CVP Cost Allocation Study: Draft Table of Findings and Recommendations

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1/20/2015 1

The below draft Findings and Recommendations Table provides information on the CVP Cost Allocation Study. Reclamation is asking the public to provide comments on 

the table 30 calendar days from Friday, March 28, 2014. Reclamation will then consolidate and incorporate comments received as appropriate. This table will be revised 

periodically to include new and updated information.

No Issue/Topic Findings & Recommendations Discussion Add’l Resources

1 Authority to 

Implement 

Study

Public Law 99-546 (Section 102) Section 102 of Public Law 99-546 authorizes the Secretary of the Interior to 

undertake a cost allocation study of the CVP. As approved by the President on 

October 27, 1986, Section 102 provides in pertinent part that: “(2) The Secretary of 

the Interior is authorized and directed to undertake a cost allocation study of the 

Central Valley Project, including the provisions of this Act, and to implement such 

allocations...”

PL 99-546

2 Cost 

Allocation 

vs. Cost 

Recovery 

The Cost Allocation Study focuses on 

the allocation of CVP costs assigned 

among authorized project purposes 

rather than the recovery of costs 

through the repayment process. 

The primary purpose of the Cost Allocation Study is to develop appropriate cost 

allocation factors that are used to assign CVP construction costs among authorized 

project purposes: flood control, navigation, water supply (irrigation, M&I, and 

refuge), power, fish and wildlife, water quality, and recreation. The cost allocation 

process is independent of cost recovery, which focuses on repayment of those 

project costs that are deemed to be reimbursable by project water and power 

contractors.

Once costs are allocated across purposes, the issue of cost recovery and 

repayment will be addressed as part of the Cost Allocation Study. The cost 

recovery analysis will entail estimating total reimbursable costs of the project and 

identifying which project beneficiaries will be responsible for repayment pursuant to 

Reclamation law and policy.

Cost Allocation vs. 

Recovery Diagram

3 Interim vs. 

Final Cost 

Allocation

Final cost allocation for facilities to be 

repaid by 2030 

The current cost allocation study represents the final cost allocation for CVP 

facilities subject to the 2030 repayment requirement.

Commissioner 

Memorandum

4 CostAllocation 

Methodology

Separable Costs Remaining Benefits 

(SCRB)

The Separable Costs Remaining Benefits (SCRB) method for allocating costs of 

multi-purpose projects was adopted for use by Reclamation in 1954, is a widely 

accepted method used by water resource agencies, and was used in the 1956, 

1960, 1970, and 1975 CVP cost allocations. Given the history of Reclamation 

policy supporting the SCRB method for cost allocations, the SCRB method will be 

used for the updated CVP cost allocation. The SCRB method is based on 

determining a justifiable investment for each authorized project purpose, and it is 

defined as the lesser of either: (1) the benefits ascribed to the purpose; or (2) the 

cost of the most economical single purpose alternative project that would generate 

the same benefits as the multipurpose project.

 SCRB Fact Sheet

 Reclamation 

Economics 

Guidebook

5 Facilities 

Included

All completed facilities subject to the 

2030 repayment requirement

The Cost Allocation Study will confirm or adjust allocations for CVP facilities in the 

following divisions or units: 

 Shasta and Trinity River Division; 

 Friant Division; 

 Canals Unit, Sacramento River Division; 

 Folsom Unit, American River Division; 

 Delta Division; 

 San Luis Unit, San Felipe Division; 

 Issue Paper

 Facility List
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

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 San Joaquin Division; and 

 New Melones Unit, Stanislaus Division.

With exception of the San Felipe Division, the Safety of Dams program 

improvements, and potential CVP Improvement Act-authorized projects and 

facilities, all current CVP facilities are subject to the 2030 repayment 

obligation. The allocation for facilities with post-2030 repayment obligations would 

incorporate the updated allocation resulting from the study, and those costs would 

be recovered over a separate repayment period.

6 Interest 

Rate

3.25 percent A 3.25 percent federal interest rate will be used in this CVP cost allocation 

study. This rate is consistent with rates used in past CVP cost allocation studies 

and complies with Section 80(b) of Public Law 93-251, requiring a December 1968 

discount rate for facilities authorized prior to January 1969. The rate at that time 

was 3.25 percent.

