Rates and Repayment

The Reclamation Project Act of 1939 specified the role of power users in repayment. Section 9(c) in part: "Any sale of electric power...made by the Secretary in connection with the operation of any project or division of a project, shall be...at such rates as in his judgment will produce power revenues...to cover an appropriate share of the annual operation and maintenance cost, interest on an appropriate share of the construction investments...and such other fixed charges as the Secretary deems proper: Provided further that in said sales...preference shall be given to municipalities and other public corporations or agencies, and also to cooperatives and other nonprofit organizations financed...by loans made pursuant to the REA Act of 1936..."

Specific legislation authorizing each  often addressed repayment as well. Executive agencies which administer the specific projects have developed procedures to determine these repayment obligations.

Sales of electric power repay all costs associated with power generation. Western must establish power rates sufficient to recover operating, maintenance and purchase power expenses and repay the Federal government's investment in building these generation and transmission facilities within 50 years. Rates must also be set to cover certain non-power costs Congress has assigned to power users to repay, such as irrigation costs in excess of water users' ability to repay, interest expenses on the unpaid balance of power-related principal and replacement of power facilities within the expected service life of the replacement.

Western conducts annual power repayment studies to ensure power rates for each project are adequate. Data in the study include historic expenses and investments already repaid from power revenues as well as projections for future years. Also listed are estimated annual repayment of generation and transmission investment costs throughout the project's repayment period. More specifically, the studies detail year-by-year revenues and expenses, estimated amounts of investment and interest to be paid each year and the total amount of investment remaining to be repaid. Historical data is gathered primarily from accounting records through the last fiscal year. In addition to Western's marketing and billing records, generation, hydrology and project data, historical and projected figures are provided by the Bureau of Reclamation, the Army Corps of Engineers and the International Boundary and Water Commission. The Bureau and Corps also contribute hydrological forecasting data used to project resource sales and any required purchases.