Federal Power:

Recovery of Federal Investment in Hydropower Facilities in the Pick-Sloan Program

T-RCED-96-142: Published: May 2, 1996. Publicly Released: May 2, 1996.

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GAO discussed Western Area Power Administration's (WAPA) repayment of the federal investment in hydropower facilities and water storage reservoirs in the Pick-Sloan Missouri Basin Program, focusing on the: (1) portion of the investment that may not be recoverable; and (2) actions that could be implemented to recover a larger portion of the investment. GAO noted that: (1) about $454 million of the Pick-Sloan investment is not recoverable because some of the facilities were intended for use with irrigation facilities that have not been completed or are no longer feasible; (2) Department of Energy (DOE) expects the amount of federal investment that is unrecoverable to increase, since some facilities will require renovation and replacement; (3) as a result of the completion of some irrigation facilities, DOE expects about $56 million of the federal investment to be repaid between 2042 and 2047; (4) some of the $454 million investment that is considered unrecoverable could be recovered through the WAPA hydroelectric power revenues; (5) the WAPA hydroelectric power revenues cannot be used to repay the federal investment without legislative changes; (6) the impact of recovering the investment through power revenues could vary significantly depending on the terms of repayment and amount that WAPA passes on to its customers; and (7) if the WAPA passed the entire investment amount on to its customers, power rates could increase by 14.6 percent.

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