Additional Information Concerning Irrigation Project Costs and Pricing Federal Power

RCED-86-18FS: Published: Oct 10, 1985. Publicly Released: Oct 10, 1985.

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Pursuant to a congressional request, GAO examined the current basis the Department of Energy's Power Marketing Administrations (PMA) use to price federal electric power and transmission services, specifically: (1) a list of irrigation assistance projects, their costs, and their construction status; and (2) the current PMA practice of repaying irrigation assistance costs on or near the end of the repayment period versus making annual payments over the entire repayment period.

GAO found that: (1) the Bonneville Power Administration (BPA) did not separate repayment costs into generation and transmission components prior to its 1985 rate filing; (2) more reliable data could have been obtained from BPA repayment studies; (3) deferring payment of irrigation assistance to the future resulted in decreased revenues to the Treasury since no interest is charged on the irrigation assistance principal; (4) revenues could be increased if irrigation assistance were to be repaid in annual installments over the life of the repayment period instead of repaying the entire amount at or near the end of the period; and (5) if the PMA deferred payments on the federal investment in generation and transmission facilities to compensate for the accelerated payments on irrigation assistance, then the potential benefits to the Treasury may not be realized.

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