PL 93-251

7 Base Year 2010 The base year for the Cost Allocation Study will be 2010. All estimates of project 

benefits and alternative costs will reflect 2010 average annual price levels.

8 Period of 

Analysis 

100 years PEC 01-02 states: “The period for estimating benefits and costs used in the cost 

allocation process will be the same as that used in project formulation and 

evaluation which is the lesser of the economic life of the project, or 100 years 

beyond the initial date of service (P&G 1.4.12).” Given the economic life of the 

project is expected to exceed 100 years, this final allocation will utilize 100 years 

beyond the initial date of service as the period of analysis.

PEC 01-02

9 Initial 50-

Year 

Analysis 

and Historic 

Benefits

An initial 50-year benefit analysis will 

be conducted, which will determine 

whether it will be necessary to evaluate 

historic benefits.

Reclamation will streamline the Cost Allocation Study methodology by initially 

evaluating the benefits associated with a specific CVP purpose for 50 

years. Should initial benefits exceed the Single Purpose Alternative (SPA) costs for 

that purpose, then additional economic benefit analyses would not be needed.

 Issue Paper

 Historic Benefits 

Presentation

10 Benefits 

Analysis 

(Basis)

National perspective As outlined in Reclamation’s Directives and Standards for Project Cost Allocations 

(PEC 01-02) and pursuant to the Federal Principles and Guidelines, benefits are 

measured from a national perspective, as opposed to a localized 

increase/improvement to society. 

 PEC 01-02

 Federal Principles 

& Guidelines

11 Water Year 

Types

Water year types will be considered in 

the benefits analysis.

An estimate of the range of benefits spanning critical, dry, below normal, above 

normal, and wet water year types will be developed based on the results of CalSim2 

modeling.

12 Hydrology 

Model

CalSim2 Reclamation has selected CalSim2 planning model for the Cost Allocation 

Study. CalSim2 uses historic hydrology adjusted to reflect a consistent level of land 

use, current facilities, simulated current regulatory environments, and is able to 

consider climate change impacts on water supply as an important sensitivity 

analysis.

CalSim2 – Model 

Overview

13 Water 

Supply 

Deliveries 

(Actual vs. 

Modeled)

Future water supplies will be based on 

CalSim2 modeling and historic water 

supplies will be based on actual 

deliveries.

Future water deliveries will be estimated by the CalSim2 model, which reflects 

multipurpose project operations under a consistent set of regulations and 

facilities. Historic water supplies will be based on actual deliveries based on 

records maintained by Reclamation.

14 Capital Cost indexing or re-pricing can be used The capitalized costs for each facility need to be equated to a common base year Issue Paper
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

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Cost 

Evaluation: 

Methodolog

y

to bring estimated construction costs to 

constant (base year) dollars.

for comparison with facility benefits. There are two alternative cost equalization 

methodologies available for use in the Cost Allocation Study: (1) indexing and (2) 

re-pricing. Either method can be used to equate capital costs to a common base 

year required as part of the SCRB analysis, but each method has strengths and 

weaknesses that must be considered.

15 Capital 

Costs: 

Types of 

Costs 

Specific, separable, and joint costs will 

be estimated as part of the SCRB 

analysis.

Capital costs are categorized as Specific Costs, Separable Costs, or Joint 

Costs. Specific Costs relate to a single purpose facility. Separable Costs are part 

of a multi-purpose facility, but can be individually defined based upon a minimum 

allocation to the associated single purpose or function. Joint costs are those costs 

that remain in a multi-purpose facility after all separable costs are deducted.

Separable Costs will be itemized and determined utilizing Appraisal Level cost 

estimating methods, which are derived from engineering models, quantity take-offs 

and comparison.

