# Presentation: 727280

## Financial Management

**Of Hoover Dam**

## Topics

**Brief History of Dam**
**Boulder Canyon Project Act**
**Boulder Canyon Project Adjustment Act**
**Colorado River Basin Project Act**
**Department of Energy Act**
**Hoover Power Plant Act**

## Topics (cont’d)

**Current Power Contractors**
**Uprating Program of the Hoover Power Plant**
**Cost of the Uprating Program**
**Applied & Unapplied Uprating Credits**
**Example of Over Applied Uprating Credits**
**Example of Under Applied Uprating Credits**

## Topics (cont’d)

**Repayment to United States Treasury (Treasury)**
**Interest Rates**
**Principal and Interest**
**Features in Repayment Status**
**Boulder Canyon Project Implementation Agreement**
**Audits**
**Replacements**

## Topics (cont’d)

**Engineering & Operating Committee (E&OC) and the Coordinating Committee**
**Ten Year Operating Plan**
**Revenue Requirement**
**Power Repayment Study**
**Rate Process Meetings**

## Construction of Dam

**Construction began in 1931**
**Dam completed in May of 1935**
**All features completed by March of 1936**

## Generators

**The 1****st**** Generator was put into operation in 1936**
**By 1941, nine more Generators were put into operation**
**Final Generator placed into operation December of 1961**
**Total commercial Generators in Service - 17**
**8 on the Nevada side**
**9 on the Arizona side**

## Naming of “Hoover Dam”

**February 14, 1931, the name “Hoover Dam” was made official by a congressional act**
**After Mr. Hoover left office, the name “Boulder (Canyon) Dam was frequently used**
**April 30, 1947, the 80****th**** Congress passed legislation designating the Boulder Canyon Project’s (BCP) key structure as “Hoover Dam” to officially restore its name**

## Boulder Canyon Project ActP.L. 70-642, dated 12/21/1928

**An ACT to provide for the construction of works for the protection and development of the Colorado River Basin, for the ratification of the Colorado River compact (compact), and for other purposes**
**Authorized the sum of “not to exceed” $165,000,000.00 in advances, from Treasury, to carry out the provisions of this Act****	**
**Of this amount, $25,000,000.00 was allocated to flood control and to be repaid to the United States out of revenues**
**Available only for construction expenditures and payment of interest during construction**

## Boulder Canyon Project Act of 1928(cont’d)

**Purposes (Section 1.)**
**Flood Control on the Colorado River**
**Improve navigation of the Colorado River**
**Regulate the flow of the Colorado River**
**Provide for storage of waters**
**Delivery of the stored waters and**
**Generate electrical energy as a means of making the project a self-supporting one**

## Boulder Canyon Project Act of 1928(cont’d)

**Established the “Colorado River Dam Fund” (CRDF)**
**A special receipt account**
**To record collections that are earmarked by law for a specific purpose**
**Not to be utilized for repayment of operation and maintenance expenses unless specifically appropriated for that purpose**
**At fiscal year end, money in excess of construction, interest or operation and maintenance was returned to Treasury to the credit of miscellaneous receipts**

## Boulder Canyon Project Act of 1928(cont’d)

**	****Original legislation stated that money in the CRDF could not be utilized for repayment of operation and maintenance expenses unless specifically appropriated**
**Amended by**
**The Boulder Canyon Project Adjustment Act, Section 2, of July 19, 1940**
**Required annual appropriations for the operation, maintenance, and replacement of the project**
**And further amended by**
**The Hoover Power Plant Act, Sections 103 and 104, of August 17, 1984**
**Changed the requirement of annual appropriations.  Instead, “All receipts from the project shall be paid into the CRDF and shall be available, without further appropriation (Permanent appropriation)**

