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RECLAMATION'S ROLE IN HYDROPOWER


Index

Overview of the Electric Utility Industry
Hydropower in the United States
Background
Undeveloped Potential
Reclamation's Power Program
Allocation of Costs
Figure: Allocation and Assignment of Costs
Federal Rate and Repayment
Power Repayment Studies
Marketing Power and Energy
Basic Marketing Criteria
Contract Administration
Determination of the Amount of Power for Sale
Power Allocations

OVERVIEW OF THE ELECTRIC UTILITY INDUSTRY

(a) The importance of reliable and economic electric power to the public interest.

(b) The practice of granting exclusive franchise under the concept that electric utilities are natural monopolies. Regulation is used to limit IOU's monopoly profits and encourage efficiency.

HYDROPOWER IN THE UNITED STATES

Background

Undeveloped Potential

RECLAMATION'S POWER PROGRAM

Grand Coulee Powerplant on the Columbia River in the state of Washington (largest hydroelectric powerplant in the United States)

Hoover Powerplant on the Colorado River in the states of Arizona and Nevada

Glen Canyon Powerplant on the Colorado River in the state of Arizona

Shasta Powerplant on the Sacramento River in the state of California

Yellowtail Powerplant on the Bighorn River in the state of Montana

ALLOCATION OF COSTS


Chart showing Allocation and Assignment of Costs

FEDERAL RATE AND REPAYMENT

POWER REPAYMENT STUDIES

(1) An appropriate share of annual operation and maintenance costs and other fixed annual costs necessary for good operating practice;
(2) Replacement of facilities within their service lives;
(3) Repayment of the allocated commercial power investments within 50 years at an interest rate normally fixed at the time of construction; and
(4) That portion of the power construction costs allocated to irrigation pumping as well as other project irrigation costs in excess of the irrigators ability to pay. The past development of good hydroelectric dam sites, the joint savings in multipurpose development, low fixed interest rates, and 50-year repayment periods have all contributed to what are now considered very attractive Federal rates. As these rates are now considerably lower than the costs of alternative thermal facilities, there is great demand for power produced at Federal facilities.

MARKETING POWER AND ENERGY

Basic Marketing Criteria

In marketing power and energy, the Federal Power Marketing Administrations are governed by several statutory requirements. Two of the more pertinent requirements are:

(a) Preference in the sale of power shall be given to municipalities and other public corporations or agencies, and also to cooperative and other nonprofit organizations financed in whole or in part by loans made pursuant to the Rural Electrification Act of 1936 and by amendments thereof.
(b) Revenues from the sale of power and energy are to be adequate not only to pay costs allocated to power, but also to pay a variety of certain other costs such as irrigation aid and salinity control, which are assigned to power for repayment.

The Power Marketing Administrations market the firm power and energy produced at Reclamation hydroelectric facilities at the lowest possible rates consistent with sound business principles.

Contract Administration

Marketing programs and criteria are implemented with the negotiation of power contractors. Power contracts establish the obligations and entitlements of each of the parties to the contract. Contractual arrangements may be drafted in the format of a contract, supplement of agreement, memorandum of understanding, or a letter of agreement. Power contracts cover the following general categories:

Determination of the Amount of Power for Sale

The total amount of power available to be placed under contract is determined by taking into consideration the installed capacity at powerplants, forecasting load patterns of specific marketing areas, system losses, water operations and depletions, and the historical streamflow hydrology.

Power Allocations

The allocations procedure is an apportionment process used to distribute specific amounts of firm power to qualified potential customers. Allocations are required when requests from qualified purchasers exceed the amount of available firm power. Allocable firm power may become available:



Revised: November 27, 2013.Hydropower Site Map .Help