U.S. Department of the Interior January 2020

Central Valley Project

Final Cost Allocation Study
Mission Statements

The mission of the Department of the Interior is to protect and provide access to our 

Nation’s natural and cultural heritage and honor our trust responsibilities to Indian Tribes 

and our commitments to island communities.

The mission of the Bureau of Reclamation is to manage, develop, and protect water and 

related resources in an environmentally and economically sound manner in the interest of 

the American public.
Table of Contents | iii

Table of Contents

Page

Executive Summary...........................................................................................................................................1

Chapter 1. Introduction ....................................................................................................................................9

Chapter 2. Overview of the Central Valley Project ....................................................................................13

Chapter 3. Project Facilities and Costs.........................................................................................................19

Chapter 4. Cost Allocation Methodology.....................................................................................................27

Chapter 5. Key Concepts and Assumptions................................................................................................33

Chapter 6. Hydrological Modeling ................................................................................................................43

Chapter 7. Economic Benefits.......................................................................................................................51

Chapter 8. Single-Purpose Alternatives........................................................................................................63

Chapter 9. Cost Estimates..............................................................................................................................72

Chapter 10. Cost Allocation Results (Period 2)...........................................................................................83

Chapter 11. Final Cost Allocation (Two-Period Merge)............................................................................95

Chapter 12. Implementation of the Final Cost Allocation ......................................................................103

CAS Facility List.............................................................................................................................................107

Key Terms ......................................................................................................................................................142

References ......................................................................................................................................................149

List of Tables

Table ES-1. Final Cost Allocation (Merge) – Construction (Nominal Dollars).......................................3

Table ES-2. Summary of Repayment Obligations – Construction Costs Only (Excludes IDC and 

OM&R)...........................................................................................................................................6

Table ES-3. Reimbursable Costs Distribution – Construction Costs Only (Excludes IDC and 

OM&R)...........................................................................................................................................7

Table 6-1. Estimated Annual Water Supply Deliveries by Water Year Type (TAF) .............................44

Table 6-2. Water Supply SPA Storage Facility Sizing (TAF).....................................................................44

Table 6-3. D-1641 Estimated Annual Water Requirements by Source and Water Year Type (TAF) 45

Table 6-4. SPA Storage Size Results for the Water Quality Purpose (TAF)...........................................46
iv | Central Valley Project Final Cost Allocation Study

Table 6-5. Estimated Annual Power Generation and Consumption by Water Year Type (GWh).....46

Table 6-6. SPA Storage Size Results for the Flood Control Purpose (TAF)..........................................47

Table 6-7. Estimated Average Annual Storage Requirements Used to Meet B2 Water Supply 

Objectives (TAF).........................................................................................................................48

Table 7-1. Estimated Annual Economic Benefits of CVP Irrigation Water Supplies, by Water Year 

Type ($millions)...........................................................................................................................53

Table 7-2. Estimated Annual Economic Benefits of CVP M&I Water Supplies, by Water Year Type 

($millions).....................................................................................................................................54

Table 7-3. Estimated Annual Economic Benefits of CVP Water Quality, by Water Year Type 

($millions).....................................................................................................................................55

Table 7-4. Estimated Annual Economic Benefits of CVP Flood Control, ($millions).........................57

Table 7-5. Estimated Annual CVP Hydropower Benefits, by Water Year Type ($millions) ...............60

Table 7-6. Estimated Annual Total CVP Hydropower Benefits ($millions) ..........................................60

Table 7-7. Summary of Estimated Economic Benefits of the CVP (2013 Dollars) ($millions) ..........61

Table 9-1. Diminishable Multipurpose Facilities.........................................................................................77

Table 9-2. Non-Diminishable Multipurpose Facilities...............................................................................77

Table 9-3. SCRB Total and Separable Cost Estimates (2013 Dollars).....................................................79

Table 9-4. Total Estimated SPA Costs by Purpose1 (2013 Dollars).........................................................81

Table 10-1. SCRB Results – Period 2 (2013 Dollars).................................................................................86

Table 10-2. Reimbursable Purpose Allocation Percentages (Nominal Dollars).....................................91