## Boulder Canyon Project Adjustment Act, (54 Stat. 774) dated 07/19/1940

**Further amended the BCP Act of 1928 by directing that the CRDF be used for **
**Operation and maintenance and replacement**
**Repayment to the Treasury with interest**
**Transfers of $300,000.00 each to the states of Arizona and Nevada in lieu of taxes, beginning fiscal year 1938 and ending fiscal year 1987**
**Transfer of $500,000.00 annually to the Colorado River Development Fund, beginning fiscal year 1938 and ending fiscal year 1987**
**Provided that the $25,000,000.00 allocated to flood control repayment would be deferred until post 1987, without interest**

## Colorado River Basin Project Act, P.L. 90-537, dated 09/30/1968 

**Required the CRDF to reimburse the Upper Colorado River Basin Fund (UCRBF) to meet deficiencies in generation at Hoover Dam during the filling of Glen Canyon Reservoir (Lake Powell)**
**Transfer of $500,000.00 annually from the CRDF to the UCRBF, beginning fiscal year 1970 and ending 1987**
**Any deficiency left at the end of fiscal year 1987 would be repaid from the CRDF surplus revenues**
**The act also directed the continuance of the $300,000.00 in-lieu-of-tax payment to the states of Arizona and Nevada**

## Department of Energy Act of 1977P.L. 95-91, dated 08/04/1977

**Established the Department of Energy (DOE) on 10/01/1977**
**Title I:  Purpose – reorganize the energy functions within the Federal Government in order to secure effective management to assure a coordinated national energy policy**
**Title III:  The current contracts for electric service and the responsibility for future marketing were transferred to DOE – Western Area Power Administration (Western)**

## Western’s Role

**Operates & Maintains the Transmission Lines**
**Markets the power**
**Administers the electric service contracts**
**Bills the Power Contractors (Contractors)**
**Sends revenue to Reclamation monthly via **
**	****an SF-224**
**All of Western’s O&M that is associated with the BCP is paid from the CRDF**

## Hoover Power Plant Act P.L. 98-381, dated 08/17/1984

**	****There were no excess revenues to reimburse UCRBF for the remainder of deficiencies after fiscal year 1987**
**Therefore, the act provided for surplus revenues by including 4 1⁄2 mills and 2 1⁄2 mills per kilowatt hour (kWh) surcharge in the rates**
**The 4 1⁄2 mills are charged to purchasers in Arizona**
**The 2 1⁄2 mills are charged to purchasers in California and Nevada**
**The surplus revenue is collected into the CRDF, transferred to the Lower Colorado River Basin Development Fund (LCRBDF) and then utilized for their intended purposes**

## Intended Purposes of Mills

**4 1⁄2 mills**
**To operate the Central Arizona Project (CAP) facilities in accordance with the Colorado River Basin Project Act of 1968**
**Any excess revenues are to be used to repay the CAP**
**2 1⁄2 mills**
**To pay for the Hoover Deficiency, augmentation of water supplies of the Colorado River and**
**As provided by the Colorado River Basin Control Act of 1974 (P.L. 90-320) a portion of the payments for the construction, operation, maintenance and replacement of salinity control units**

## Current Power Contractors

**City of Anaheim, CA**
**Arizona Power Authority (APA), AZ**
**City of Azusa, CA**
**City of Banning, CA**
**City of Boulder City, NV**
**City of Burbank, CA**
**Colorado River Commission (CRC), NV**
**City of Colton, CA**
**City of Glendale, CA**

**Los Angeles Department of Water and Power (LADWP), CA**
**Metropolitan Water District of Southern California (MWD), CA**
**City of Pasadena, CA**
**City of Riverside, CA**
**Southern California Edison Company (SCE), CA**
**City of Vernon, CA**

## Uprating Program of the Hoover Power Plant

**Section 101 (a) of the Hoover Power Plant Act of 1984 – authorizes to increase the capacity of existing generating equipment and appurtenances**
**Section 102 (a) (2) of the same act authorized the use of non-Federal funds to accomplish the uprating program**
**11 of the 15 Contractors who purchase power from Hoover elected to participate in the uprating program**
**8 of the 11 participating Contractors issued bonds to advance the funds to the BCP (debt funded)**
**Required assurance from the government that these bonds would be repaid on a fixed annual schedule**