16 Facility 

Sizing

Based on re-sizing of each existing 

reservoir as a stand-alone facility for 

each authorized purpose

A database of existing facility costs will be developed using Bid Abstracts to identify 

major bid items and pricing. Costs for each CVP facility will be linked to major bid 

items in order to establish ratios and develop a computer-generated model of the 

existing facility for future sizing manipulation. Once the single purpose alternative 

sizing is determined (based on the benefits analysis for each project purpose), the 

facility will be re-sized with the computer model and material quantities extracted for 

re-pricing or indexing (depending on the approach selected). Appraisal-level cost 

estimates can be completed by applying the original facility pricing to new facility 

sizes and indexing as appropriate.

17 Inclusion of 

New 

Melones 

Unit

Reclamation may assume responsibility 

for determining the cost allocation 

factors for the New Melones Unit in the 

final CVP Cost Allocation Study.

The New Melones project was authorized by PL 87-874 in 1962 for construction by 

the USACE with the provision that upon completion, the project would be 

operationally and financially integrated into the CVP. In 1980, the project costs 

were transferred to the CVP when the facility was placed in service, and 

Reclamation has been using the USACE cost allocation since that 

time. Reclamation has concluded that pursuant to PL 87-874, when the project was 

transferred to Reclamation, responsibility for performing the cost allocation was also 

transferred from the USACE to Reclamation. However, there is no governing 

authority precluding Reclamation from incorporating the facility into the final CVP 

cost allocation.

Issue Paper

18 Trinity 

River –

Assumption

s

The CAS will not allocate any 

construction costs of the Trinity River 

Division to the flood control or 

navigation purposes

Flood control and navigation are not authorized for the Trinity River Division and 

any benefits that accrue to flood control or navigation are incidental to its primary 

operation for fishery flows, recreation, irrigation deliveries, and power 

generation. Therefore, the Cost Allocation Study will not allocate any construction 

costs of the Trinity River Division to the flood control or navigation purpose.

 Public Law 386

 Letter to USACE 

from Reclamation

19 Flood 

Control: 

BenefitsMethodology

Damages prevented analysis Flood control benefit values are characterized by “damages prevented” for each 

reservoir. The USACE completed flood control benefit analyses for each reservoir 

by indexing historic damages prevented values forward to the base year 

(2010). The USACE data have not been updated in several years; therefore, the 

property values reflected in the damages prevented analysis are considered very 

conservative. The effect of reservoir operations on downstream flow (damages 

prevented) is determined by routing and comparing regulated and unregulated (i.e. 

natural or without-project) river stages for selected sites. This involves comparing 
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

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observed flows and damages occurring with the flood reduction facility to 

unregulated flows and the potential resulting damages. The reduction in river stage 

or flow resulting from reservoir operations is used to index the value of damages 

prevented. Given that flood control benefit values for the CVP have historically 

been significantly higher than the single purpose flood control facility cost, 

Reclamation will assume that the benefits still exceed the single purpose cost for 

the SCRB analysis.

20 Flood 

Control: 

BenefitsResults

Flood control benefits have been 

estimated by the USACE. Damages 

avoided are estimated at approximately 

$37.7 billion (nominal dollars).

The flood control analysis completed by the USACE for the CVP Cost Allocation 

Study indicates that the value of historical flood control benefits generated by the 

CVP is an estimated $37.7 billion (nominal or historic dollars). This value will be 

indexed to base year dollars and compared to the cost of a single-purpose flood 

control alternative. The nominal benefits are greater than the cost of the entire 

CVP; therefore, no further economic benefits analysis is needed; the single-purpose 

flood control alternative cost is the maximum justifiable expenditure and will be the 

controlling parameter in the allocation of joint costs to flood control.

USACE 50-Year 

Flood Control 

Analysis

 New Melones 

Analysis

 Friant Analysis

 Shasta Analysis

 Folsom Analysis

21 Flood 

Control: 

Facility 

Sizing

Resize each existing reservoir as a 

stand-alone flood control facility

The general approach is to resize each existing reservoir as a stand-alone flood 

control facility based on USACE Flood Control Rule Curve requirements. The Flood 

Control Rules for maximum allowable storage are used in the CalSim2 planning 

model. Reclamation will examine the time series of rules used, and find the 

difference between the lowest number in the data set and the actual size of the 

reservoir which will equal the space or size required to accommodate inflows. This 

is the size of the reservoir that would be required if its only purpose was to provide 

flood control benefits.

