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RCED-85-158 1 (1985-09-09)

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   BY THE US GENERAL ACCOUNTING OFFICE



   Report To The Honorable

   Howard M. Metzenbaum

   United States Senate




   Bureau of Reclamation's

   Central Utah and Central Valley Projects

   Repayment Arrangements


   The Department of the Interior's Bureau of Reclamation,
   the federal government's principal water development
   and management organization in the western United
   States, develops and operates projects to provide water
   for the generation of electricity and for municipal and
   industrial use and irrigation. Certain project costs must
   be paid by the project beneficiaries. GAO was asked to
   examine the repayment arrangements for two of these
   projects: the Central Utah Project's Bonneville Unit and
   the Central Valley Project in California.

   GAO found that the current repayment contracts are
   inadequate to recover costs. The Bureau, however, is
   currently negotiating supplemental repayment contracts
   for the Bonneville Unit that would increase the repayment
   obligation for municipal and industrial water. In addition,
   the Bureau is developing a rate-setting policy to correct
   the shortfall on the Central Valley Project. The deficits on
   the Central Valley Project, nevertheless, will persist for
   several years until existing long-term contracts expire
   and are renegotiated.

   Other issues that could affect the recovery of projects'
   costs are also discussed in the report.







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                                                                GAO/RCED-85-158
      1OcOU4  J                                               SEPTEMBER 9,1985

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