## Uprating Program of the Hoover Power Plant  (cont’d)

**The remaining 3 Contractors advanced the funds to the BCP without having to borrow money (cash funded)**
**Section 105 (c) (4) (a) of the Hoover Power Plant Act of 1984 states the contract period will expire September 30, 2017**
**Section 105 (c) (4) (c) (2) (f) states: “Those amounts advanced by non-Federal purchasers shall be financially integrated as capital costs ... and shall be returned to those purchasers throughout the contract period through credits which include interest costs incurred by such purchasers for funds contributed ... for uprating program.”**

## Cost of the Uprating Program

**Reclamation funded from its 1987 carryover for replacement reserve**
**$15,147,109.18**
**Amount advanced by 11 of the 15 Contractors**
**$153,900,003.21**
**Total amount available for the uprating program**
**$169,047,112.39**
**Total cost of the uprating program**
**$168,459,698.45**
**Advance refund issued to the 11 participating  Contractors according to the original percentages of advances received**
**$917,413.94**

## Participating Power Contractors

**Borrowed monies for advance (debt funded)**
**City of Anaheim**
**APA**
**City of Azusa**
**City of Banning**
**City of Burbank**
**CRC**
**City of Colton**
**City of Riverside**

**Did not have to borrow monies for advance (cash funded)**
**City Glendale**
**City of Pasadena**
**City of Vernon**

## Slide 24

| 
Power Contractor | Original
Uprating
Liability | 
Uprating Refund | Revised
Uprating
Liability | Principal
Paid as of
09/30/06 | Principal
Owed as of
10/01/06 |
| --- | --- | --- | --- | --- | --- |
| Anaheim | 12,238,591 |   72,956 | 12,165,636 |   4,711,064 |   7,454,572 |
| APA | 57,521,357 | 342,891 | 57,178,466 | 14,417,795 | 42,760,671 |
| Azusa |   1,223,812 |     7,295 |   1,216,517 |      471,088 |      745,429 |
| Banning |      611,906 |     3,648 |      608,258 |      235,544 |      372,714 |
| Burbank |   4,589,455 |   27,358 |   4,562,097 |   1,739,285 |   2,822,812 |
| CRC | 57,521,356 | 342,891 | 57,178,465 | 14,484,244 | 42,694,221 |
| Colton |      917,861 |     5,471 |      912,390 |      353,317 |      559,073 |
| Glendale |      611,906 |     3,648 |      608,258 |      242,512 |      365,747 |
| Pasadena |   2,753,732 |   16,415 |   2,737,316 |   1,091,270 |   1,646,046 |
| Riverside |   9,178,904 |   54,716 |   9,124,188 |   3,533,283 |   5,590,905 |
| Vernon |   6,731,123 |   40,125 |   6,690,998 |   2,667,494 |   4,023,504 |
| Total | 153,900,003 | 917,414 | 152,982,589 | 43,946,896 | 109,035,694 |

## Applied & Unapplied Uprating Credits

**The principal & interest is repaid to the Contractors that participated in the Uprating Program by applying credits on their monthly billings**
**If more uprating credits are applied to a bill than is scheduled, per the annual uprating schedule, the excess credits are also “applied uprating credits” and reduces the uprating credit carryforward (an additional liability owed the Contractors) (Uprating Credit Example_1)**
**If less uprating credits are applied to a bill than is scheduled, per the annual uprating schedule, the unused applied uprating credits become “unapplied uprating credits” and increases the uprating credit carryforward (an additional liability owed the Contractors) (Uprating Credit Example_2)**

## Uprating Credit Example

**City of Azusa – Fiscal Year 2007**
**Principal & Interest Schedule for the fiscal year**
**Principal -  $53,264.52**
**  ****Interest -  **_**$43,220.16**_
**      ****Total  - $96,484.68**
**Uprating Credit Schedule**
**Per month -  $8,040.39**
**Per Fiscal Year 2007 - $96,484.68    ($8,040.39 x 12)**
**Uprating Credit Carryforward Balance as of **
**	****September 30, 2006 - $22,632.35**