 Technical 

Memorandum

22 Navigation: 

BenefitsMethodology

Existing analysis of historic navigation 

benefits prepared by USACE, which 

will be indexed for the Cost Allocation 

Study

Over the years, there have been the following correspondence between 

Reclamation and USACE regarding navigation benefits: 

 In a 1987 USACE letter to Reclamation, navigation benefits were indexed from a 

1959 estimate, and therefore, it is likely that minimal navigation benefits were 

occurring at that time.

 According to a letter from Reclamation to the USACE, dated June 3, 2013, the 

CVP has little, if any, effect on the navigation of ocean-going ships calling at the 

ports of West Sacramento and Stockton. As a result, the Cost Allocation Study 

will not allocate any construction costs of the CVP to navigation. These costs will 

be allocated among the other project purposes of the CVP.

 A revised letter (pending release) from Reclamation to USACE that corrects the 

June 3, 2013 letter, states that the Cost Allocation Study will not include an 

estimate of future navigation benefits generated by the CVP. However, costs 

allocated to navigation will be based on the present value of historic benefit 

values indexed to base year (2010) or the cost of a single-purpose project 

capable of providing the same level of benefits for navigation as the multi-purpose 

project. Lastly, pending the release of the revised letter, USACE concurs with 

Reclamation on the methodology used for navigation benefits. 

 USACE 

Navigation 

Analysis

 Letter to USACE 

from Reclamation

23 Navigation: 

BenefitsResults

To be estimated To be estimated
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24 Navigation: 

Facility 

Sizing

Not applicable Because USACE and Reclamation have determined that the CVP no longer 

provides navigation benefits, there is no need to develop single-purpose alternative 

costs.

25 Irrigation 

Water 

Supply: 

BenefitsMethodology

Statewide Agricultural Production 

Model (SWAP)

Irrigation water supply benefits will be based on an economic analysis using the 

Statewide Agricultural Production Model (SWAP). SWAP optimizes crop acreage 

by projecting future cropping patterns, land use, and water use by considering land 

and water availability and cost, market conditions, and production costs. The model 

selects those crops, acreage and water supplies that maximize profit subject to 

certain constraints. SWAP is an agricultural crop acreage model that simulates the 

decisions of agricultural producers (farmers) on a regional level based on principles 

of economic optimization.

SWAP is well suited to estimate future irrigation water supply benefits. If the value 

of a 50-year projection of benefits does not exceed the cost of the single-purpose 

alternative, historic benefits may need to be estimated. In this case, alternative 

modeling approaches may be used, including the Farm Budget approach in 

accordance with the procedures described in the Economic and Environmental 

Principles and Guidelines for Water and Related Land Resources Implementation 

Studies (P&G’s). As stated in the P&G’s, irrigation benefits are the value of 

increases in the agricultural output of the nation and/or the cost savings in 

maintaining a given level of output. The value of increases in agricultural output can 

be measured in a farm budget analysis as an increase in net farm income. Cost 

savings can be measured through increased production efficiencies and reduced 

production costs. 

The benefits associated with irrigation water supplies are essentially the additional 

net farm revenues that result from the application of irrigation water to agricultural 

lands. SWAP (or the Farm Budget approach) will be used to estimate the value of 

an irrigation water supply to produce crops by estimating the residual net farm 

income of a representative farm in a project area with irrigation compared to 

residual income without irrigation.

 SWAP – Model 

Overview

 Farm Budget Tool 

– Model Overview

26 Irrigation 

Water 

Supply: 

BenefitsResults

To be estimated To be estimated

27 Irrigation 

Water 

Supply: 

Facility 

Sizing

Construct hydrology model with the 

single purpose of meeting project water 

deliveries which are fixed to those 

under the current regulatory 

environment. To ensure a least-cost 

approach, the study will also consider 

the possibility that a different 

combination/mix of reservoirs may yield 

a more economical single-purpose 

alternative.

