from power revenues ($207 million). This 207 million dollars would be provided as follows: 82 million dollars from the interest component on the power investment to be credited between 1945 and 1991, the period of amortization of the power investment; 125 mil- lion dollars from net power revenues (average 5.2 million dollars annually) after the completion of amortization on the power investment, to be paid between 1991 and 2015.6 Repayment would be completed by 2015. The calculations of repayment are based on pro- duction before 2015 of about 138 billion kilowatt hours of firm energy at 5.1 mills per kilowatt-hour, 20 billion kilowatt-hours of nonfirm energy at 3.3 mills per kilowatt-hour, and 40 billion kilowatt- hours of pumping power at 2.5 mills per kilowatt- hour. The use of the interest component and power revenues for repayment of irrigation costs in the Central Valley presents a different problem from that encountered in the Columbia Basin. The prospective power development is much smaller, and the need for irrigation subsidy relative to the power investment is much higher. Thus, while the interest component would be large enough to care for all possible irrigation development in the Co- lumbia Basin, this would not be the case in the Central Valley. There the interest component would have to be used during the power amortiza- tion period and the net power revenues thereafter for an additional 20 years to complete repayment of irrigation facilities. power produced by facilities on any Federal irrigation project. According to opinions of the Solicitor of the Department of the Interior, under present law, the interest component is assignable to the repayment of that part of the estimated project cost allocable to irrigation in the same project, and beyond the ability of the water users to pay. "H. Doc. No. 537, 81st Cong., 2d sess. (1950). * All years fiscal. 116 |