## Uprating Credit Example_1 (cont’d)City of Azusa (Oct. Svc Mo)

| Monthly LCRBDF  2 1⁄2 mills | $660.00 |
| --- | --- |
| Uprating Credit Applied to LCRBDF | ($205.12) |
| Uprating Credit Carryforward Applied to LCRBDF | ($454.88) |
| Monthly Capacity Base Charge | 5,766.41 |
| Uprating Credit Applied to the Monthly Capacity Base Charge | ($5,766.41) |
| Monthly Energy Base Charge | $2,068.86 |
| Uprating Credit Applied to the Monthly Energy Base Charge | ($2,068.86) |
| Total Amount Due | $0.00 |

## Uprating Credit Example_1 (cont’d)City of Azusa (Oct. Svc Mo)

**Uprating credits are applied in the following order**
**Capacity**
**Energy**
**LCRBDF**

| Uprating Credit Applied to the Monthly Capacity Base Charge | ($5,766.41) |
| --- | --- |
| Uprating Credit Applied to the Monthly Energy Base Charge | ($2,068.86) |
| Uprating Credit Applied to LCRBDF | ($205.12) |
| Uprating Credit Carryforward Applied to LCRBDF | ($454.88) |
| Total Uprating Credits Applied | ($8,498.27) |
| Applied Uprating Credits per schedule | ($8,040.39) |

## Uprating Credit Example_1 (cont’d)City of Azusa (Oct. Svc Mo)

**If Azusa had only applied the amount of their credit schedule, their bill would have totaled $454.88**
**However, they made use of their uprating credit carryforward balance**
**Applied (to LCRBDF) an additional ($454.88) uprating credits to zero out their billing**
**Remember, as of Sep. 30, 2006, their uprating credit carryforward balance was $22,632.35**
**Now, their uprating credit carryforward balance is $22,177.47  ($22,632.35 - $454.88)**
**Has reduced Reclamation’s liability**

## Uprating Credit Example_2 (cont’d)City of Azusa (Oct. Svc Mo)

| Monthly LCRBDF  2 1⁄2 mills | $460.00 |
| --- | --- |
| Uprating Credit Applied to LCRBDF | ($460.00) |
| Monthly Capacity Base Charge | 5,766.41 |
| Uprating Credit Applied to the Monthly Capacity Base Charge | ($5,766.41) |
| Monthly Energy Base Charge | $1,203.98 |
| Uprating Credit Applied to the Monthly Energy Base Charge | ($1,203.98) |
| Total Amount Due | $0.00 |

## Uprating Credit Example_2 (cont’d)City of Azusa (Oct. Svc Mo)

**Uprating credits are applied in the following order**
**Capacity**
**Energy**
**LCRBDF**

| Uprating Credit Applied to the Monthly Capacity Base Charge | ($5,766.41) |
| --- | --- |
| Uprating Credit Applied to the Monthly Energy Base Charge | ($1,203.98) |
| Uprating Credit Applied to LCRBDF | ($460.00) |
| Total Uprating Credits Applied | ($7,430.39) |
| Applied Uprating Credits per schedule | ($8,040.39) |
| Unapplied Uprating Credits  | ($610.00) |

## Uprating Credit Example_2 (cont’d)City of Azusa (Oct. Svc Mo)

**Their total billing was less than the uprating credits allowed per their schedule**
**Therefore, they have ($610.00) in unapplied uprating credits**
**Remember, as of Sep. 30, 2006, their uprating credit carryforward balance was $22,632.35**
**Now, their uprating credit carryforward balance is $23,242.35  ($22,632.35 + $610.00)**
**Has increased Reclamation’s liability**

## Unapplied Uprating Credit Balance as of 09/30/06

| Power 
Contractor | Unapplied
Credits |
| --- | --- |
| Anaheim | 242,268.29 |
| APA | 0.00 |
| Azusa | 22,632.35 |
| Banning | 37,715.93 |
| Burbank | 0.00 |
| CRC | 0.00 |
| Colton | 136,879.42 |
| Glendale | 0.00 |
| Pasadena | 0.00 |
| Riverside | 103,078.88 |
| Vernon | 1.26 |
| TOTAL: | 542,576 |