Water supply benefits and single purpose alternative (SPA) facility sizing are based 

on water deliveries achieved with the multipurpose project. Water deliveries will be 

defined by CalSim2 model results which reflect multipurpose project operations 

under a consistent set of regulations and facilities rather than historical delivery 

levels which have varied over time due to changing criteria and system 

configurations. The following steps are required to analyze SPA facility sizes for 

water supply:

Reclamation will construct a "Cost Allocation CalSim2" (CalSim2) model with the 

single purpose of meeting project deliveries which are fixed to those under the 

current regulatory environment. The model will determine the reservoir sizes 

required to facilitate deliveries. The effects of regulations and other project 

Technical 

Memorandum
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

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1/20/2015 6

operations are implicitly captured in the level of delivery that is met. Isolating the 

delivery purpose and operating theoretical storage facilities to meet only this 

purpose provides the single purpose facility sizes. To ensure a least-cost approach,

the study will also consider the possibility that a different combination/mix of 

reservoirs may yield a more economical single-purpose 

alternative. 

CalSim2 model runs can also provide a range of analysis options, including: 

 Unique categories of delivery, such as irrigation and M&I

 Varying relative sizes of project reservoirs

 Effects of regulatory environment

 Effects of climate change 

 SPA facilities could be sized for delivery levels achieved under D-1485, 

CVPIA, and D-1641. 

28 M&I Water 

Supply: 

BenefitsMethodology

Several models will be used: California 

Municipal Demand Model (CMDM), 

Least-Cost Planning SIMulation Model 

(LCPSIM), and Other Municipal Water 

Economics Model (OMWEM).

Several distinct approaches are being considered to estimate M&I water supply benefits.

Demand Curve Approach: The California Municipal Demand Model (CMDM) will be 

used to estimate benefits on a per acre-foot basis. The municipalities that are 

included in the model are Contra Costa Water District, Eastern Municipal Water 

District, Irvine Ranch Water District, Los Angeles Department of Water and Power, 

Otay Water District, East Bay Municipal Water District, Western Municipal Water 

District, Carlsbad Municipal Water District, San Juan Capistrano.

Cost Minimization: The LCPSIM and OMWEM models attempt to minimize the 

costs of unreliability (foregone use) and the costs of reliability enhancement 

(demand reduction and supply augmentation).

Once benefit values are estimated for M&I water supplies based on demand curve 

analyses and/or cost minimization analyses, these values will be considered in 

conjunction with M&I water supply estimates provided by CalSim2 (for future 

deliveries) and/or historical data if needed to quantity total benefits. 

 CMDM – Model 

Overview

 LCPSIM – Model 

Overview

 OMWEM – Model 

Overview

29 M&I Water 

Supply: 

BenefitsResults

To be estimated To be estimated

30 M&I Water 

Supply: 

Facility 

Sizing

Construct hydrology model with the 

single purpose of meeting project water 

deliveries which are fixed to those 

under the current regulatory 

environment. To ensure a least-cost 

approach, the study will also consider 

the possibility that a different 

combination/mix of reservoirs may yield 

a more economical single-purpose 

alternative.

Water supply benefits and single purpose alternative (SPA) facility sizing are based 

on water deliveries achieved with the multipurpose project. Water deliveries will be 

defined by CalSim2 model results which reflect multipurpose project operations 

under a consistent set of regulations and facilities rather than historical delivery 

levels which have varied over time due to changing criteria and system 

configurations. The following steps are required to analyze SPA facility sizes for 

water supply:

Reclamation will construct a "Cost Allocation CalSim2" (CalSim2) model with the 

single purpose of meeting project deliveries which are fixed to those under the 

current regulatory environment. The model will determine the reservoir sizes 

required to facilitate deliveries. The effects of regulations and other project 

operations are implicitly captured in the level of delivery that is met. Isolating the 

delivery purpose and operating theoretical storage facilities to meet only this 

Technical 

Memorandum
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

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1/20/2015 7

purpose provides the single purpose facility sizes. To ensure a least-cost approach, 

the study will also consider the possibility that a different combination/mix of 

reservoirs may yield a more economical single-purpose 

alternative 

CalSim2 model runs can also provide a range of analysis options, including: 

 Unique categories of delivery, such as irrigation and M&I

 Varying relative sizes of project reservoirs

 Effects of regulatory environment

 Effects of climate change 

 SPA facilities could be sized for delivery levels achieved under D-1485, CVPIA, 

and D-1641. 

