Policies Governing BPA's Repayment of Federal Investment Still Need Revision
RCED-84-25
Published: Oct 26, 1983. Publicly Released: Oct 26, 1983.
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Highlights
Federal law requires the Bonneville Power Administration (BPA) to repay the federal investment in its power generation facilities. In a follow-up to a previous report, GAO examined BPA policies regarding repayment.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Energy | The Secretary of Energy should direct BPA to replace its repayment study method of determining revenue requirements with a cost-based method incorporating a fixed annual repayment schedule. Incorporated into the cost-based method should be a provision that late or missed repayments incur interest costs at the higher of project interest costs or the Treasury's current cost of borrowing. |
GAO will probably review alternatives for federal power pricing methodologies in early FY 1986 and follow-up on this recommendation at that time. GAO, Treasury, and FERC have all made this recommendation and testified in its favor, but it is politically sensitive since it will probably result in higher electric rates in the northwest.
|
| Department of Energy | The Secretary of Energy should abandon the policy of repaying highest interest projects first and require scheduled repayment of each increment of the federal investment in the power system based on its cost and repayment period. If revenues in any given year exceed the annual debt service, BPA should be authorized to apply surplus revenues to the highest interest-bearing projects. |
GAO will probably review alternatives for federal power pricing methodologies in early FY 1986 and follow-up on this recommendation at that time. GAO, Treasury, and FERC have all made this recommendation and testified in its favor, but it is politically sensitive since it will probably result in higher electric rates in the northwest.
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AmortizationElectric utilitiesEnergy suppliesFinancial analysisFinancial managementInterest ratesLoan accounting systemsReimbursements to governmentUtility ratesPower rates