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ENCLOSURE IV ENCLOSURE IV 



In a July 1985 report, we noted that the Congress, in a 1966 

 law (P.L. 89-561), had limited BPA's authority to provide 

 irrigation assistance, as well as the amount of the assistance. We 

 noted that the law represented an attempt by the Congress to 

 balance the somewhat conflicting interests of power users and 

 irrigators. The law provides that (1) irrigation assistance may be 

 paid only from net revenues (defined by the act as revenues not 

 required to repay project costs allocated to power and irrigation 

 assistance authorized before the passage of Public Law 89-561; (2) 

 construction of irrigation projects after 1966 will be scheduled so 

 that any irrigation assistance provided to those projects, together 

 with already authorized irrigation assistance, will not require an 

 increase in BPA rates; and (3) the total amount of irrigation 

 assistance may not average more than $30 million per year in any 

 period of 20 consecutive years. 



We found that, according to the legislative history of the 

 1966 law, the key to balancing the interests of power users and 

 water users is the scheduling of construction of post-1966 

 irrigation projects. The Congress reasoned that the repayment of 

 the irrigation costs of any project authorized after 1966 would not 

 be necessary until 2026 at the earliest, and probably not until 

 2030 or 2035. By that time, the Congress reasoned, BPA should have 

 substantially reduced its power-related costs and could shift its 

 revenues to the repayment of irrigation-related costs without 

 having to increase power rates . 



In a 1986 review of a proposed expansion of irrigation 

 facilities in the Columbia Basin Project, we examined who would 

 repay the costs of constructing the facilities and what share of 

 the total costs each group would pay. We found that the main 

 difference between the Bureau's analysis and the other two analyses 

 that we reviewed was that the Bureau's analysis did not take into 

 account the interest subsidy granted to users of federal 

 irrigation. According to the two studies that took the subsidy 

 into account, the U.S. Treasury would pay 74 percent or 82 percent 

 of the total cost of the project. In contrast, the Bureau's study, 

 which did not consider the interest subsidy, showed that irrigators 

 would pay the largest share (46 percent) of the total cost and the 

 Treasury would bear no expense in the project. 



15 GA0/RCED-93-133R, GAO Products on Bonneville Power Adninlstration 



