Federal Power: Outages Reduce the Reliability of Hydroelectric Power
Plants in the Southeast (Testimony, 07/25/96, GAO/T-RCED-96-180).

GAO discussed the maintenance and repair of hydroelectric powerplants
operated by the Army Corps of Engineers in the Southeast, focusing on
the extent to which: (1) the power plants are experiencing outages; and
(2) planning and budgeting processes allow the Corps to perform timely
and effective repairs and rehabilitation of its hydroelectric assets.
GAO noted that: (1) due to lengthy outages, the plants' availability to
generate power dropped from 95.4 percent to 87.2 percent and have lost
about $13 million since fiscal year (FY) 1986; (2) some of the plants'
units are aging, need repair or replacement, were poorly designed, were
not properly installed, and have been adversely affected by the way they
have been operated; (3) the need to spend more to maintain and repair
the aging hydroelectric power plants will compete with the need to
maintain and repair other Corps facilities; (4) the Corps' emphasis on
routine, ongoing maintenance and repair work and the lengthy
justification process for extensive work delays long-term repairs; and
(5) the Corps is addressing the plants' planning and budgeting needs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-96-180
     TITLE:  Federal Power: Outages Reduce the Reliability of 
             Hydroelectric Power Plants in the Southeast
      DATE:  07/25/96
   SUBJECT:  Hydroelectric powerplants
             Hydroelectric energy
             Electric utilities
             Public utilities
             Equipment repairs
             Electric power generation
             Government sponsored enterprises
IDENTIFIER:  Southeastern Federal Power System
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


Cover
================================================================ COVER


Before the Subcommittee on Water and Power Resources, Committee on
Resources, House of Representatives

For Release
on Delivery
Expected at
2:00 p.m., EDT,
Thursday,
July 25, 1996

FEDERAL POWER - OUTAGES REDUCE THE
RELIABILITY OF HYDROELECTRIC POWER
PLANTS IN THE SOUTHEAST

Statement of Victor S.  Rezendes,
Director, Energy, Resources, and Science Issues, Resources,
Community, and Economic
Development Division

GAO/T-RCED-96-180

GAO/RCED-96-180T


(307340)


Abbreviations
=============================================================== ABBREV


============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

Thank you for the opportunity to report today on the results of our
work on issues surrounding the production and marketing of power from
federal hydroelectric plants in the Southeast.  Over a major portion
of the nation, the U.S.  Army Corps of Engineers (Corps) and the
Department of the Interior's Bureau of Reclamation operate
hydroelectric power plants at federal water projects to produce
energy, and the Department of Energy's five power marketing
administrations market the electricity generated.\1 Concerned about
the maintenance and repair of the power plants operated by the Corps
in the Southeast, you asked us to examine the extent to which (1)
these power plants are experiencing outages and (2) the current
planning and budgeting processes allow the Corps to perform timely
and effective repairs and rehabilitations of these plants. 
Separately, we will also report in the next several months on the
accounting and ratemaking practices of the power marketing
administrations.\2

In our review, we focused on 11 of the Corps' 23 hydroelectric power
plants\3 that generate the power marketed by the Southeastern Power
Administration (Southeastern).\4 These 11 plants provided about 71
percent of Southeastern's revenues in fiscal year 1995.  We also
performed more detailed case-study analyses of 2 of the 11 plants
that had experienced lengthy outages stemming from design and
technical problems; the results of these case studies are presented
in appendixes III and IV. 

In summary, Mr.  Chairman, our principal points are the following: 

  -- Federal hydroelectric power plants in the Southeast have
     experienced significant outages, ranging from a few days to
     several years in duration and degrading the reliability of the
     Corps' hydroelectric system.  The availability of these plants
     to generate electricity declined from about 95 percent in 1987
     to 87 percent in 1995--a trend that is paralleled in the Corps'
     hydroelectric power plants nationwide.  According to Corps
     officials, these outages occur because of the way the power
     plants are operated and because the plants are aging.  Also,
     these officials said, a few of the plants suffer problems with
     the way the equipment is designed and installed.  As a result of
     these outages, Southeastern has lost revenues and raised the
     wholesale electric rates it charges its customers. 

  -- Although the Corps recognizes that long-term, comprehensive
     planning and budgeting systems are needed to identify and fund
     key repairs and rehabilitations at its hydroelectric power
     plants, especially in the current environment of static or
     declining budgets, its funding decisions are not based on such
     systems.  The Corps gives priority to routine, ongoing
     maintenance.  When the power plants experience unplanned
     outages, the Corps frequently performs repairs that are reactive
     and short-term.  For the extensive repairs and rehabilitations
     that eventually become essential, the Corps' budgeting process
     requires extensive justifications that can take a year or longer
     to complete.  The Corps has taken some actions to address its
     planning and budgeting needs, but these measures are still
     ongoing.  Finally, although Southeastern markets all of the
     power generated by the Corps projects we examined, the Corps
     does not consult with Southeastern for planning and budgeting
     purposes at the corporate level.  At the divisional level in
     Atlanta, the Corps meets with Southeastern and power customers
     to discuss planned capital improvements and scheduled
     maintenance.  Because the Corps is in the process of addressing
     its planning and budgeting requirements, we are not making
     recommendations at this time for the Corps to improve its
     planning and budgeting systems. 


--------------------
\1 The five power marketing administrations are the Alaska,
Bonneville, Southeastern, Southwestern, and Western Area Power
Administrations. 

\2 We have also recently testified on the repayment by the Western
Area Power Administration of the federal investment in the
hydroelectric facilities in the Pick-Sloan Program.  See Federal
Power:  Recovery of Federal Investment in Hydropower Facilities in
the Pick-Sloan Program (GAO/T-RCED-96-142, May 2, 1996). 

\3 Electric power plants are made up of one or more generating units,
whose major components are the generator and turbine.  The total
capacity of a plant is the sum of the capacity of its generating
units. 

\4 App.  I shows the location of these 11 power plants (Allatoona,
Buford, Carters, Hartwell, J.  Strom Thurmond, Jim Woodruff, Millers
Ferry, Richard B.  Russell, Robert F.  Henry, Walter F.  George, and
West Point), and app.  II summarizes their characteristics.  These
plants are operated by the Corps' South Atlantic Division, which has
offices in Atlanta, Georgia.  The Richard B.  Russell power plant has
four units that have operated since 1984, and four other units are
being tested.  This testimony makes no reference to the latter. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

As the nation's largest supplier of hydroelectric power, the Corps
generates about 25 percent of all the hydroelectric power in the
United States.  The Corps operates hydroelectric power plants at 75
dams with a total capacity of about 21,000 megawatts (MW).  The total
capital investment in these facilities over the years has exceeded
$7.9 billion.\5

Southeastern markets power for 23 hydroelectric power plants owned
and operated by the Corps to 294 wholesale customers in all or parts
of 10 southeastern states and Illinois.\6 Southeastern also
coordinates with the Corps on the availability of the power to be
generated by the Corps' plants.  Unlike other power marketing
administrations, Southeastern owns no transmission assets.  Regional
public and investor-owned utilities transmit the power to
Southeastern's wholesale customers. 