31 Refuge 

Water

Supply: 

BenefitsMethodology

Foregone value of most likely 

alternative use of water (i.e., 

agriculture)

Refuge water deliveries per acre foot will be valued based on the “foregone value” 

associated with the most likely alternative use of the water (i.e., agriculture).

Future annual refuge water supplies from the hydrology modeling and possibly 

historical annual refuge water supplies would be multiplied by recent (adjusted to 

2010) values per acre foot from the agricultural analysis to reflect the value of the 

most likely forgone use.

32 Refuge 

Water 

Supply: 

BenefitsResults

To be estimated To be estimated

33 Refuge 

Water 

Supply: 

Facility 

Sizing

Construct hydrology model with the 

single purpose of meeting project water 

deliveries which are fixed to those 

under the current regulatory 

environment. To ensure a least-cost 

approach, the study will also consider 

the possibility that a different 

combination/mix of reservoirs may yield 

a more economical single-purpose 

alternative.

Water supply benefits and single purpose alternative (SPA) facility sizing are based 

on water deliveries achieved with the multipurpose project. Water deliveries will be 

defined by CalSim2 model results which reflect multipurpose project operations 

under a consistent set of regulations and facilities rather than historical delivery 

levels which have varied over time due to changing criteria and system 

configurations. The following steps are required to analyze SPA facility sizes for 

water supply:

Reclamation will construct a "Cost Allocation CalSim2" (CalSim2) model with the 

single purpose of meeting project deliveries which are fixed to those under the 

current regulatory environment. The model will determine the reservoir sizes 

required to facilitate deliveries. The effects of regulations and other project 

operations are implicitly captured in the level of delivery that is met. Isolating the 

delivery purpose and operating theoretical storage facilities to meet only this 

purpose provides the single purpose facility sizes. To ensure a least-cost approach, 

the study will also consider the possibility that a different combination/mix of 

reservoirs may yield a more economical single-purpose 

alternative 

CalSim2 model runs can also provide a range of analysis options, including: 

 Unique categories of delivery, such as irrigation and M&I

 Varying relative sizes of project reservoirs

 Effects of regulatory environment

 Effects of climate change 
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

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 SPA facilities could be sized for delivery levels achieved under D-1485, CVPIA, 

and D-1641.

34 Power: 

BenefitsMethodology

Power benefits will be estimated using 

the Plexos model

The benefit analysis for power will either be based on: (1) a with and without the 

CVP approach, or (2) future power market price approach. The first approach is a 

traditional approach for Reclamation. The second was suggested by some CVP 

contractors. To determine if the second is an appropriate approach, a Proof of 

Concept Test will be conducted. If the Proof of Concept indicates that both 

approaches provide comparable results, then Reclamation will use the more 

streamlined second approach to value CVP power benefits.

The Proof of Concept entails estimating the benefits of CVP hydropower through a 

direct calculation of power accomplishments multiplied by forecasted market 

prices. The recommended simplifying methodology is to simply use a forecast of 

market prices, for year 2020 conditions when: (1) the Renewable Portfolio Standard 

mandate requiring 33 percent of load to be met from renewable resources will have 

been implemented, and (2) the Cap and Trade greenhouse gas emissions offset 

market will be mature and apply these prices, as appropriate, to forecasted CVP 

generation and ancillary services as constrained by the CVP’s physical and 

regulatory operating constraints. The Proof of Concept tests the hypothesis that 

electricity market prices with and without the CVP are not significantly different than 

the streamlined approach. If that hypothesis cannot be validated, the power 

benefits evaluation will be completed using the with- and without-project approach. 

