OCR Text |
Show municipalities and REA's; and other power revenues, in excess of those required to meet operation, maintenance and amortization costs of the power plants, shall be available to help pay off the other costs of water resource projects. In this connection, the suggestion has been made in certain quarters that REA cooperatives, for instance, ought not to have to pay for power a rate in excess of that required to operate, maintain and return the cost of the power generation and distribution plants themselves. Such a conception fails to take account of the fact that, in the Western States, at least, the farmers in the main owe their very existence to water resource development projects which could not, in turn, exist without power as a paying partner. So far as the Upper Colorado River Basin is concerned in any event, it appears clear that even the large scale irrigation development which is in the offing will not require financial assistance through any special component of power rates, but that interest returned on the power investment will be sufficient therefor. In other words, those irrigation costs of our prospective development that are beyond the reasonable ability of prospective water users to repay within a reasonable period of years can be financed through revenues derived from the interest component of power rates as provided by existing Reclamation Law, and, so long as the traditional policy of application of such interest revenues to return of costs permits, the REA cooperatives and others are assured of reasonable rates for power. In this connection, it should be borne in mind that the report on the Colorado River Storage project and participating projects (a report which has been favorably commented upon by the five Upper Basin States) envisages the establishment of a basin account that recognizes the financial interrelationship of projects participating and that provides for financial assistance from power revenues. This basin account recognizes the essential unity of the Upper Colorado River Basin. It serves a two-fold purpose. First, in that it averages the cost of power development throughout the Upper Basin, thus diffusing, by means of uniform rates, the benefit of the Upper Basin's power developments; and, second, in that it provides a means whereby proposed irrigation developments may be judged on their intrinsic merits, that is to say, on the basis of their benefit-cost ratios, without regard to the question whether a particular development has associated with it a power development of magnitude sufficient to repay those irrigation costs that are beyond the ability of the water users to repay. This answers the fears expressed by the Presidential Commission (referred to by Mr. Scheidt, see page 20 of this report) that "Dependence on power revenues . . . may result in failure to develop some good land because of the lack of power resources in that area ..." We regard a basin account -22- |