**The Contractor can request the unapplied uprating credits balance to be paid to them in cash at any given time**
**Contractor sends letter of request for payment**
**Reclamation requests Western to bill Reclamation via the Intra-governmental Payment and Collection System (IPAC)**
**Western would then issue payment to Contractor**

## Repayment to TreasuryInterest Rates

**Interest Rates determined**
**Whenever by the terms of the BCP Act or the BCP Adjustment Act payment of interest is provided for, and whenever interest shall enter into any computation thereunder, such interest shall be computed at the rate of 3 per centum annum, compounded annually  **
**The Hoover Power Plant Act provided that the respective rates of interest on appropriated funds for the visitor facilities program ... shall be determined by the Secretary of the Treasury**
**Legislation – P.L. 99-591, dated 10/30/86 – Advances since October 1, 1984 shall bear interest at the rate determined pursuant to section 104 (a) (5), P.L. 98-381 (Determined by the Secretary of Treasury**

## Repayment to TreasuryPrincipal and Interest

**Principal and Interest Amortization Table maintained by Western**
**Principal is not paid on all features annually**
**Up until fiscal year 2007, concentrated on highest interest features**
**Required to make certain payments annually on certain features**
**Interest is paid on each feature annually**
**Based on the day of the fiscal year principal is paid**
**Once principal is paid the interest payment is calculated**
**Is posted on a quarterly basis**

## Repayment to Treasury

**General Machinery & Equipment**
**Interest Rate - 3%**
**Cumulative Federal Investment - $55,081,366**
**Unpaid Federal Investment as of May 31, 1987 - $15,238,250**
**Dam & Appurtenances**
**Interest Rate - 3%**
**Cumulative Federal Investment - $90,769,847**
**Unpaid Federal Investment as of May 31, 1987 - $10,432,693**
**Flood Control**
**Interest Rate – 3%**
**Cumulative Federal Investment - $25,000,000**
**Unpaid Federal Investment as of May 31, 1987 - $25,000,000**

## Repayment to Treasury (cont’d)

**Visitor Facilities (substantially complete September 30, 1995)**
**Weighted Average Interest Rate – 8.062%**
**Cumulative Federal Investment - $123,735,917**
**Visitor Facilities (complete September 30, 2004)**
**Weighted Average Interest Rate – 8.062%**
**Additional Cumulative Federal Investment - $2,529,427**
**Visitor Facilities**
**Total Cumulative Federal Investment - $126,265,344**

## Repayment to Treasury (cont’d)

**Air Slots**
**Weighted Average Interest Rate – 9.84%**
**Cumulative Federal Investment - $10,637,126**
**Unpaid Federal Investment as of May 31, 1987 (substantially complete) - $10,637,126**
**Air Slots Adjustment**
**Weighted Average Interest Rate – 9.84%**
**Additional Cumulative Federal Investment - $687,165**
**Unpaid Federal Investment as of May 31, 1987 - N/A –completed after 1987**
**Air Slots**
**Total Cumulative Federal Investment - $11,324,291**

## Balances due to Treasury as of 09/30/06

**General Machinery & Equipment**
**$1,236,741**
**Dam & Appurtenances**
**$10,203,925**
**Flood Control**
**$24,768,782**
**Visitor Facilities**
**$114,303,427**
**Air Slots**
**10,370,470**
**TOTAL:  $160,883,345**

## BCP Implementation Agreement(BCP IA)

**In administration of the contracts with the Contractors, a controversy had arisen between Reclamation, Western and the Contractors with respect to eleven issues**
**Replacements**
**Visitor Facilities**
**Amending 10 CFR 904**
**Multi-project Benefits and Costs**
**Engineering and Operating Committee (E&OC) and Coordinating Committee**
**Billing and Payment**