Reclamation has contracted with Pinnacle Consulting LLC and Energy Exemplar to 

perform power benefits analyses and validate the results for a number of planning 

studies and the CVP Cost Allocation Study using the PLEXOS model. The 

PLEXOS model dynamically simulates the market dispatch of generation to meet 

load and reserve requirements while respecting transmission constraints to estimate 

the price of the resource being evaluated (in this case, the CVP hydropower 

system). PLEXOS is particularly good at modeling hourly hydro dispatch 

constrained by water operations and regulatory requirements. In addition, PLEXOS 

allows future benefits to be evaluated considering load growth, market dynamics 

and generation additions needed to meet legislative mandates.

 Plexos – Model 

Overview

 Issue Paper

35 Power: 

BenefitsResults

To be estimated To be estimated

36 Power: 

Facility 

Sizing

The single purpose alternative will be 

sized as a dam, reservoir and power 

plant system providing comparable 

power benefits to those associated with 

existing CVP power features. To 

ensure a least-cost approach, the study 

will also consider the possibility that a 

different combination/mix of reservoirs 

may yield a more economical singlepurpose alternative.

Because hydropower generation is dependent on the available flow and head on 

the various river systems where current CVP facilities are located, it is assumed that 

each SPA power feature will be constructed at the same location as the current 

CVP facility. However, the size of the dam may be reduced and the length of the 

penstock increased to provide identical power benefits at least cost. The SPA will 

be sized as a dam, reservoir, and power plant system providing comparable power 

benefits to those associated with existing CVP power features (including on-peak, 

off-peak and ancillary service benefits). Comparable CVP capacity benefits to be 

provided by the power SPA would be estimated using a dry-year analysis. To 

ensure a least-cost approach, the study will also consider the possibility that a 

different combination/mix of reservoirs may yield a more economical single-purpose 
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

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1/20/2015 9

alternative. 

 The costs of CVP transmission facilities to the principal points of delivery in 

the CVP will be considered as costs to be allocated. At a minimum, it would 

be desirable to include the cost of high voltage transmission to the Tracy 

load center independent of whether such facilities are owned by 

Reclamation or Western.

 The benefits to be replaced by the SPA are those associated with the gross 

production of CVP power rather than the net production of power after 

project use is subtracted. Separable and joint costs assigned to the power 

function will be sub-allocated to project use and commercial power. 

37 Fish & 

Wildlife: 

BenefitsMethodolog

y

Benefits transfer (if applicable) During the last attempt to update the CVP cost allocation study, U.S. Fish and 

Wildlife Service (FWS) did not participate in the study, but stated that it is probably 

inappropriate to assign any project costs to fish and wildlife purposes considering 

the negative impact that the CVP has had on fish and wildlife. After fish and wildlife 

losses associated with the CVP have been compensated for, it will be appropriate to 

begin assigning enhancement benefits to fish and wildlife. 

For this study, Reclamation has been coordinating with FWS on the issue of fish 

and wildlife benefits. Initial meetings between FWS and Reclamation staff have not 

resulted in definitive decisions as to the issue of mitigation versus enhancement 

with respect to fish and wildlife resources (e.g., fish species) significantly affected by 

CVP facilities. If fish and wildlife resources are being mitigated, there would be no 

valuation of benefits. If the fish and wildlife resources are being enhanced by the 

CVP, fish and wildlife benefits would exist, and therefore, would require estimation 

using a benefits-transfer process. Benefits transfer makes use of valuation results 

from existing research when estimating benefits for the resource of interest.

The benefits transfer based valuation process would involve applying annual 

estimates of fish and wildlife enhancement populations as obtained from the U.S. 

Fish and Wildlife Service to economic use values (e.g., commercial, recreational, 

etc. ) per fish as obtained from existing literature.

Costs allocated in the 1975 cost allocation study for facilities (e.g., Tehama-Colusa 

Fish Facility) which were constructed at the request of FWS for the purpose of 

enhancing fish and wildlife resources will be transferred to this Cost Allocation 

Study as enhancement and not reassigned or reallocated to other purposes.

38 Fish & 

Wildlife: 

BenefitsResults

To be estimated To be estimated

39 Fish & 

Wildlife: 

Facility 

Sizing

To be developed To be developed

40 Water 

Quality: 

BenefitsTo be developed To be developed.

