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B-125042 1 (1974-08-01)

handle is hein.gao/gaobabknp0001 and id is 1 raw text is: 7$cOM'R i~y ?aM Lid _aa wmi= P 'Uo . B-125042 RELEASED The Honorable Henry S. Reuss Chairman, Conservation and Natural tf Resources Subcommittee Committee on Government Operations House of Representatives Dear Mr. Chairman: As your office requested on May 28, 1974, we reviewed an excerpt Financial Position of the Central Valley Project from Mr. Herbert C. Westfall's May 20, 1974, testimony before the Water and Power Resources [-I fh 6j4-Subcommittee of the House Interior Committee (hearings on H.R. 14221). We examined the excerpt to ascertain --its accuracy; --the validity of Mr. Westfall's contention that A rate increase is justified only if the projected unpaid balance exceeds the allowable unpaid balance; and --the effect such contention would have had on the November 1, 1973, electric power rate increase for the Central Valley Project (CVP). ACCURACY OF THE EXCERPT The factual data Mr. Westfall presented is accurate. His assump- 1/ tions, however, concerning the method used by the Bureau of Reclamation, Department of the Interior, to compute interest expense is not entirely I/accurate and the basis for his conclusion on CVP's financial condition does not recognize all the necessary factors. These matters are dis- cussed below. Interest expense computation Mr. Westfall testified as follows concerning the Bureau's interest expense computation: The calculation of a $1.3 billion deficit with rates existing prior to April 1, 1974 appears on page 20 of the June CVP Study and is described as the 'accumulated results of a repay- ment study ending in 2031 based on the current rate.' The ~Q~ ON~L

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