The Corps and Southeastern receive congressional appropriations
through the Department of Defense - Civil account and the Department
of Energy, respectively, to finance their operations.  In fiscal year
1996, the Corps received appropriations for its civil works
activities totaling about $3.2 billion.\7

Southeastern is responsible for repaying, with interest, its
appropriations as well as the portion of the Corps' construction and
operation and maintenance appropriations that are allocated to
power.\8

Repairs to and maintenance of the power plants are funded from the
Corps' "construction, general" account or "operations and
maintenance, general" account, depending on their scope.  Funds from
the "construction, general" account are used for major rehabilitation
projects that exceed $5 million, including work pertaining to the
designs, plans, and specifications for such projects.  Major
rehabilitation projects are identified at the Corps' projects and
districts, and the ensuing budget proposals are justified, examined,
and ranked in the Corps' field offices and headquarters.  The
Department of the Army's Assistant Secretary for Civil Works and the
Office of Management and Budget then examine and approve or
disapprove the requests for funding for the individual projects. 
Funds from the "operation and maintenance, general" account are used
for routine repairs and maintenance and for emergency repairs of
hydroelectric and other facilities. 

The 11 power plants that we examined account for about 63 percent of
Southeastern's generating capacity.  These hydroelectric power
plants, located on six river systems, range in generating capacity
from 30 to 500 MW. 


--------------------
\5 This amount is not adjusted for inflation and does not represent
the present value of the capital investment in hydroelectric
facilities. 

\6 These plants are part of multipurpose facilities also serving a
variety of nonpower purposes, including flood control, irrigation,
navigation, and recreation. 

\7 The dollars are current dollars. 

\8 Multipurpose projects have both specific and joint costs. 
Specific costs are related to, or for the benefit of only one
purpose, whereas joint costs are shared by all authorized purposes of
the projects.  Southeastern is responsible for repaying all specific
and joint costs allocated to power. 


   OUTAGES AT PLANTS IN THE
   SOUTHEAST HAVE REDUCED SYSTEM'S
   RELIABILITY
---------------------------------------------------------- Chapter 0:2

The Corps' hydroelectric power plants in the Southeast have
experienced lengthy outages, resulting in declines in reliability and
availability.\9 For example, from 1987 to 1995 the availability of
the plants in the Corps' South Atlantic Division dropped from 95.4
percent to 87.2 percent.  Nationwide, during this same period, the
availability of the Corps' hydroelectric power plants dropped from
92.9 percent to 87.9 percent (see app.  V).  According to Corps
officials, the outages have occurred because of the ways in which the
units are operated\10 and because they are aging.  In a few cases,
Corps officials said, the units were also poorly designed and
installed.  According to Southeastern officials, the outages
contributed to revenue losses for Southeastern and led to increases
in its wholesale electric rates. 

From 1986 through 1995, all 11 of the power plants we examined
experienced forced and/or scheduled outages, ranging from 30 days to
over 3 years.  Thirty-seven of the 43 units at these 11 power plants
experienced at least one outage (see app.  VI), and several units
experienced outages simultaneously (see app.  VII).  For example,
from January through March 1993, eight units at the Allatoona,
Carters, Hartwell, Robert F.  Henry, Millers Ferry, J.  Strom
Thurmond, and Walter F.  George power plants, representing about 395
MW of capacity (or 13 percent of the capacity available to
Southeastern from the Corps' facilities), were out of service at the
same time. 

Many of the Corps' hydroelectric power plants in the Southeast are
aging.  The average age is about 30 years, and four have been in
service for over 35 years.  According to Southeastern officials and
studies by the Corps, key components of the hydroelectric units are
designed to last about 35 years and can be expected to need repair or
replacement.  However, according to the Corps, the need to repair or
replace a component is based not solely on age, but also on test
results and operational performance.  For example, in 1984 the
responsible Corps district office requested approval to perform a
scheduled repair of a generator component at Allatoona--the oldest of
the power plants that we examined, which has been in service since
1949.  The generator component had reached 35 years--the anticipated
end of its useful life--and the unit's performance had declined in
the late 1970s and early 1980s, after a failure in 1967.  Corps
headquarters did not approve the request because it did not believe
that the district had submitted adequate justification.  After the
unit failed again in 1990, the Corps continued to operate the unit by
bypassing the damaged component.\11

In 1991, the Corps' district office again requested approval to
repair the affected generator as well as another unit of similar age. 
Both units were repaired in 1993 and 1994, at a cost of about $8
million. 

Also, according to Corps officials, some units are poorly designed by
the manufacturer and not properly installed by the contractor, and
other units are adversely affected by the way in which they are
operated.  For instance, the Jim Woodruff power plant has experienced
operational problems because its turbines are poorly designed. 
Specifically, the turbines, intended to function under conditions of
changing water flow, experienced severe vibrations and had to be
welded in place, leading to decreased efficiency in the power plant
when water conditions changed (see app.  IV).  In addition, according
to Corps officials, the conventional hydroelectric generating units
at Carters, which are used to start the pumpback units,\12 were not
designed to consistently handle startups.  Operating the conventional
units for startups over the years damaged the insulation in the
generators, causing the units to fail.  According to a Corps report
on the rehabilitation of the Hartwell power plant, Hartwell's
turbines are significantly oversized in comparison with the
generators.  According to the Corps' analysis, with the larger
turbines and thus greater horsepower available, the generators failed
because they were consistently operated at 125 percent of their rated
capacity.  Southeastern officials added that, in their view, the
units failed because they were 30 years old and thus approaching the
end of their useful lives.  Also, according to Corps officials, four
units at the Robert F.  Henry power plant required major repairs
within 6 years of beginning operation because major components of the
generators were not properly manufactured and installed.  The
components became loose during operations, causing severe vibrations
and deterioration of the generators' insulation. 

When hydroelectric power plants experience unexpected outages at the
same time and/or these outages are extended, utilities generally have
to purchase replacement power at higher prices.  For example, from
1990 through early 1992, two or more of the four units at the Carters
power plant were out of service at the same time for periods ranging
from about 3 months to almost 1 year.  An official of Southeastern
estimated that Southeastern's utility customers purchased replacement
electricity costing about $15 million more than they would have paid
for electricity marketed by Southeastern.\13

Extended outages, Southeastern officials estimate, have resulted in
lost revenues of about $13 million to Southeastern since fiscal year
1986.  The impact was most acute when units at the Carters power
plant were out of service.  Moreover, according to Southeastern
officials, because of the unplanned outages, a severe drought in the
late 1980s, and increases in operation and maintenance costs,
Southeastern increased its wholesale power rates.  For example,
customers on the Georgia-Alabama-South Carolina system paid 22
percent more in 1990 than they had in the previous year.\14 According
to Southeastern, reductions in the amount of hydroelectric power
available because of the drought, combined with the inefficient
operation of the Jim Woodruff project, contributed to an increase in
the wholesale rates charged to customers of the Jim Woodruff system
of nearly 100 percent, phased in from January 1991 to September
1993.\15


--------------------
\9 Reliability is the capability of a power plant to generate power
consistently when called upon to do so.  Availability is a measure of
the power plant's availability to generate power over a period of
time. 

