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092715 1 (1969-03-26)

handle is hein.gao/gaobacwpc0001 and id is 1 raw text is: *~ ' Cl 1ccorn~,t\ CIVIL DI \ UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D C 20548 VISION MAR 2 6 1989 dEST @sDUMENTIRV2LABL8o Dear 14r9 Dominy: The Oeneral Accounting Office has made a limited fview of a March 22, 1966, letter agreement which amended contract No. 14-06-200-290 of the Bureau of Reclamation (Bureau) for providing electric service to the Sacemto uniip9al UtilityDistrict (SMOD) of Sacramento, California. We have examined into the reasonableness of the amended method provided by the letter agreement for computing SHUD's billing demand for power purchased from the Bureau's Central Valley Project (CVP), and have found that the application of this method has caused* and can continue to cause, a reduction in CVP power revenues, Furthermore, this new billing procedure appears inequitable because SHOD is allowed a discount for power purchases that is not given to other CVP preference customers. In view of the Bureau's recently expressed concern relative to the repayment capac- ity of the CVP, we believe that the Bureau should initiate negotia- tions with SMUD with a view toward terminating the revised billing procedure. The Bureau and SMUD, a preference customer of the CVP, entered into an electrical service contract on December 11, 1952. On March 22, 1966, a letter agreement amended the basic contract. This letter agreement provided, in part, for a new method of computing SM4' billing for power purchased from the Bureau. The agreement states: *Commencing with the first billing period following execution of this letter agreement, billing demand will be determined as follows: For each billing period the SHOD billing 4emand will be the greater of (a) 290,000 kilowatts, or (b) SHD's contribution to the Central Valley Project system maximum simultaneous demand for that period, plus one-half the difference between SHOD's contribution to the Central Valley Project system maxi- mum simultaneous demand for that period and SHOD's con- tract rate of delivery in effect during that period. The contract rate of delivery is the maximum amount of demand which the Bureau is responsible for delivering to a customer. SUD's current contract rate of delivery is 360,000 kilowatts (KW) consist- ing of 290,000 KW, their original CVP allocation which is not with- drawable, and 70,000 &W provided by the Trinity Unit of the CVP. The 6~> -9 0 a 0- Uv

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