Below is pertinent background information related to water quality benefits: 

The CVP maintains increased flows in the Trinity, American, and Stanislaus rivers 

PL 99-546
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

http://www.usbr.gov/mp/cvp/cvp-cas/docs.html Public Meeting 3/28/14

1/20/2015 10

Methodolog

y

to improve the fisheries habitat and water quality conditions. Flow conditions in the 

lower reaches of the Trinity, American, and Stanislaus rivers are maintained under 

flow requirements set by the California State Water Resources Control Board 

(SWRCB). These costs are generally embedded in the costs of operating and 

maintaining the CVP, and for the most part, reimbursed by the authorized water and 

power beneficiaries. The costs of providing increased flows in the Stanislaus River 

however, are deemed non-reimbursable and assigned to the water quality purpose 

for the New Melones Unit.

The CVP is currently responsible for meeting its share of the salinity outflow 

standards set for the Sacramento-San Joaquin Delta. The standards are included 

in the SWRCB Water Rights Decision 1485 (D-1485) and Decision 1641 (D1641). The costs of meeting D-1485 water quality standards are reimbursable by 

water and power contractors. Public Law 99-546, Section 102 (c) (1) dated October 

27, 1986, states "the costs for providing water for salinity control and for complying 

with State water quality standards above those standards identified in the previous 

sentence (D-1485) shall be non-reimbursable." Meeting D-1641 water quality 

standards requires exceeding those of D-1485, meaning that any additional costs 

incurred by Reclamation in meeting D-1641 would be nonreimbursable. Reclamation is researching whether it was the intent of Congress in 

passing PL 99-546 that the added cost of complying with water quality standards 

higher than D-1485 would also be non-reimbursable. If this was the intent of 

Congress, then an appropriate share of project costs would be allocated to a nonreimbursable water quality purpose. It is recognized that the CVP provides 

additional water quality benefits during critically dry years. Reclamation is exploring 

options for evaluating these benefits that may be considered as water quality 

benefits. 

41 Water 

Quality: 

BenefitsResults

To be estimated To be estimated

42 Water 

Quality: 

Facility 

Sizing

To be developed To be developed

43 Recreation: 

BenefitsMethodolog

y

No joint costs can be allocated to 

recreation, with the possible exception 

of the New Melones Unit. If recreation 

benefits need to be quantified, benefitstransfer methodology will be used.

Based on Reclamation law and policy, and in the absence of specific authorizing 

legislation or the existence of a cost-sharing agreement, it is anticipated that no joint 

costs will be allocated to the recreation purpose for any multi-purpose CVP facilities.

The Federal Water Project Recreation Act of 1965 (FWPRA) authorizes project joint 

costs to be allocated to recreation, provided that Reclamation has an appropriate 

cost-share partner and agreement in place PRIOR TO project authorization 

(FWPRA, Sec. 2). It further requires, prior to project authorization, obtaining a 

commitment in writing from a non-Federal public entity to administer the project 

lands and water areas for recreation and to cost share on a portion of singlepurpose recreation construction costs and at least half of all operating costs. 

Because these requirements have not been met, no joint costs will be allocated to 

 Issue Paper

 Federal Water 

Project Recreation 

Act
CVP Cost Allocation Study: Draft Table of Findings and Recommendations

http://www.usbr.gov/mp/cvp/cvp-cas/docs.html Public Meeting 3/28/14

1/20/2015 11

the recreation purpose with the possible exception of the New Melones Unit. 

Should the New Melones Unit qualify for a recreation allocation, recreation benefits 

would need to be estimated. To estimate recreation benefits, annual recreation 

visitation data would be collected and/or estimated. A benefits-transfer process 

would be employed to value the recreation benefits. Benefits transfer makes use of 

valuation results from existing research when estimating benefits for the resource of 

interest. Recreation benefits per visit obtained from existing literature would be 

applied to the annual visitation estimates.

44 Recreation: 

BenefitsResults

To be estimated (if applicable) To be estimated, if applicable

45 Recreation: 

Facility 

Sizing

To be developed (if applicable) To be developed, if applicable