FINANCIAL OPERATION Statement accompanying report of the Secretary of the Interior to the Committee on Appropriations (1) Revenue from 64 per cent of firm energy alone will more than repay the entire estimated cost of the project in 50 years, exclusive of the $25,000,000 allocated to flood control. The financial situation-in case only 64 per cent of firm energy were paid for, and no secondary energy and no water sold-would be as follows: FINANCIAL OPERATION-BOULDER CANYON PROJECT Table No. 4. Plate No. 12 Revenue from 64 per cent of firm energy only. No revenue from sale of water. No revenue from sale of secondary energy. Machinery investment repaid separately by lessees of power plant within 10 years. Repayment of $25,000,000 allocated to flood control, including interest charges thereon deferred. Repayment period 50 years. Revenue from sale of 64 per cent of firm energy at 1.63 mills per kilowatt-hour.... $209, 406, 100 207, 309, 464 2,096, 636 The income above stated for 64 per cent of the firm energy accords with the minimum obligations of the city (37 per cent) and company (27 per cent) and would be derived as follows: (2) There is, however, under these contracts a firm obligation to pay for 100 per cent of all firm energy, which would result as follows: FINANCIAL OPERATION-BOULDER CANYON PROJECT Table No. 1. Plate No. 9 Revenue from 100 per cent of firm energy only. No revenue from sale of water. No revenue from sale of secondary energy. Machinery investment repaid separately by lessees of power plant within 10 years. Repayment period 50 years. Gross revenue from sale of energy at 1.63 mills per kilowatt-hour.. $327, 866, 350 Operation and maintenance_ $7, 262, 857 8,875, 553 108, 107, 007 25, 000, 000 Surplus. 298, 296, 181 29, 570, 169 NOTE. If surplus is applied to repayment, the entire cost of the project would be repaid in about 43 years. In this case the revenue would be derived as follows: The revenue from all firm energy alone will repay the entire estimated cost of the project and give Arizona and Nevada an average of $450,000 per year each in addition to amortizing the flood-control allocation. In the 50-year period following completion of the dam, in excess of $29,000,000 would be paid into the Colorado River Dam fund from these power revenues, excluding revenue from water. The income stated above, from power only, would appear as follows if an average of 1,550,000,000 kilowatt-hours of secondary energy were taken in addition: In the 50-year period, in excess of $50,000,000 would be paid into the Colorado River Dam fund from these power revenues, excluding revenue from water, and the average annual payment to Arizona and to Nevada would be in excess of $550,000 each. (3) The estimates of cost included in the above data are as follows: Estimated cost of Boulder Canyon project exclusive of interest during construction............. Interest during construction.. Total estimated cost.... Amount added to cover cost of raising dam 25 feet (Sibert board said higher dam can be built within original estimate) Less $25,000,000 allocated to flood control ... ... .... Less cost of machinery which is to be repaid separately in 10 years_ Net investment, exclusive of $25,000,000 allocated to flood control and investment in machinery... $109, 446, 000 11, 554, 000 121, 000, 000 4,392, 000 125, 392, 000 25, 000, 000 100, 392, 000 17, 717, 000 82, 675, 000 These estimates of cost are made sufficiently high to include the following safety factors: 15 per cent allowed for contingencies in original estimates becomes 17.5 per Additional head due to scour of river channel 20 feet_ Per cent 17.5 4. 2 3.5 3. 8 29 (4) It has been stated that income from firm energy allocated to the city and company would alone be adequate. The average annual payments for firm energy by each will be approximately: City.. $2,427, 070 With reference to the amount of the city payment, please see audit which has been submitted of the accounts of the city's bureau of power and light for the year ending June 30, 1929, from which it appears that A surplus of. Was available after payment to the Edison Co. for energy which Boulder Dam purchases will supplant in the amount of Or a total which would have been available for purchase of As compared with an actual average bill due the United States And without, of course, depleting the bureau's surplus built And: See the certified Edison Co. statement that the Edison $3, 626, 972. 23 3, 422, 642. 37 7,049, 614. 60 2, 427, 070. 00 24, 024, 249. 75 15, 701, 283. 06 361, 266, 756. 34 (5) "Firm energy" as used above represents 4,330,000,000 kilowatt-hours per year, upon completion of the dam, which will raise the water surface 582 feet, as authorized by the Sibert board. This amount of firm energy will decrease at the rate of 8,760,000 kilowatthours per year due to upstream consumptive use of water. This estimate of available firm energy is based upon exhaustive hydrographic studies of the river, and will not encroach on flood control. The annual decrease just stated is taken into consideration in the revenue estimates. (6) The quoted estimates of the financial operation of the Boulder Canyon project are based upon a rate for firm energy of 1.63 mills, and of 0.5 mill for secondary energy. The act provides for readjustment of these rates 15 years from execution of the contracts and every 10 years thereafter "upon the demand of either party thereto." As the readjustment so provided for is to be "either upward or downward as to price, as the Secretary of the Interior may find to be justified by competitive conditions at distributing points or competitive centers," the future maintenance of the rates now set is a matter which can not be determined in advance. |