## BCP IA(cont’d)

** ****Working Capital**
** ****Audits**
** ****Principal Payments**
** ****Annual Rate Adjustments and**
** ****Uprating Credits**
**In February 1993, three negotiating teams were formed**
**Representatives from all parties were members of each team**
**Reclamation**
**Western**
**Contractors**

## BCP IA(cont’d)

**Objective – Provide BCP Contractors with significant oversight of Reclamation’s and Western’s planning and operating activities, improve maintenance and reliability, minimize costs, and eliminate the need for federal appropriations**
**February 17, 1995 – BCP IA executed by all Parties**

## BCP IA:  Audits

**BCP IA 15.1 – Conduct of Audits**** **
**15.1.1 - All recommendations from audits conducted pursuant to the BCP IA shall be evaluated and reviewed by the Engineering & Operating Committee (E&OC)**
**Those recommendations with which the E&OC Members unanimously agree shall be implemented by Reclamation or Western, as applicable**
**Reclamation or Western may decline to implement any audit recommendation**
**However, any E&OC Member may submit for consideration any audit recommendation(s) which Reclamation or Western may decline**
**BCP IA 15.2 - Initial Audit of the BCP**
**15.2.2 - To be conducted and concluded within nine months of the effective date of the BCP IA**
**To cover the period beginning June 1, 1987 and concluding with the most recently completed fiscal year (1996)**

## BCP IA:  Audits (cont’d)

**BCP IA 15.3 - Annual Audit**
**15.3.1 - Reclamation and Western shall be audited on an annual basis pursuant to the Chief Financial Officers Act of 1990 (P.L. 101-576)**
**15.3.3 - Each audit shall determine whether the books, records, and financial statements of Reclamation and Western are maintained in compliance with applicable standards, laws, regulations, and procedures**
**15.3.6 – The cost incurred to complete each annual audit shall be deemed an O&M expense for the BCP and included in the O&M component of the Power Repayment Study (PRS)**

## BCP IA:  Audits (cont’d)

**BCP IA 15.4 - Joint Audits**
**15.4.1 – Other audits may be performed by one or more Contractors.  If two or more Contractors agree to conduct an audit (Joint Audit), then all Contractors shall be provided the opportunity to participate**
**Shall be at the sole expense of the Contractors participating**
**15.4.2 – The Contractors shall provide Reclamation and Western at least thirty days advance written notice**
**Of an intent to conduct a Joint Audit**
**The audit scope and**
**The proposed work plan**

## BCP IA:  Replacements

**Funded by the Contractors, not appropriations**
**BCP IA 6.2 - Labeled “Replacement Capital Advances”**
**Ninety-six percent (96%) of the sum of the amounts so expensed, together with interest during construction on those expenditures which are for replacement items not placed in service in the year such expenditures are made, shall be Replacement Capital Advances (RCA)**
**The remaining four percent (4%) of replacements shall not be calculated in the RCA calculation since some small amount of annual replacement expenditures has historically been expensed**

## BCP IA:  Replacements (cont’d)

**BCP IA 6.3 – Repayable Advances**
**Had the replacements been funded by appropriations, the costs would have been amortized and in repayment status the beginning of the fiscal year following the placed in service date**
**6.3 (b) – the capital (principal) which the Treasury would have recovered annually ...  to be amortized on a levelized basis in the format set forth in Table A.2.1. of Appendix A.  For the calculation, the amortization repayment period shall be 50 years, ... and the interest rates employed in the calculation shall be in accordance with DOE Order RA 6120.2**

## BCP IA:  Replacements (cont’d)

**The current electric service contracts expire **
**	****September 30, 2017**
**At that time, new contracts will be in place**
**Repayable Advances will be reimbursed to contractors that do not renew their electric service contract**
**They will be reimbursed for the value of the replacements that are still in service that they helped fund**
**BCP IA 6.4.4 – Beginning October 2017, Western, ... shall collect a surcharge adequate to make reimbursement of Repayable Advances required by 6.4.5**
**BCP IA 6.4.5 – Reimbursements shall be made in no more than five equal annual installments commencing on September 30, 2018 and each year thereafter, with interest from October 1, 2017**