\10 For instance, according to Corps officials, the Corps operates
some units at a level that exceeds their designed nameplate
capacities. 

\11 The affected part was a generator coil.  Units can be operated,
sometimes at reduced capacity, if a coil is bypassed.  Eventually,
Corps officials said, more extensive repairs are performed. 
According to Corps officials, this practice is standard throughout
the electric utility industry. 

\12 Pumpback units reuse water from downstream of a dam in order to
supplement the water supply that is available for the conventional
generating units to use when the demand for electricity peaks. 

\13 Southeastern's estimates are based on the average wholesale rates
on the Georgia-Alabama-South Carolina system and the average
commercial wholesale electric rates in the region. 

\14 The average wholesale rate increased from 2.3 cents per
kilowatt-hour to 2.8 cents per kilowatt-hour. 

\15 As of January 1991, Southeastern's average wholesale rates were
1.43 cents per kilowatt-hour, but they increased to 2.85 cents per
kilowatt-hour by September 1993. 


   CORPS' CAPITAL PLANNING AND
   BUDGETING PROCESSES DO NOT
   FACILITATE TIMELY AND EFFECTIVE
   REPAIRS
---------------------------------------------------------- Chapter 0:3

Although the Corps recognizes that long-term, comprehensive planning
and budgeting systems are needed to identify and fund key repair and
rehabilitation projects, especially in the current environment of
static or declining budgets, its funding decisions for the power
plants are not based on such systems.  The Corps gives priority to
routine, ongoing maintenance.  However, when the power plants
experience unplanned outages, the Corps frequently performs repairs
that are reactive and short-term.  For the extensive repairs and
rehabilitations that eventually become essential, the Corps'
budgeting process requires extensive justifications that can take a
year or longer to complete.  The Corps has taken some actions to
address its planning and budgeting needs and recognizes that these
efforts should be continued. 


      CORPS FACES DIFFICULT
      FUNDING DECISIONS IN CURRENT
      BUDGET ENVIRONMENT
-------------------------------------------------------- Chapter 0:3.1

The Corps' budget has been declining in real terms over the last 10
years--by about 18 percent between fiscal years 1986 and 1996, from
about $3.8 billion to $3.1 billion.\16 According to a report prepared
by the Corps' Institute for Water Resources,\17 because of the need
to address the federal budget deficit, this funding trend is expected
to continue.  In such a budget environment, finding adequate funding
to properly maintain, rehabilitate, and repair the aging
hydroelectric power plants will be increasingly difficult. 

Furthermore, the capital investment to maintain and repair the Corps'
power plants is expected to increase by about $1 billion.  For
example, the Corps stated that from 1993 through 2004, it would spend
about $410.3 million to rehabilitate hydroelectric units at eight
power plants nationwide.\18 Moreover, the Corps projected that it
would need to spend $558 million through the year 2004 to repair and
rehabilitate other hydroelectric power plants.\19

The need to spend more to maintain and repair the Corps' aging
hydroelectric power plants will compete with the need to maintain and
repair other Corps facilities, such as those related to commercial
navigation, flood damage reduction, hurricane and storm damage
reduction, and the restoration and protection of environmental
resources (including fish and wildlife habitat).  For example, with
its budget submissions to the Congress, the Corps includes a
"capabilities list" that identifies additional funds for necessary
repairs and rehabilitations for the power plants, as well as for
other purposes--such as dredging, recreation, and navigation--not
included in the initial target budget request.  For the fiscal year
1996 budget proposal, the list contained repair and rehabilitation
projects totaling $72 million--including $8 million for hydroelectric
power plants.  However, the list does not rank the proposed repair
and rehabilitation projects by importance or need. 

Moreover, according to Southeastern's Administrator, although
Southeastern markets the power generated at the Corps' power plants,
the Corps does not consult Southeastern at the corporate level for
budgeting and planning purposes.  However, according to Corps and
Southeastern officials, the Corps' South Atlantic Division consults
with Southeastern in preparing major rehabilitation proposals and in
long- and medium-range planning for maintenance.  Moreover, according
to Corps and Southeastern officials, the Corps meets with a group of
Southeastern's wholesale customers and with Southeastern at least
twice a year to discuss scheduled maintenance and capital projects
planned for the next 10 years.  According to Southeastern officials,
this group is not an advisory group on capital planning and budgetary
matters; it only meets to share information. 


--------------------
\16 In constant 1995 dollars. 

\17 Hydroelectric Investment Strategy for the Corps of Engineers,
Working Draft Report, Version 5.1, Institute for Water Resources,
June 21, 1994. 

\18 According to the Corps, the plants involved and the projected
expenditures for rehabilitations are Bonneville, Oregon/Washington
($113.1 million); Dardanelle, Arkansas ($29.7 million); Hartwell,
Georgia/South Carolina ($17.7 million); Jim Woodruff, Florida ($30.6
million); J.  Strom Thurmond, Georgia/South Carolina ($69.7 million);
The Dalles, Oregon/Washington ($86 million); Walter F.  George,
Alabama/Georgia ($27.4 million); and Garrison, North Dakota ($36.1
million). 

\19 According to Corps officials, much of the $558 million for
capital investment in hydroelectric assets can be funded from the
"operations and maintenance, general" account. 


      PRIORITY IS GIVEN TO
      ROUTINE, ONGOING MAINTENANCE
      WORK, AND GAINING APPROVALS
      FOR EXTENSIVE REPAIRS IS
      OFTEN A LENGTHY PROCESS
-------------------------------------------------------- Chapter 0:3.2

The Corps gives priority to routine, ongoing work, such as the
operation of power plants and recreation facilities, or maintenance
work that is needed to keep the projects operating through the fiscal
year.  Nonroutine work or work that can be deferred to the next year
has been given lower funding priority.  After the Office of
Management and Budget informs Corps headquarters of the Corps' budget
ceiling, headquarters sets budget targets for the Corps' divisions,
which in turn set budget targets for the Corps' districts.  The
districts decide how to allocate the amounts to various projects
within the funding levels established annually by Corps headquarters. 
The baseline level of funding represents the annual fixed,
nondiscretionary costs required to operate and maintain the projects. 
When major repairs are needed, the Corps must follow a system of
approvals and justifications to comply with budgeting procedures and
to explain the repairs to such parties as the Department of the
Army's Assistant Secretary for Civil Works and the Office of
Management and Budget.  Satisfying these requirements delays funding
the expensive repairs and rehabilitations needed to keep the
hydroelectric system operating effectively.  Because of these
approvals and justifications, after the need to repair or
rehabilitate a plant is identified at the project or district level,
it has taken from about 10 months to almost 5 years to begin the
needed repairs. 

