127 



DISCUSSION 



I. Pickaround and History of Hydroelectric Project Purpose Allocations anri 

 BPA's Obligation to Repay the Powpr P urpose Share of Those Allocation;; ^ n 

 the Treasury 



Section 4(h)(10)(C) of the Northwest Power Act directs BRA to treat 

 expenditures In excess of the power share of a hydroelectric project's cost as 

 "payments for other project costs for which BPA Is responsible under law." 

 H.R. Rep. No. 96-976. 96th Cong. 2d Sess.. pt. 2, at 45 (1980). To understand 

 how this accounting proylslon works. It Is Important to understand how the 

 power purpose share of hydroelectric project costs Is determined and repaid, 

 and the project costs for which BPA Is responsible under existing law. 



A. BPA Is Obligated to Recover Its Costs and Repay the Federal 

 Investment in the Hvdropower System Through its Rates . 



Congress established BPA in the Bonneville Project Act of 1937 to market power 

 generated at the Bonneville Dam, and to construct transmission lines to 

 deliver that power to wholesale purchasers. 16 U.S.C. §§ 332-8321. The BPA 

 Administrator's authority to market power expanded over the years as other 

 Federal dams were built in the Pacific Northwest by the Army Corps of 

 Engineers (Corps) and Bureau of Reclamation (Reclamation). S££, e.g. . Flood 

 Control Act of 1944, 16 U.S.C. § 825s; Exec. Order No. 8526, 5 Fed. Reg. 3,390 

 (1940); i££ also . Aluminum Co. of Am. v. Central Lincoln Peoples' Util. Dist. . 

 467 U.S. 380, 386 n.5 (1984). The combined generation and transmission 

 facilities became known as the Federal Columbia River Power System (FCRPS). 

 With the passage of the 1974 Federal Columbia River Transmission System Act. 

 16 U.S.C. §§ 838-838k (Transmission System Act), the Administrator was, with 

 minor exceptions, "designated as the marketing agent for all electric power 

 generated by Federal generating plants in the Pacific Northwest" constructed 

 by the Corps and Reclamation. 16 U.S.C. § 838f. Today, BPA markets power 

 from 30 Federal hydroelectric projects. 



The projects for which BPA Is designated as the power marketing agent are 

 generally multiple-purpose projects. This means the projects serve multiple 

 purposes such as power production, navigation, recreation, flood control, 

 irrigation, fish and wildlife enhancement, and other miscellaneous purposes.^' 



BPA Is not responsible for recovering all project costs. Rather, with the 

 limited exception of Irrigation assistance discussed below, BPA's 

 responsibility for project cost recovery extends only to recovering costs 

 properly allocable to the FCRPS. These costs are sometimes referred to as 

 reimbursable costs because BPA reimburses the Treasury for the Federal 

 investment allocated to the FCRPS. ^' 



BPA's statutory ratesettlng directives express BPA's responsibility for 

 project cost recovery. Section 7 of the Bonneville Project Act directs BPA to 

 establish rates for the sale of power to recover "the cost of producing and 



^' S££. e.g. ■ Bonneville Project Act, 16 U.S.C. § 832; Act of August 4, 1939, 

 43 U.S.C. § 485h(a)-(b); Federal Hater Project Recreation Act, 16 U.S.C. §§ 

 4601-12. 13, 18; Flood Control Act of 1962, 16 U.S.C. § 460d. 33 U.S.C. §§ 

 701n, 701r-l. 701s; S.' Rep. No. 2258. 87th Cong., 2d Sess. 141 (1962); Flood 

 Control Act of 1950, 33 U.S.C. §§ 701-1 £l seq. : River and Harbor Act of 1945, 

 33 U.S.C. §§ 545b, 603a; Act of August 30, 1935, ch. 831, 49 Stat. 1028. 1039; 

 Columbia Basin Project Act, 16 U.S.C. §§ 835 £i seo. : Hungry Horse Dam Act, 43 

 U.S.C. §§ 593 £i ifii..; Reclamation Act of 1902, 43 U.S.C. §§ 371 £i seo. : 

 Reclamation Act of 1939, 43 U.S.C. §§ 485 £i seo. : H.R. Rep. No. 1507. 80th 

 Cong., 2d Sess. 2 (1948). 



^' Conversely, non-reimbursable costs are project costs for which BPA has no 

 reimbursement obligation. Such costs generally benefit only a nonpower 

 purpose. 