## BCP IA:  Replacements (cont’d)

**BCPIA 6. through 6.5 – Initial Replacements implementation**
**KPMG, the firm which prepared the Initial Audit of the BCP, made certain recommendations concerning the accounting practices to be followed by Western and Reclamation in the administration of the BCPIA**
**The E&OC established a subcommittee with representatives from Western, Contractors & Reclamation, for the purpose of reviewing the recommendations**
**One of those recommendations was regarding the administration of Section 6.2. – Replacement Capital Advances – definition and principles**
**The subcommittee submitted a procedure (Resolution  96-6) to resolve the questions raised by KPMG**

## BCP IA:  ReplacementsResolution 96-6 (Approved 12/10/1996)

**Defined during the years beginning 06/01/1987 and ending 09/30/1996. **
**Beginning with Fiscal Year 1997, “replacements” and replacement expenses to be included in each “Final” Ten Year Operating Plan and the BCP PRS are defined as:**
_**One or more item of equipment, facility, structure, or system that:**_
**In fact substitutes for and replaces one, or more, existing item of equipment, facility, structure, and or system; and**
**Is permitted to be classified as a “retirement unit” under 18 CFR (FERC System of Accounts); or**

## BCP IA:  ReplacementsResolution 96-6 (cont’d)

**Is classified as a “replacement” in the most recent “Final” Ten Year Operating Plan; or , fits into one or more of the following categories unless classified as and item of maintenance in the annual revision of the “Final” Ten Year Operating Plan**
**A “Unit of Property Replaceable During Period of Analysis” as described in Table 9 of the DOE and DOI, Blue Covered Manual entitled “REPLACEMENTS, UNITS, SERVICE LIVES, FACTORS”, **
**	****dated July 1995 (The “**_**Bluebook**_**”)**
**A Unit of property described in the Bluebook, “Table 2,  SERVICE LIFE SUMMARY”**
**An item described in “Table 3, Plant” and**

## BCP IA:  ReplacementsResolution 96-6 (cont’d)

**Any item covered by revisions to the documents described in (a), (b) and (c ) above, provided that any such revisions have been approved by the E&OC as additions to the documents to which they pertain**
**For purposes of administering certain parts of Section 6.2 of the BCP IA, the following principles will apply:**
**Defines principles for 06/01/1987 through 09/30/1990**
**Defines principles for 10/01/1990 through 09/30/1995**
**Defines principles for 10/01/1995 through 09/30/2017**

## E&OC and the Coordinating Committee

**E&OC – consists of representatives of power contractors **
**Meet with Reclamation and Western on a quarterly basis**
**Updates on ongoing works**
**Future works**
**Potential issues**
**Reports to the Coordinating Committee**
**Coordinating Committee – Administration of the Contractors, Reclamation and Western**
**Meet on an annual basis**

## Ten Year Operating Plan (Plan)

**Annual budget planning process required by the BCP IA, 12.6.1**
**Developed by Reclamation and Western**
**Provides the Contractors the opportunity to provide input into the operations of the BCP prior to expenditure**
**To assure that the BCP is being operated as efficiently and effectively as possible and**
**To provide a mechanism to link the budget, rate and ten-year planning process**

## Ten Year Operating Plan (cont’d)

**Developed & Reviewed in three phases**
**Preliminary**
**Proposed**
**Final**
**Preliminary**
**Plan is developed**
**Printed & distributed to the Contractors for review and comment**
**Must be sent to the E&OC at least ten working days prior to any meetings scheduled for comment purposes**

## Ten Year Operating Plan (cont’d)

**After the Preliminary Plan is distributed to the Contractors, a meeting with the Technical Review Committee (TRC) (subcommittee of the E&OC) is held at Hoover Dam**
**To present the Preliminary Plan**
**To allow Program directors to provide presentations**
**RAX and Replacements are always discussed**
**The TRC members are free to ask questions and make recommendations**
**Approximately two weeks after the meeting, the TRC submits their questions and recommendations via written document**
**Reclamation and Western are required to provide a written  response and it is included in the Proposed Plan as Appendix A**