Given the emphasis on routine and ongoing maintenance and repair work
and the lengthy justification processes that must be followed for
extensive repairs when units break down unexpectedly, the Corps
frequently performs repairs that are short-term and reactive. 
However, such actions only postpone the need to make more extensive
repairs.  For example, after a failure of the Hartwell power plant's
unit 1 in November 1989, the Corps bypassed the damaged part and
brought the unit back into service at a reduced operating capacity. 
Three months later, the unit was taken out of service for 59 days
while a contractor replaced the damaged part.  Then, in May 1990, the
same kind of problem put unit 2 out of service for 54 days.  The
Corps repaired the unit, but it failed again in January 1992.  The
Corps bypassed the damaged part and returned the unit to service. 
The unit continues to operate at a reduced capacity, along with the
other three units.  As a result of these reductions, Southeastern has
lost about 40 MW of capacity.  The Corps estimates that it will need
about $17.7 million to repair the four units. 

Before extensive and costly repairs or rehabilitation can begin, in
order to justify capital investments, the relevant field location
must perform a lengthy study to document the problem.  The study can
take 18 months to complete, and then another year or longer may be
needed for the proposal to clear the review levels within the Corps
and receive funding.  According to a Corps official, the process is
lengthy because (1) the documentation and analysis submitted by field
staff do not always satisfy the requirements of Corps headquarters
and (2) lengthy examinations and reexaminations of a proposal are
required within the field structure, headquarters, the Department of
the Army's Assistant Secretary for Civil Works, and the Office of
Management and Budget.  A Corps headquarters official explained that
this lengthy analysis and documentation process is applied even if a
hydroelectric unit is out of service and needs immediate repair
because the Corps needs to show the need for costly capital
investments in hydroelectric power plants to the Department of the
Army's Assistant Secretary for Civil Works and the Office of
Management and Budget. 

For example, at the three-unit Millers Ferry power plant, one unit
failed in 1987 because the insulation in the unit's generator had
deteriorated.  The unit was repaired and returned to service within
30 days.  After a second unit failed in 1992 for the same reason, the
responsible district office requested approval from the division in
1993 to repair all three units.  The district office believed that
all three units suffered from the same problems and would need
repairs in the future.  However, Corps headquarters interceded and
requested additional analysis and justification to support repairing
all three units.  During 1993 to 1995, while the district office
complied with certain requests from Corps headquarters and completed
design specifications and the request for proposal, the remaining two
units also failed.  These units were temporarily repaired and
returned to service but operated at a reduced capacity.  As a result,
Southeastern lost about 31 MW of capacity.  More extensive repairs,
according to Corps officials, will not be completed until 1998, at an
estimated cost of $7 million. 


      CORPS HAS TAKEN SOME ACTIONS
      TO ADDRESS PLANNING AND
      BUDGETING NEEDS
-------------------------------------------------------- Chapter 0:3.3

The Corps has recognized that when budgetary resources are relatively
scarce, it cannot continue to fund all of the activities it performed
in the past, such as operating some recreation sites.  Corps
officials have also said that in times of budget shortfalls, it
becomes increasingly important to implement long-term, systematic,
and comprehensive capital planning and budgeting systems.  Such
systems allow agencies to anticipate projects that need to be funded
in the future and to consider the tradeoffs that are inherent in
assigning funding to different purposes.  Given that obtaining
additional funds for hydroelectric investments will be difficult, the
Corps began, in the early and mid-1990s, to take steps to improve its
corporate planning and budgeting processes.  However, these measures
are still ongoing. 

The Corps commissioned a study by its Institute for Water Resources
on its capital planning process for hydroelectric power plants.\20 In
its 1994 working draft report, the Institute concluded that in light
of the power plants' aging and the continued prospects for budget
constraints, the Corps should develop a 10-year plan for future
capital investments for its hydroelectric program and develop, in
coordination with the power marketing administrations and their
customers, procedures for ranking hydroelectric investment needs on
the basis of such criteria as economic, environmental, and
engineering factors.  According to a Corps headquarters official, in
response to these recommendations, Corps headquarters directed all of
its field locations, including those in the Southeast, to compile
lists of proposed, nonroutine hydroelectric capital improvement
projects that had to be accomplished within 10 years.  Although these
lists were compiled on a national level during fiscal years 1993 and
1994, no lists were compiled in fiscal year 1995.  The fiscal year
1994 list shows a projected need through 2004 of over $900 million to
repair and rehabilitate the Corps' 75 hydroelectric power plants
nationwide.  However, the criteria for ranking the proposed repair
and rehabilitation projects have not been established.  The
responsible Corps headquarters official explained that in fiscal year
1995, the effort was suspended because of higher priorities.  He said
he intends to direct the field locations to undertake the effort
again during the summer of 1996, in time to be considered for the
fiscal year 1998 budget.  Currently, Corps headquarters does not use
this list for the agency's annual budget process but rather
encourages its use at the district level for long-range planning. 
Corps officials said they recognize the need to pursue formal use of
the list for planning and budgeting nationwide. 

In addition, according to a Corps official, the Corps recognized in
the early 1990s that the outages at its power plants were reducing
the reliability of its hydroelectric power system.  Consequently,
from fiscal year 1993 through fiscal year 1997, the Corps requested
appropriations for major rehabilitations of eight hydroelectric
plants, four of which are in the Southeast.\21 In March 1996, the
Corps estimated that from 1993 through 2004, it would spend about
$410 million to rehabilitate these eight power plants.  According to
the Corps, as of the end of fiscal year 1996, the Corps had obtained
appropriations of about $22 million for this purpose. 


--------------------
\20 Hydroelectric Investment Strategy for the Corps of Engineers,
Working Draft Report, Version 5.1, Institute for Water Resources,
June 21, 1994.  The report has not been finalized. 

\21 The projects located in the Southeast are Hartwell (Georgia/South
Carolina), Jim Woodruff (Florida), J.  Strom Thurmond (Georgia/South
Carolina), and Walter F.  George (Alabama/Georgia). 


-------------------------------------------------------- Chapter 0:3.4

We provided a draft of this statement to and discussed its contents
with Corps officials, including the Chief, Operations, Construction
and Readiness (headquarters); Hydropower Coordinator (headquarters);
Chief, Construction and Operations Division (South Atlantic
Division); and the Chief, Hydropower Operations (South Atlantic
Division).  We also discussed the statement and its contents with
Southeastern officials, including the Administrator; Assistant
Administrator for Finance and Marketing; and the Chief, Operations. 
These officials generally agreed with the facts presented in our
statement and said that we had fairly represented the condition of
the federal hydroelectric power plants in the Southeast.  Corps
officials agreed that historically the agency's planning and
budgeting systems did not expedite planning and budgeting for
multiple-year capital improvement projects for the Corps'
hydroelectric power plants.  Corps officials said, however, that they
have taken steps to improve their planning and budgeting systems for
these plants.  Corps and Southeastern officials also discussed
efforts under way within the Corps' South Atlantic Division to
consult with Southeastern and with power customers about the
maintenance of the hydroelectric power plants in the region.  These
officials also suggested several technical revisions to our
statement, which we have incorporated as appropriate.  We conducted
our review from January through June 1996 in accordance with
generally accepted government auditing standards. 

