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Show trie power development has been recommended or contemplated, Federal power developments could be included either in a general Missouri Basin ac- count, or in a regional account embracing adjacent basins supplying power to that section of the basin. The decision should depend on which solution is determined to be most efficient for planning and rate-making purposes. 5. The Use of Power Revenues, Including the In- terest Component, in Financing Irrigation De- velopment The Problem Use of commercial power revenues, including the interest component, in partial payment of reim- bursable irrigation costs. The Situation In the Missouri Basin program, which is the co- ordinated program of the Bureau of Reclamation and the Corps of Engineers as included in the 1944 Flood Control Act, $680,472,000 of investment cost, as of July 1950, was eventually allocated to elec- tric power, and $2,333,251,000 to irrigation, in- cluding $226,824,000 of power investment assigned to irrigation pumping. The water users and recla- mation districts would be expected to repay $814,- 668,000, or 35 percent of the irrigation allocation, over a 40-year repayment period. After applying the expected sum of $31,661,000 from municipal water revenues, the remaining irrigation costs of $1,486,922,000 would be repaid from net power revenues, including the interest component.41 Power rates would be established at levels which would pay annual operation, maintenance, and replacement costs, interest at 3 percent per annum on the investment allocated to power, and such other fixed charges as the Secretary deems proper. The wholesale power rates proposed were 5.5 mills per kilowatt-hour for firm commercial energy, 3 mills for secondary, and 2.5 mills for irrigation pumping energy. It was estimated that during the 43-year amorti- zation period, and assuming a 23-year power devel- opment period during which interest would not be charged, $379,712,000 would accrue from the interest component in the commercial power rates. If this sum could be used to help pay irriga- tion costs, there would still remain $1,107,210,000 of irrigation costs unpaid. To liquidate this re- maining cost it is proposed to use all net power revenues, amounting to $29,433,107 annually (gross revenues minus operation, maintenance, overhead, replacement and interest, already applied to irriga- tion-subsidy purposes) over a period of 38 years be- yond the 43-year commercial power amortization period. Provision would be made for expected replacements to maintain plants in full operation throughout the 81-year period involved. For some facilities, this assumed useful economic life is some 30 years greater than that generally used for Federal power developments. If the interest were not applied to irrigation re- payment, an additional $379,712,000 would have to be obtained from other sources. To pay this cost from net power revenues of $29,433,107, esti- mated to accrue annually after amortization of the power investment, would extend the payout period about 13 years. Under these assumptions the total payout period would be about 93 years. The fig- ures below show the estimated annual sales of elec- tric energy, revenues, and deductions at full production.42 Estimated by the Department of the Interior. Deductions: Operation, maintenance, and overhead... $8, 686, 585 Provision for replacement.............. 6, 944, 609 Total.............................. 15, 630,194 Net revenues............................. 29, 433,107 Accordingly, if either of these schedules were used, including the use of the interest component, irrigation repayment would have little effect on the power rates during the amortization of the power investment. Thereafter, however, power rates would be considerably higher for the period 42 Allowances have been made for losses in computing sales of electric energy. 251 ^r. r Total sales Gross »* Type of power ofcnergy revenue Rate Mills per kilo-7,000 kilo- watt-watt-hours hour Irrigation pumping 1,158, 566 $2, 896, 415 2. 5 Firm................. 5,683,299 31,258,145 5.5 Nonfirm.............. 3,636,247 10,908,741 3.0 Total............10, 478,112 45, 063, 301........ |
