UNITED STATES
DEPARTMENT OF THE INTERIOR
BUREAU OF RECLAMATION

AND

UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION

AGREEMENT ON COLORADO RIVER STORAGE PROJECT
POWER REPAYMENT STUDIES

Over the last several years, the Colorado River Energy Distributors Association (CREDA) has disagreed with the Western Area Power Administration (Western) on the appropriate level of rates for power generated by the Colorado River Storage Project (CRSP). This difference of opinion resulted in CREDA's filing of protests as to CRSP rates before the Federal Energy Regulatory Comission (FERC). The FERC in its decision on Western's FY-1977 rate, held that future CRSP participating projects should not be included in the power repayment study unless the Bureau of Reclamation (Bureau) made a good faith showing of a reasonable expectation that a project or a separable feature thereof would be constructed.

Since the FERC ruling, Western, the Bureau, and CREDA have explored mutually agreeable means of implementation of the reasonable expectation standard. General agreement has been reached as to the adoption of certain policies, methods and standards that will satisfy the FERC test, the concerns of CREDA, Western and the Bureau and meet the requirements of the CRSP act. The following policies, methods and standards will be used as a result of these agreements in the development of CRSP power rates, commencing with the next CRSP rate revision to be promulgated by Western, but not including any substitute rates necessitated by the rejection of any CRSP power rates currently with the FERC.

1. The parties hereto agree that the power repayment study must include all authorized CRSP participating projects. The Bureau agrees, however, to schedule repayment requirements for projects in an indefinite status such that they do not control the rate under consideration. Participating projects or separable features thereof shall not be included in the rate setting years of the power repayment study unless a definite plan report is prepared, water rights are substantially acquired, environmental clearances are obtained and repayment contracts with water users are signed. Exceptions to this standard may be exercised at the discretion of the Commissioner of the Bureau (i) on behalf of Indian projects, (ii) for the Animas-La Plata project, and (iii) where Congress has appropriated construction funds.
2. The parties further agree that the water depletion schedules for power repayment study purposes shall be consistent with construction schedules for participating projects.
3. The parties also agree that the application of revenues in the CRSP power repayment study, to the extent allowed by law, will recognize that all CRSP storage unit investments must be repaid within fifty years but need not be repaid prior to the repayment of any participating project costs. Participating project costs will be repaid in a manner that minimizes their effect upon CRSP revenue requirements which will require a deviation from the policy of paying the highest interest-bearing investments first to the extent possible while repaying all investments within their repayment periods.

The principles agreed upon above will be proposed for implementation in accordance with the notice and comment provisions of the Administrative Procedure Act and the Department of Energy Organization Act, to the extent applicable. Such implementation will be proposed as part of the next CRSP rate adjustment by Western.

Western will hold an informal meeting for the discussion of anticipated rate revisions with the power customers prior to the preparation of a Federal Register notice announcing new CRSP power rate adjustments and the Bureau will participate in such meetings.

Upon execution, this agreement will become effective and will be implemented as soon as is reasonably practicable.

Dated this 26th day of August, 1983.