This concludes our prepared statement.  It also concludes our work on
this issue for the Subcommittee.  Details of our objectives, scope,
and methodology are presented in appendix VIII.  We would be glad to
answer any questions you may have at this time. 


SOUTHEASTERN POWER
ADMINISTRATION'S SERVICE AREA AND
POWER PLANTS INCLUDED IN OUR STUDY
=========================================================== Appendix I



   (See figure in printed
   edition.)

   Source:  Based on an
   illustration from the
   Southeastern Power
   Administration.

   (See figure in printed
   edition.)


CHARACTERISTICS OF POWER PLANTS
INCLUDED IN OUR STUDY
========================================================== Appendix II

Po
we                                                              Plant's
r                                                                 total
pl                     Number of  Fiscal year  Average age    nameplate
an      River        hydroelectr   of initial     of units     capacity  Authorized
t       system          ic units    operation      (years)       (MW)\a  purposes\b
--  --  -----------  -----------  -----------  -----------  -----------  -----------
Al      Etowah                 3         1949           47           74  HP,FW,FC,NV
la                                                                       , RE,WQ,WS
to
on
a

Bu      Chattahooch            3         1957           39           86  HP,FW,FC,NV
fo      ee                                                               , RE,WQ,WS
rd

Ca      Coosawattee            4         1975           20          500  HP,FW,NV,RE
rt                                                                       , WQ
er
s

Ha      Savannah               5         1962           30          344  HP,FW,FC,NV
rt                                                                       , RE,WQ,WS
we
ll

J.      Savannah               7         1953           43          280  HP,FW,FC,NV
St                                                                       , RE,WQ,WS
ro
m
Th
ur
mo
nd

Ji      Apalachicol            3         1957           39           30  HP,FW,NV,RE
m       a                                                                , WQ
Wo
od
ru
ff

Mi      Alabama                3         1970           26           75  HP,FC,NV,RE
ll
er
s
Fe
rr
y

Ri      Savannah             4\c         1984           11          300  HP,FW,FC,RE
ch                                                                       , WQ,WS
ar
d
B.
Ru
ss
el
l

Ro      Alabama                4         1975           21           68  HP,FC,NV,RE
be
rt
F.
He
nr
y

Wa      Chattahooch            4         1963           33          130  HP,FW,NV,RE
lt      ee                                                               , WQ
er
F.
Ge
or
ge

We      Chattahooch            3         1975           21           73  HP,FW,FC,NV
st      ee                                                               , RE,WQ
Po
in
t

====================================================================================
To                            43                      30\d        1,960
ta
l
------------------------------------------------------------------------------------
\a The generator nameplate capacity refers to the full-load
continuous rating under specified conditions, usually indicated on a
plate attached physically to the equipment.  Because water flow
largely dictates the amount of water available for generation, the
average megawatts (MW) available for power generation from a
hydroelectric facility may differ from the nameplate capacity.  These
numbers are rounded to the nearest MW. 

\b HP = hydropower; FW = fish and wildlife; FC = flood control; NV =
navigation; RE = recreation; WQ = water quality; WS = water supply. 

\c Four additional units are being tested. 

\d The average age of the units in our study was 30. 

Source:  Based on information from the U.S.  Army Corps of Engineers. 


CASE STUDY:  MILLERS FERRY POWER
PLANT
========================================================= Appendix III

Millers Ferry began producing power in 1970.  The power plant's three
generating units have a history of operational problems, and the
Corps has taken remedial action to keep them operational from the
outset.  However, one of the units has been shut down for nearly 4
years, and the other two units are operating at reduced capacity. 
Delays in repairs have been caused by the documentation and review
the Corps requires to justify expenditures for major repairs.  In
April 1996, the Corps awarded a contract for major repairs to the
units at an estimated cost of $7 million. 


   BACKGROUND
------------------------------------------------------- Appendix III:1

Millers Ferry Lock and Dam is located in southwest Alabama on the
Alabama River.  Millers Ferry aids navigation along the Alabama River
and generates electric power, which is marketed by Southeastern to
wholesale customers.  The reservoir and surrounding park have become
a popular recreational facility.  The power plant's three 25-MW units
have a total nameplate capacity of 75 MW. 


   OPERATIONAL PROBLEMS AT THE
   PLANT
------------------------------------------------------- Appendix III:2

When the generating units came on line in 1970, they produced
extraordinarily high noise and vibration levels, which over the years
contributed to the generators' aging at an accelerated rate.  Also,
because the noise levels were high enough to damage human hearing,
the Corps took several actions to protect personnel in the
powerhouse.  For example, noise absorbing panels were installed on
the ceilings and walls of the powerhouse, and sound enclosures were
installed around each of the three generators.  Since 1970, the Corps
has spent about $700,000 on noise abatement measures. 

According to the Corps, although the excessive noise is caused by
vibration within the generator, the Corps had no recourse against the
manufacturer because the design specifications did not address
acceptable noise levels.  The Corps decided to keep the units
operating rather than shut them down to correct the exact cause of
the noise. 

In addition, all three of the power plant's generators have failed
during the past 9 years.  Unit 3 failed in June 1987 and was shut
down for 27 days for repairs.  Unit 1 failed in July 1992, and the
damage was so extensive that the unit has been shut down for nearly 4
years.  Unit 3 failed again in June 1994 and was shut down for 21
days for repairs.  The most recent failure occurred when unit 2
failed in November 1995 and was shut down for 45 days for repairs. 
However, after units 2 and 3 were temporarily repaired and returned
to service, they were operated at reduced capacity to prevent further
damage.  As a result, Southeastern lost about 31 MW of capacity. 

The Corps attributes these failures to deterioration in the
generators' insulation caused by frequent changes in internal
temperatures.  According to the Corps, the insulation used in the
units is not as tolerant of heat as the insulation used in older
units in other power plants. 

In addition, the enclosures installed around the generators for noise
abatement increased the operating temperatures, thus shortening the
life of the units.  These enclosures also contributed to increases in
maintenance costs and in the time needed to perform maintenance
because they make it more difficult for repair crews to access the
generators.  For example, it takes three employees 6 days to
disassemble and then reassemble a noise abatement enclosure to access
a generator. 


   REPAIR OF UNITS HAS BEEN
   DELAYED BY INTERNAL REPORTING
   REQUIREMENTS
------------------------------------------------------- Appendix III:3

According to a Corps official, the delay in repairing the units has
been caused primarily by the internal documentation and review
process that the Corps requires to justify expenditures for major
repairs.  After unit 1 failed in 1992, the Corps' district office in
January 1993 requested approval from the Corps' division to repair
not only unit 1 but also the other two units, which were in poor
operating condition.  The district estimated that a contract could be
awarded by April 1994.  However, Corps headquarters interceded and
requested additional documentation to support the repair of all three
units.  A Corps headquarters official said the district office had
not provided the required analyses and justifications for the
proposed repair work.  The official said that this documentation is
necessary to satisfy Corps management, the Department of the Army's
Assistant Secretary for Civil Works, and the Office of Management and
Budget of the need to make extensive repairs. 

