Bureau of Reclamation: Information on the Federal Financial Commitment and Repayment Status of the Central Arizona Project

GAO discussed the Bureau of Reclamation's Central Arizona Project (CAP), focusing on the: (1) total cost for the construction of CAP; and (2) Central Arizona Water Conservation District's ability to repay allocated project costs. GAO noted that: (1) by the time CAP is completed in 1999, the CAP total construction cost is expected to total $4.7 billion and the federal share of these costs is estimated at $1.7 billion; (2) the Bureau's costs could increase to over $2.8 billion depending on how the District's repayment dispute is resolved, how future water allocations for Indian water-rights settlements are determined, and whether non-Indian farmers default on water-distribution system loans; (3) although the District will be able to repay its allocated construction cost obligation and recover its annual operation and maintenance (O&M) expenses, it will substantially reduce its financial reserve fund; and (4) uncertainties that could substantially affect the District's ability to repay its obligation include whether reimbursable construction costs are underestimated, anticipated revenues from power sales can be realized, annual fixed O&M expenses can be recovered, and water sales to non-Indian farmers are realized.