## Ten Year Operating Plan (cont’d)

**Proposed Plan**
**Transmitted ten working days prior to the meeting scheduled for review and comment**
**Contractors then prepare and submit final comments to Reclamation and Western**
**Final Plan**
**Prepared and submitted to the Contractors for approval**
**Last opportunity for Contractors to identify concerns with the Plan in writing**
**Reclamation and Western must respond within sixty days if there are any concerns expressed**

## Ten Year Operating Plan (cont’d)

**The **_**Final**_** Plan must contain**
**Plan Summary**
**Historic Statistics Section**
**Tables and Graphs which compare planned expenditures and anticipated revenues for the most recently completed fiscal year to actual expenditures and actual revenues**
**Replacement Program Section**
**Additions and Betterments Program Section**
**Dam and Power Plant O&M Program Section**
**Visitor Facility Program Section**
**Multi-Project Section (for current and 9 fiscal out years)**
**Hydrology and Generation Projections**
**Preliminary Power Repayment Study (PRS) Spreadsheet**

## Revenue Requirement

**One of the protections afforded the Federal Government through the BCPIA was “Guaranteed revenue requirement funding by Contractors”**
**Is a calculation per the PRS**
**Revenue Requirement consists of 50% Energy and 50 % Capacity dollars**
**Month Capacity Dollar - capacity dollars/12 months**
**Monthly Energy Ratio – estimated amount of energy each Contractor is to receive each month in accordance with the Final Master Schedule/the total energy that Contractor is to receive in that fiscal year under the Final Master Schedule**

## Revenue Requirement (cont’d)

**Revenue Requirement = Total Expenses – (Prior Year CRDF carryover + Water Sales + Other Revenue)**
**Types of Expenses**
**Operation & Maintenance (O&M)  - costs associated with Reclamation’s and Western’s O&M costs, which includes O&M costs of the Visitor Facilities**
**Repayment to Treasury**
**Replacements**
**Uprating Credits**
**Payment to States (in-lieu-of-tax)**
**Miscellaneous Costs – includes Visitor Facilities guide services**

## Revenue Requirement (cont’d)

**Types of Revenue**
**Prior year CRDF carryover – revenue surplus (+) or deficit (-) from the previous fiscal year as shown in the PRS**
**Water sales – for the storage and delivery of water for irrigation and domestic use**
**Other Revenue**
**Visitor Facilities Revenue**
**Guided Tours**
**Parking**
**Sale of Memorabilia**
**Permit Fees**
**Miscellaneous Revenue**
**Collected by Reclamation**
**Collected by Western**

## Power Repayment Study (PRS)

**Consists of**
**Expenses as described previously**
**Revenues as described earlier**
**Also takes into consideration**
**Change in Unliquidated Obligations**
**Accounts Receivable**
**Working Capital**
**Unobligated cash balance in the CRDF **
**Not included in prior year carryover**
**Current balance - $1,600,000**

## Rate Process Meetings

**Annually, Reclamation and Western and representatives of the Contractors meet to approve the rate requirements**
**March – Informal Meeting**
**Held after the TRC has met**
**Ten Year Plan – are there any issues remaining**
**Start the PRS (Rate Process)**
**April – Public Information Meeting**
**Is on the record**
**Review the PRS**
**Contractors or representatives can ask any questions**
**After Reclamation and Western receive the transcript they prepare the responses to the questions, via written document, even if the questions were answered in the meeting ****	**

## Rate Process Meetings (cont’d)

**May – Public Comment Forum**
**Contractors and/or representatives last opportunity to **
**	****give any input**
**August – Published in the Federal Register**
**Upcoming fiscal year’s base charge & rates – Executive Summary**
**Upcoming fiscal year’s 12 month Customer Power Billing**

## 	Then, the process of the Ten Year Operating Plan, Revenue Requirement, Power Repayment Study and Rate Process Meetings starts over