As noted earlier, the Corps did not award the contract for the
repairs until April 1996, more than 3-1/2 years after unit 1 failed. 
The other two units also failed during the intervening period, while
the Corps' district office complied with the Corps headquarters'
request for additional reports, including tests and economic
analysis, and completed design specifications and request for
proposal.  The Corps estimates that the repair of the three units
will cost $7 million and will be completed in early 1998. 


CASE STUDY:  JIM WOODRUFF POWER
PLANT
========================================================== Appendix IV

The Jim Woodruff power plant has a long history of operational
problems stemming from the poor initial design of the turbines and
changing operating conditions.  The plant has experienced major
outages resulting in costly repairs.  Over the years, the Corps has
taken remedial measures that permitted continued use of the plant but
at the same time limited the plant's range of operations and
efficiency.  Because of increasing operational costs and declining
efficiency, the Corps requested federal funds to repair the plant. 
In November 1995, the Congress approved the Corps' plan to
rehabilitate the plant.  The Corps estimates that the cost of repairs
will be over $30 million. 


   BACKGROUND
-------------------------------------------------------- Appendix IV:1

Jim Woodruff Lock and Dam is a multipurpose project located 37 miles
northwest of Tallahassee, Florida, on the Apalachicola River.  In
addition to generating electric power for northern Florida, the
project aids navigation on the Apalachicola River below the dam and
on the Chattahoochee and Flint Rivers above the dam.  The navigation
lock serves commercial water transportation and recreational boating. 

The power plant has been producing electric power since 1957.  It has
a total nameplate capacity of 30 MW, provided by three 10-MW
generating units.  The plant provides over 200 million kilowatt-hours
of energy per year to Southeastern, which markets the energy to six
wholesale customers in Florida.  Small amounts of excess energy are
sold to the Florida Power Corporation. 


   PROBLEMS WITH THE PLANT
-------------------------------------------------------- Appendix IV:2

The plant has experienced problems with reliability since the 1970s. 
Combined with the age of the plant (39 years), the cumulative effects
of the poor initial design of the turbine and erosion of the
downstream river channel since the plant was constructed have caused
major outages, reduced efficiency, increased operations and
maintenance costs, and reduced revenues to Southeastern. 


      POOR DESIGN AND CHANGING
      CONDITIONS HAVE LED TO
      OUTAGES
------------------------------------------------------ Appendix IV:2.1

The plant's variable pitch turbines are a unique design--only eight
were ever manufactured.  The turbines were designed for variable
pitch in order to operate efficiently under a wide range of water
flow conditions.  For two of the plant's three turbines, the
operating linkages that allow the variable pitch feature to function
have failed. 

In addition, erosion of the downstream river channel since the plant
was constructed and the resulting increase in the operating head\22
have placed major stress on the turbine blades.  The operating heads
at the plant routinely exceed those for which the turbines were
originally designed, thus decreasing the extent to which the turbines
are submerged.  As a result, the units have exhibited increasingly
severe vibration problems, leading to outages for repairs. 

Major outages have continued since the 1970s.  For example, after
unit 1 was shut down in October 1977 for 2 days for repairs, it was
shut down again from July 1983 to May 1984, for a 313-day outage, and
in April 1988, for a 60-day outage.  In unit 2, cracks in the turbine
blades were repaired in 1974; the Corps made additional repairs to
the unit from July 1986 through February 1987, for a 207-day outage,
and again in December 1988, for a 5-day outage.  In unit 3, the Corps
discovered and repaired cracks in the turbine blades in 1974 and
1975; additional repairs were made in April 1987, for a 59-day
outage. 


--------------------
\22 The operating head is the difference in elevation between the
water surface above and below a hydroelectric power plant. 


      PLANT'S PERFORMANCE AND
      COSTS HAVE BEEN AFFECTED,
      PROMPTING COMPLAINTS FROM
      SOUTHEASTERN
------------------------------------------------------ Appendix IV:2.2

Because of continuing operational problems, the Corps welded the
plant's turbine blades into a fixed position in 1988.  This action
improved the availability of the plant, but reduced the plant's
efficiency, because fixed turbine blades cannot be adjusted to take
advantage of the varying release rates necessary to maintain adequate
water depths for navigation.  Loss of efficiency reduces the amount
of energy that can be produced at the power plant, affecting its
ability to fulfill contracts for power generation.  The Corps
estimated that the plant's average annual output has been reduced by
about 17 percent, or over 36 million kilowatt-hours per year, because
of the welding of the blades into a fixed position. 

In addition, the costs of operating and maintaining the plant have
increased over the years.  According to the Corps, these increases
are attributable to major maintenance work, the design and
specifications for the major rehabilitation, and the addition of
on-site operators.  Five maintenance personnel are directly assigned
to the plant, and additional personnel are brought in from other
projects if the maintenance is extensive. 

The operational problems at Woodruff prompted Southeastern to
complain to the Corps about a loss of revenue.  In a letter to the
Corps dated September 19, 1990, Southeastern expressed concerns about
the plant's operations, stating that the plant has not been able to
operate at its fullest, resulting in reduced output and a loss in
revenue.  According to Southeastern, the Corps had to spill water
because of the need to decrease the vibrations that occurred as the
units operated.  Southeastern added that the loss to its customers
was even greater because the customers must replace the missing power
by purchasing power from another utility at a higher rate.  The
letter further stated that the plant's inefficient operation and the
resulting loss in revenue had a significantly negative impact on the
repayment schedule for the project and had caused Southeastern to
seek a substantial increase in the power rates charged to its
customers.  According to Southeastern, the combined effects of the
plant's inefficient operation and the droughts of the late 1980s
caused it to raise its wholesale customer rates on the Jim Woodruff
system by nearly 100 percent from 1991 to 1993. 


   CORPS IS PLANNING TO
   REHABILITATE THE PLANT
-------------------------------------------------------- Appendix IV:3

Because of the plant's increasing operations and maintenance costs
and declining efficiency, the Corps in 1991 started a study for a
major rehabilitation of Woodruff.  The study, completed in 1993,
recommended replacing the three turbines, rehabilitating the three
generators, and replacing several peripheral electrical components,
most notably the transformers, to restore the plant's lost
reliability and efficiency. 

According to the Corps, the field office submitted the major
rehabilitation report to Corps headquarters in March 1992 for fiscal
year 1994 funding.  Corps headquarters rejected the report in May
1992.  In March 1993, the field resubmitted the report to
headquarters for fiscal year 1995 funding, and headquarters approved
it in November 1993.  However, the major rehabilitation plan,
included in the Corps' fiscal year 1995 budget request, was rejected
by the Office of Management and Budget because the President's fiscal
year 1995 budget did not include any money for "new starts." In 1994,
the Corps included the plan as part of its fiscal year 1996 budget,
and it was approved by the Office of Management and Budget in
December 1994.  In November 1995, the Congress made funds available
to the Corps to rehabilitate the plant.  Thus, it took the Corps
about 2 years to prepare and approve the rehabilitation study and
another 2 years to get congressional approval for the funding.  It is
estimated that the rehabilitation will be completed in 2001--about 10
years after the beginning of the study.  The Corps estimates that the
cost to rehabilitate the plant will be $30,600,000. 


