The federal investment in the Pick-Sloan Program has nonreimbursable and reimbursable components. Infeasibility of Some Irrigation Projects Makes Repayment of Some Costs Unlikely

Because certain of the Pick-Sloan Program’s irrigation facilities will not be completed as planned, a portion of the federal investment is unrecoverable. As originally authorized in 1944, portions of the program’s power facilities and water storage reservoirs were intended for use with irrigation facilities. Some of the program’s power facilities and reservoirs are now being used in conjunction with those irrigation facilities that have been completed.As a result, the associated federal investment is now scheduled for repayment. These investments are scheduled for repayment between 2042 and 2047, according to Bureau officials. In addition, the amount of the federal investment that is considered unrecoverable will increase over time. The impact of recovering the $454 million investment through power revenues could vary significantly depending on many factors, including the amount Western passes on to its power customers. The amount of the federal investment in storage reservoirs that would be redirected for repayment through power revenues is uncertain because some of this investment could be assigned to other program purposes, thereby lessening any effect on the rates. They clarified several points about the estimate of the potential impact on the power rate of recovering a portion of the federal investment through power revenues.
Why GAO Did This Study

GAO discussed Western Area Power Administration's (WAPA) repayment of the federal investment in hydropower facilities and water storage reservoirs in the Pick-Sloan Missouri Basin Program, focusing on the: (1) portion of the investment that may not be recoverable; and (2) actions that could be implemented to recover a larger portion of the investment.

What GAO Found

GAO noted that: (1) about $454 million of the Pick-Sloan investment is not recoverable because some of the facilities were intended for use with irrigation facilities that have not been completed or are no longer feasible; (2) Department of Energy (DOE) expects the amount of federal investment that is unrecoverable to increase, since some facilities will require renovation and replacement; (3) as a result of the completion of some irrigation facilities, DOE expects about $56 million of the federal investment to be repaid between 2042 and 2047; (4) some of the $454 million investment that is considered unrecoverable could be recovered through the WAPA hydroelectric power revenues; (5) the WAPA hydroelectric power revenues cannot be used to repay the federal investment without legislative changes; (6) the impact of recovering the investment through power revenues could vary significantly depending on the terms of repayment and amount that WAPA passes on to its customers; and (7) if the WAPA passed the entire investment amount on to its customers, power rates could increase by 14.6 percent.