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Impact of Annual Repayment on Efficient Use of Power Revenues

by R. L. Rodenburg, Western Area Power Administration, Golden, CO, USA,
Dennis R. Carlin, Western Area Power Administration, Golden, CO, USA,



Document Type: Proceeding Paper

Part of: Water Power '87

Abstract:

Congressional efforts to control Federal budget deficits are leading to new requirements for fixed annual repayment of investment in power and irrigation facilities. Traditionally, investments earning the highest rate of interest are repaid first to minimize interest expenses. In a deviation from traditional repayment practice, however, proposals advanced to construct the Animas-LaPlata Unit of the Colorado River Storage Project, 1986 legislation reformulating the Garrison Unit of the Pick-Sloan Missouri Basin Program and front-end financing by the State of Wyoming for Buffalo Bill Dam and Shoshone Powerplant provide that these new investments must be repaid with fixed annual payments. Repayment periods are 30 and 40 years respectively, significantly shorter than the 50-year maximum traditionally used. Advocates of front-end financing often plan to obtain needed funds from sales of bonds, with debt service to be provided from power revenues through annual payments over a 30- or 35-year period. Proposals from the Public Power Development Corporation are an example of this approach.

Subject Headings: Investments | Electric power | Financing | Revenues | Payment | Legislation | Energy consumption | United States | Colorado River | Missouri | Wyoming

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