AVAILABILITY OF CORPS'
HYDROELECTRIC UNITS IN THE SOUTH
ATLANTIC DIVISION AND NATIONWIDE,
FISCAL YEARS 1987 THROUGH 1995
=========================================================== Appendix V



   (See figure in printed
   edition.)

Note:  According to the Corps, for the first two quarters of fiscal
year 1996, the Corps-wide availability of hydroelectric power plants
was unchanged from the previous fiscal year at 87.9 percent.  The
availability of hydroelectric power plants operated by the Corps'
South Atlantic Division increased from 87.2 percent in fiscal year
1995 to 90.2 percent for the first two quarters of fiscal year 1996. 

Source:  U.S.  Army Corps of Engineers. 


OUTAGES OF THIRTY DAYS OR LONGER
FOR CORPS' HYDROELECTRIC UNITS IN
OUR STUDY, CALENDAR YEARS 1986
THROUGH 1995
========================================================== Appendix VI

                                                        Duration
Plant         Unit      Start date    End date            (days)      Reason
----------  ------  --  ------------  ------------  ------------  --  ----------
Allatoona        2      Jan. 29,      Apr. 15,               441      Generator
                        1993          1994                            repair
                                                                      (forced)

                 1      Apr. 26,      Dec. 31,               230      Generator
                        1994          1994                            repair
                                                                      (scheduled
                                                                      )

Buford           1      May 1, 1995   June 9, 1995            39      Inspection
                                                                      (scheduled
                                                                      )

Carters          3      Mar. 25,      Jan. 13,               299      Turbine
                        1989          1990                            repair
                                                                      (scheduled
                                                                      )

                 2      Dec. 21,      Feb. 19,               790      Generator
                        1989          1992                            repair
                                                                      (forced)

                 4      Jan. 15,      July 19,               186      Turbine
                        1990          1990                            repair
                                                                      (scheduled
                                                                      )

                 1      Apr. 2, 1990  Mar. 11,               343      Turbine
                                      1991                            repair
                                                                      (forced)

                 1      Sept. 16,     Mar. 12,               178      Generator
                        1991          1992                            repair
                                                                      (forced)

                 1      Sept. 21,     May 13, 1993           233      Generator
                        1992                                          repair
                                                                      (forced)

                 2      Sept. 22,     Oct. 27,                35      Inspection
                        1992          1992                            (scheduled
                                                                      )

                 2      Sept. 25,     Nov. 9, 1995            45      Inspection
                        1995                                          and
                                                                      turbine
                                                                      repair
                                                                      (scheduled
                                                                      )

Hartwell         3      Nov. 14,      Jan. 16,                63      Generator
                        1986          1987                            repair
                                                                      (scheduled
                                                                      )

                 4      Mar. 23,      May 8, 1987             46      Inspection
                        1987                                          (scheduled
                                                                      )

                 1      Feb. 1990     Apr. 1990               59      Generator
                                                                      repair
                                                                      (scheduled
                                                                      )

                 2      May 1990      July 1990               54      Generator
                                                                      repair
                                                                      (forced)

                 5      Oct. 29,      July 1, 1993           976      Turbine
                        1990                                          repair
                                                                      (forced)

J. Strom         4      Apr. 1987     May 1987                30      Inspection
Thurmond                                                              and
                                                                      turbine
                                                                      repair
                                                                      (scheduled
                                                                      )

                 6      Nov. 1992     Jan. 1993               42      Generator
                                                                      repair
                                                                      (forced)

                 2      Jan. 1993     June 1993              137      Transforme
                                                                      r repair
                                                                      (forced)

                 3      Jan. 1993     June 1993              147      Transforme
                                                                      r repair
                                                                      (forced)

                 5      Aug. 1993     Oct. 1993               67      Testing
                                                                      for plant
                                                                      rehabilita
                                                                      tion
                                                                      report
                                                                      (scheduled
                                                                      )

                 1      Oct. 1994     Dec. 1994               73      Transforme
                                                                      r repair
                                                                      (forced)

                 3      Dec. 1994     Jan. 1995               36      Turbine
                                                                      repair
                                                                      (forced)

                 6      Jan. 1995     Sept. 1995             245      Transforme
                                                                      r repair
                                                                      (forced)

                 7      Jan. 1995     Sept. 1995             245      Transforme
                                                                      r repair
                                                                      (forced)

Jim              1      Apr. 7, 1986  June 13,                67      Inspection
Woodruff                              1986                            and
                                                                      maintenanc
                                                                      e
                                                                      (scheduled
                                                                      )

                 2      July 14,      Feb. 6, 1987           207      Turbine
                        1986                                          repair
                                                                      (scheduled
                                                                      )

                 3      Apr. 20,      June 18,                59      Turbine
                        1987          1987                            inspection
                                                                      and repair
                                                                      (scheduled
                                                                      )

                 1      Apr. 25,      June 23,                60      Inspection
                        1988          1988                            and
                                                                      generator
                                                                      repair
                                                                      (scheduled
                                                                      )

                 1      July 14,      Sept. 9,                57      Generator
                        1988          1988                            repair
                                                                      (scheduled
                                                                      )

Millers          1      July 6, 1992  Dec. 31,              1274      Generator
Ferry                                 1995\a                          repair
                                                                      (forced)

                 2      Nov. 28,      Dec. 31,                34      Generator
                        1995          1995\b                          repair
                                                                      (forced)

Richard B.       1      Feb. 18,      July 25,               157      Generator
Russell                 1986          1986                            repair
                                                                      (forced)

                 3      Apr. 23,      May 29, 1986            36      Generator
                        1986                                          repair
                                                                      (forced)

                 2      Aug. 4, 1986  Sept. 16,               43      Generator
                                      1986                            repair
                                                                      (scheduled
                                                                      )

Robert F.        2      Dec. 25,      Mar. 29,                94      Generator
Henry                   1990          1991                            repair
                                                                      (forced)

                 1      Mar. 23,      Aug. 1, 1995          1226      Generator
                        1992                                          repair
                                                                      (forced)

                 3      Dec. 10,      Mar. 2, 1993            82      Excessive
                        1992                                          ozone
                                                                      emissions
                                                                      (forced)

                 3      Mar. 5, 1993  Dec. 31,              1032      Excessive
                                      1995\c                          ozone
                                                                      emissions
                                                                      and
                                                                      generator
                                                                      repair
                                                                      (forced)

Walter F.        2      Aug. 1, 1990  Nov. 6, 1990            97      Generator
George                                                                repair
                                                                      (forced)

                 1      Apr. 1, 1991  June 12,                72      Inspection
                                      1991                            (scheduled
                                                                      )

                 3      Mar. 30,      May 8, 1992             37      Inspection
                        1992                                          (scheduled
                                                                      )

