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B-170816 1 (1970-10-23)

handle is hein.gao/gaobaafnk0001 and id is 1 raw text is: -' - UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548IIIIIII IIIIII LM095755 CIVIL DIVISION B-170816 OCT Z j lbtu Dear Mr. Secretary: The General Accounting Office, as part of its continuing reviews of the financial activities related to the Federal power program, has examined into the policies followed by the Bureau of Reclamation, De- partment of the Interior, regarding the capitalization of interest on construction costs during the period of _ con on of hydroelectric power projects of the Federal. qCklumki River Power System. Our opinion letters to the audited financial statements of the System over the past several years have included comments on the Bu- reau's failure to capitalize interest during conptruction of certain Bureau power facilities included in the System and the need to resolve this matter for improved disclosure of the financial position and re- sults of operations of the integrated power system. The System also includes the power-generating facilities of the Corps of Engineers and the transmission facilities of the Bonneville Power Administration (BPA). The cost of constructing and operating these power facilities is required, by law, to be repaid out of power revenues of the System. Both the Corps and BPA have capitalized interest costs during the con- struction of their power projects and have included such costs in the unrepaid investment in their facilities on which annual interest is payable to the Treasury from power revenues. Prior to 1956 the Bureau did not, in all cases, capitalize, as a part of the Government's investment in power projects, the interest on the construction costs incurred during the period of construction, unless it was specifically required to do so by the legislation author- izing construction of a project. We found that, of the six Bureau hy- droelectric projects in operation in the System at June 30, 1969, interest costs incurred during the construction period of four projects and one division of a fifth project--the Columbia Basin, Hungry Horse, Boise, and Minidoka Projects and the Kennewick Division of the Yakima Project--were not capitalized and were not scheduled for repayment from power revenues. The Columbia Basin and Hungry Horse Projects constitute the major part of the Government's investment in the System upon which interest during construction has not been capitalized as part of the investment. 0 ____

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