128 



transmitting such electric energy. Including the amortization of the capital 

 Investment over a reasonable period of years." 16 U.S.C. § 832f. Section 7 

 requires that the rates be "based upon an allocation of costs made by the 

 Federal Power Commission" and that, with regard to costs of the Bonneville 

 Project, "the Federal Power Commission may allocate to the costs of electric 

 facilities such a share of the cost of facilities having joint value for the 

 production of electric energy and other purposes as the power development may 

 fairly bear as compared with such other purposes." Id. 



Section 9 of the subsequently enacted Transmission System Act provides that 

 power marketed by BRA shall be sold under rate schedules drawn "having regard 

 to the recovery ... of the cost of producing and transmitting such electric 

 power. Including the amortization of the capital Investment allocated to power 

 over a reasonable period of years" and certain Irrigation costs. 16 U.S.C. 

 §§ 838g, 8381(b)(9). 4' This language Is virtually identical to language In 



Section 5 of the Flood Control Act of 1944. S££ 16 U.S.C. § 825s. 



Section 7(a)(1) of the Northwest Power Act Incorporates the ratemaklng 

 requirements of the Transmission System Act and the Flood Control Act, and 

 also provides that BPA's rates shall be established and revised "to recover. 

 In accordance with sound business principles, the costs associated with the 

 acquisition, conservation, and transmission of electric power. Including the 

 amortization of the Federal Investment In the Federal Columbia River Power 

 System (Including Irrigation costs required to be repaid out of power 

 revenues) over a reasonable period of years and the other costs and expenses 

 Incurre'd by the Administrator pursuant to this Act and other provisions of 

 law." 16 U.S.C. § 839e(a)(l). 



^' The references In the Transmission System Act to Irrigation costs, and In 

 the Northwest Power Act to "Irrigation costs required to be repaid out of 

 power revenues," (16 U.S.C. § 839e(a)(l)). refer to the exception to the rule 

 that BPA's rates recover only project costs properly allocable to power 

 production. This exception Is comnonly referred to as "Irrigation 

 assistance." A number of statutes enacted during the last fifty years 

 authorized Reclamation projects In the Pacific Northwest, and directed BPA to 

 establish its rates to repay project costs assigned to Irrigation water users, 

 but beyond their ability to repay. S££. e.g. . 43 U.S.C. § 615v (The Dalles 

 Dam). Some statutes specifically direct BPA to repay such costs from net 

 revenues, after power features are repaid and within the repayment period 

 prescribed by law. Other project authorizations, while not as specific, were 

 based on Reclamation feasibility studies which established power's allocation 

 of Irrigation costs beyond the water users' ability to pay and power's payment 

 of that obligation from net revenues. 



Reclamation determines the amount of Irrigation assistance the FCRPS must 

 provide. This determination Is based on Reclamation's estimates of the 

 Irrigators' ability to repay. The Irrigators' ability to pay Is determined by 

 Reclamation using a representative farm budget with certain adjustments. Each 

 year. Reclamation submits updated Irrigation data to BPA. BPA Includes this 

 Information In Its repayment studies and as part of Its audited FCRPS 

 financial statements. 



5^ Costs of the Bonneville Dam were allocated In 1945. On the basis of 

 studies by the Federal Power Commission staff and other data, the Chief 

 Engineer of the Army Corps of Engineers prepared and submitted a report dated 

 June 15, 1945, entitled, "Bonneville Project and Transmission System, 

 Allocation of Costs." The Commission, based on the report, made a 

 determination as to portions of the Bonneville Dam's costs allocable to power 

 purposes. 4 F.P.C. 950, 952 (1945). Allocation of costs of some other 

 projects — the McNary, Lower Granite, Little (5oose, Lower Monumental and Ice 

 Harbor projects — were made or confirmed by the Commission because authorizing 

 legislation for the projects required that their power be delivered to the 

 Secretary of Energy for disposition In accordance with laws relating to the 

 disposition of power from the Bonneville Project. River and Harbor Act of 

 1945, 33 U.S.C. §§ 545b. Those laws Include the cost allocation directive of 

 section 7 of the Bonneville Project Act. 