                 2      Jan. 25,      Mar. 24,                58      Generator
                        1993          1993                            repair
                                                                      (scheduled
                                                                      )

                 4      Aug. 30,      Sept. 29,               30      Inspection
                        1993          1993                            and
                                                                      turbine
                                                                      repair
                                                                      (scheduled
                                                                      )

                 3      Jan. 18,      Feb. 25,                38      Inspection
                        1994          1994                            and
                                                                      turbine
                                                                      repair
                                                                      (scheduled
                                                                      )

                 1      May 30, 1995  July 6, 1995            37      Inspection
                                                                      (scheduled
                                                                      )

West Point       3      June 2, 1986  July 31,                59      Turbine
                                      1986                            repair
                                                                      (scheduled
                                                                      )

                 3      May 11, 1992  June 19,                39      Inspection
                                      1992                            (scheduled
                                                                      )

                 2      Sept. 14,     Oct. 23,                39      Inspection
                        1992          1992                            (scheduled
                                                                      )

                 1      Sept. 13,     Oct. 18,                35      Inspection
                        1993          1993                            (scheduled
                                                                      )

                 3      May 31, 1994  June 30,                30      Inspection
                                      1994                            (scheduled
                                                                      )

                 1      Aug. 2, 1995  Dec. 31,               152      Generator,
                                      1995\d                          turbine,
                                                                      and
                                                                      transforme
                                                                      r repairs
                                                                      (scheduled
                                                                      )
--------------------------------------------------------------------------------
\a On April 24, 1996, the Corps signed a contract for repairs on all
three units; the estimated completion date is February or March 1998. 

\b Unit returned to service on January 12, 1996. 

\c Unit returned to service on February 12, 1996. 

\d The Corps estimates that the unit will be returned to service in
November 1996. 

Source:  U.S.  Army Corps of Engineers. 


OUTAGES OF 30 DAYS OR LONGER FOR
HYDROELECTRIC UNITS INCLUDED IN
OUR STUDY, CALENDAR YEARS 1989
THROUGH 1995
========================================================= Appendix VII



   (See figure in printed
   edition.)

Source:  U.S.  Army Corps of Engineers. 


OBJECTIVES, SCOPE, AND METHODOLOGY
======================================================== Appendix VIII

On December 18, 1995, the Chairman, Subcommittee on Water and Power
Resources, House Committee on Resources, requested that we examine
certain operational and financial issues related to the Department of
Energy's power marketing administrations.  As agreed in subsequent
discussions, this statement focuses on the maintenance and
operational efficiency of the hydroelectric power plants operated by
the Corps that generate the power marketed by the Southeastern Power
Administration (Southeastern).\23

Specifically, we examined the extent to which (1) these power plants
are experiencing outages and (2) the current planning and budgeting
processes allow the Corps to perform timely and effective repairs and
rehabilitations of its hydroelectric assets. 

To determine the extent to which the Corps' hydroelectric power
plants in the Southeast are experiencing outages, we interviewed
Corps officials in Washington, D.C.; Atlanta, Georgia; Savannah,
Georgia; and Mobile, Alabama.  We also contacted the Administrator
and former Acting Administrator of the Southeastern Power
Administration and other agency officials in Elberton, Georgia, and
at the Department of Energy's headquarters in Washington, D.C.  From
the Corps' headquarters and South Atlantic Division, we obtained
operating statistics (i.e., nameplate capacity) and information on
the plants' reliability and availability.  We also obtained data on
plant outages from 1986 through 1995.  We focused on outages of 30
days or longer in order to avoid less important outages and discussed
maintenance procedures with Corps and Southeastern officials.  From
Southeastern, we obtained estimates of the reduced revenues and
increased rates that resulted from outages at the hydroelectric power
plants in the Southeast; however, these estimates pertained to
specific outages and were not applicable to the entire electric
system from which Southeastern markets power. 

To explore in depth the reasons for any outages and the way the Corps
responded to them, we concentrated our efforts on 11 hydroelectric
power plants (which include 43 generating units) operated by the
Corps' South Atlantic Division (Atlanta, Georgia) and the division's
districts in Savannah, Georgia, and Mobile, Alabama.  These 11 plants
on the combined Georgia-Alabama-South Carolina and Jim Woodruff
systems\24 have a total generator nameplate capacity of 1,960 MW
(about 63 percent of the generating capacity from which Southeastern
markets power) and account for 71 percent of Southeastern's power
revenues. 

Corps and Southeastern officials agreed that these plants were
generally representative in age and operating condition of the plants
from which Southeastern markets power.  For example, we selected
power plants ranging in age from relatively new (11 years) to
relatively old (47 years) and ranging in capacity from relatively
small (30 MW) to relatively large (500 MW). 

From the 11 plants, we selected Millers Ferry and Jim Woodruff for
more detailed case-study analysis.  Although all 11 power plants we
reviewed experienced outages from 1986 through 1995, these two plants
had experienced lengthy outages stemming from problems in their
design and the installation of their equipment. 

To determine whether the current planning and budgeting processes
allow the Corps to perform timely and effective repairs and
rehabilitations of its hydroelectric power plants, we obtained and
reviewed Corps budget data from the agency's headquarters in
Washington, D.C., and South Atlantic Division.  We analyzed trends in
the availability of appropriated funds from fiscal years 1986 through
1996, and we adjusted the funds for inflation by applying the gross
domestic product deflators for the appropriate years.  We attempted
to determine the exact amounts of funds requested, appropriated, and
spent for the operation, maintenance, rehabilitation, and repair of
the 11 Corps hydroelectric power plants in our study from fiscal
years 1986 through 1996.  However, the data we requested were either
not available or were not reported consistently by the Corps.  We
also interviewed representatives of the Corps, Southeastern, and the
association of Southeastern's wholesale customers to obtain their
views on the adequacy of the funding for operating, maintaining, and
rehabilitating the Corps' hydroelectric power plants. 

We interviewed Corps budgeting and planning officials at
headquarters, the South Atlantic Division, the Savannah District, and
the Mobile District and obtained the guidelines for compiling annual
budgets and studies on ways in which the Corps could improve its
budgeting and planning systems.  We reviewed lists compiled by Corps
headquarters and the field offices on repairs that have been proposed
over the next 10 years and the cost of these repairs.  We also
obtained Southeastern's views on the Corps' planning and budgeting
functions and Southeastern's role in those processes. 

We performed our work from January through June 1996 in accordance
with generally accepted government auditing standards. 


--------------------
\23 As also requested, we addressed the use of the funds appropriated
for future irrigation projects in one hydroelectric program in our
testimony Federal Power:  Recovery of Federal Investment in
Hydropower Facilities in the Pick-Sloan Program (GAO/T-RCED-96-142,
May 2, 1996).  For a future report, we are also determining whether
the power rates charged by the power marketing administrations
recover all relevant costs. 

\24 Allatoona, Buford, Carters, Hartwell, J.  Strom Thurmond, Jim
Woodruff, Millers Ferry, Richard B.  Russell, Robert F.  Henry,Walter
F.  George, and West Point. 


*** End of document. ***