Table 10-3. Cost Allocation Summary – Period 2 (Nominal Dollars)1....................................................92

Table 11-1. Final Cost Allocation (Merge) – Construction (Nominal Dollars)......................................96

Table 11-2. Final Cost Allocation (Merge) – IDC1,2 ...................................................................................99

Table 11-3. Summary of Repayment Obligations – Construction (Excludes IDC and OM&R)......101

Table 11-4. Reimbursable Cost Distribution – Construction (Excludes IDC and OM&R) ..............102

CVP Cost Allocation Study Facility List (FY 2013) 1,2 .............................................................................107

List of Figures

Figure 2-1. CVP Project Area ........................................................................................................................14
Table of Contents | v

List of Appendices

Cost Allocation Study Spreadsheet Appendix

Cost Estimate Summary Tables Appendix

Economic Benefits Analysis Appendix

Hydrological Modeling Appendix
vi | Central Valley Project Final Cost Allocation Study

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Acronyms and Abbreviations | vii

Acronyms and Abbreviations

• AF: acre-feet

• BCI: Building Cost Index

• BO: biological opinion

• BPG: Business Practice Guidelines for CVPIA Receipts, Program Accounting, Cost Allocation, 

and Cost Recovery

• CAISO: California Independent System Operator

• CAS: cost allocation study

• CEC: California Energy Commission

• COA: coordinated operations agreement

• CVP: Central Valley Project

• CVPIA: Central Valley Project Improvement Act

• Delta: San Francisco Bay Delta

• DWR: California Department of Water Resources

• FWPRA: Federal Water Project Recreation Act of 1965

• GDP: gross domestic product

• GWh: gigawatt-hour

• IDC: interest during construction

• km: kilometer(s)

• LCPSIM: least cost planning simulation model

• LTGEN: long-term generation

• M&I: municipal and industrial

• MCD: major cost driver

• MMBtu: million British thermal units

• MW: megawatt

• MWh: megawatt-hour

• O&M: operation and maintenance

• OM&R: operation, maintenance, and replacement

• OMWEM: other municipal water economics model

• P&Gs: Principles and Guidelines
viii | Central Valley Project Final Cost Allocation Study

• PG&E: Pacific Gas and Electric

• Pump-Gen: pump-generating

• RAX: replacement, additions, and extraordinary maintenance

• Reclamation: Bureau of Reclamation

• RJE: remaining justifiable expenditure

• ROD: Record of Decision

• RPA: reasonable and prudent alternatives

• SCRB: separable costs-remaining benefits

• SOD: Safety of Dams

• SPA: single-purpose alternative

• SSJRBS: Sacramento and San Joaquin Rivers Basin Study

• SWAP: statewide agricultural production model

• SWP: State Water Project

• SWRCB: State Water Resources Control Board

• TAF: thousand acre-feet

• TBD: to be determined

• USACE: U.S. Army Corps of Engineers; Sacramento District

• USFWS: U.S. Fish and Wildlife Service

• WAPA: Western Area Power Administration

• WRC: Water Resources Council

• XO&M: extraordinary operations and maintenance
Executive Summary | 1

Executive Summary

The Central Valley Project (CVP) is a multipurpose water resources project operated by the Bureau 

of Reclamation (Reclamation) that supplies water to more than 200 long-term water contractors in 

the Central Valley, the San Francisco Bay Area, and the Santa Clara Valley. The CVP has eight

authorized purposes: water supply, power, flood control, water quality, recreation, navigation, fish 

and wildlife enhancement, and fish and wildlife mitigation.

1

The CVP is comprised of both single-purpose and multipurpose facilities that, in aggregate, serve 

the purposes of the project authorized by Congress. In accordance with CVP project authorization, 

the costs for CVP facilities are to be reimbursed by project beneficiaries. A cost allocation study is 

designed to identify the repayment obligations for project beneficiaries, as well as those nonreimbursable costs assigned to the Federal government.

