Power Marketing Administrations:

Cost Recovery, Financing, and Comparison to Nonfederal Utilities

AIMD-96-145, Sep 19, 1996

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Pursuant to a congressional request, GAO reviewed three power marketing administrations' (PMA) cost recovery practices, and financing for capital projects, focusing on how these PMA differ from nonfederal utilities.

GAO found that: (1) the three PMA are not recovering through power rates some costs related to producing and marketing federal hydropower; (2) PMA are not recovering the full costs of providing postretirement health benefits and Civil Service Retirement System pensions to agency employees; (3) the Western Area Power Administration will probably not be able to recover the construction costs of its Washoe Project because it is not generating sufficient revenue to cover its operating and maintenance expenses and repay the federal investment; (4) Western is not required to repay the $454 million allocated to its incomplete irrigation facilities; (5) PMA rely primarily on debt financing for their large capital construction projects; and (6) compared to other nonfederal utilities, PMA benefit from their reliance on inexpensive hydropower, lower construction costs, and tax-exempt status.