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Show APPENDIX VI VI 49 44 COLORADO RIVER STORAGE PROJECT In inv estimation some of the more logical and import tint of these surest ions we: (1) Principle 5 should provide that the upper basin fund would be reimbursed for the cost of nonfinn or "other energy*' used from the upper basin powcrplants for the purpose of making up Hoover deficiencies at the dollar value of such energy in the same manner that the fund would be reimbursed for money used to purchase replacement energy. (2) The language of principle 5 should make clear that the upper basin fund will not be used to guarantee generating capacity, and it should also make clear that any money used for the purchase of replacement energy on an incremental fuel cost basis is to be made at a predetermined rate that will not include a component for plant amortization or for the construction of new generating capacity. (3) Principle 8 and the explanation thereof should be amended to make it clear that the Secretary is not committed to maintain Lake Mead above elevation 1,123 after Lake Powell reaches elevation 3,490. This is probably what is intended because the Dominy letter states that "the principle enunciated has not been changed." (4) It has been suggested that the Colorado River development fund should be used for purchasing energy to make up the deficiencies in basic firm energy generation at Hoover Dam during the upper basin reservoir filling: period. This procedure would fulfill several objectives. First, it wrould provide a means whereby the Secretary could fulfill his contracts with the Hoover power allottees without reaching into either the basin fund or energy generated by storage units of the upper basin. Second, it would eliminate the accrual of large interest charges against the upper basin fund that would result if reimbursement to the fund were to be postponed until after 1987, because the Hoover power deficiencies could be paid for on a current or almost current basis. This proposal is discussed in the memorandum dated April 12, 1961, from Ival Goslin, chief engineer and secretary of the Upper Colorado River Commission, to the Honorable James K. Carr, Under Secretary, Department of the Interior, wherein Mr. Goslin discusses the general principles for fulfilling Upper Colorado River Basin reservoirs. I recommend that this proposal be thoroughly explored by the Department. It appears to me that the inherent weakness of your presently proposed general principles (June 1, 1961) lies in the fact that you guarantee to the lower basin allottees the fulfilling of their power contracts, but have not provided a guarantee of even partial reimbursement to the upper basin fund. You have expressed an intent in your "additional regulation No. 1" to partially reimburse the upper basin fund after 1987, but have provided no means of implementing this intent. It appears to me that some congressional authority through new or amendatory legislation may be required if your criteria are finally adopted. After further study of this matter I would be glad to have the opinion of the legal division of your Department with regard to my above suggestions and any other comments that you may have. I will be interested in any suggestions that you may have as to the |