The current comprehensive cost allocation study used for calculating repayment obligations of CVP 

contractors was completed in 1975. As new project facilities have been added and water and power 

uses have changed over time, updates and adjustments have been made to the cost allocation to 

determine repayment, but a holistic evaluation has not been completed since 1975. This cost 

allocation study was initiated based on direction from Congress in Public Law (P.L.) 99-546 and the 

request of water and power contractors for a final CVP cost allocation to firm up account balances 

and provide sufficient time for financial planning required to ensure full repayment of the CVP costs 

by 2030. This report provides the background and methodology for the Final Cost Allocation Study

(CAS). Reclamation will apply the Final CAS results to current costs and operational conditions that 

are in effect at the time the annual plant-in-service and operation and maintenance (O&M)

allocations are prepared.

Reclamation developed this CVP Final CAS report in consultation with stakeholders and other 

Federal agencies, including Western Area Power Administration (WAPA), U.S. Army Corps of 

Engineers (USACE) and U.S. Fish and Wildlife Service (USFWS), which participated in the study 

through coordination on key issues and analyses. This CVP Final CAS commenced in 2010. 

Throughout the process, information and updates have been shared with stakeholders through a 

series of over 30 meetings, workshops, and/or briefings.

Purpose and Need for Study

The purpose of the CVP cost allocation study is to develop allocation factors for the authorized 

purposes of the CVP. These factors will be used to determine the final repayment obligations for 

CVP facilities subject to the 2030 repayment. Though Reclamation has updated the allocation 

annually through the ratesetting process, a holistic cost allocation study has not been completed 

since 1975. A number of changes have occurred since 1975 that Reclamation and CVP contractors 

 1 Fish and wildlife mitigation without specific cost recovery guidance is treated as a joint cost.
2 | Central Valley Project Final Cost Allocation Study

agree necessitate re-evaluation. Legislative and regulatory changes in the 1990s made considerable 

changes to the benefits and authorized purposes of the CVP. This cost allocation study allows 

Reclamation to consider the new CVP facilities, operational requirements, and benefits that have 

been authorized since 1975. The final cost allocation presented in this document meets the 

requirement of a final cost allocation in accordance with Reclamation policy for final cost allocations 

(PEC P01) and in fulfillment of requirements of Public Law 99-546.

Two Cost Allocation and Two-Period Repayment Approach

Throughout the public meetings held for development of the cost allocation study, water and power 

stakeholders expressed concern that historic project operations and conditions differed significantly 

from those expected in the future. Reclamation policy (PEC 01-02) defines the period of analysis for 

the cost allocation as 100 years beyond the initial date of service. To address both Reclamation 

policy and stakeholder concerns, Reclamation combined the two separate cost allocations, each with 

their own respective 100-year period of analysis. This approach addresses the concern over disparate 

historic and future project operating conditions.

The first period (Period 1) reflects historic conditions as represented in the 1975 CVP cost allocation 

update (as updated through 2013). The second period (Period 2) reflects projected operations and 

benefits of the CVP. The two periods are then merged by providing equal weight to each period to 

create the final cost allocation. The two-period approach has been implemented as a means to 

account for historic operations of the CVP since it was placed into service through the Period 1 

allocation while also allowing for the allocation to account for current/projected project operations 

through the Period 2 allocation.2 The primary focus of this document is the assumptions, costs, and 

benefits that are used in the Separable Costs-Remaining Benefit (SCRB) cost allocation process is on 

the Period 2 allocation. The assumptions and methodology used to develop the cost allocation 

factors for Period 1 are documented in the 1970 CVP Cost Allocation Report as amended, and 

references to the Period 1 allocation are presented for context only.

Separable Costs-Remaining Benefits Analysis and Results

(Period 2)

The SCRB methodology for the cost allocation is used for the Period 2 cost allocation. The SCRB 

method is considered the most comprehensive and generally preferred method of allocating costs by 

Reclamation. The SCRB method is based on the goal of identifying and assigning all project costs 

that provide only one project benefit to the appropriate project purpose (separable costs), and then 

equitably distributing those costs that provide benefits to more than one purpose (joint costs) 

among authorized project purposes.

 2 Note that the allocation of future CVP O&M costs will be based on the Period 2 allocation; thus it will reflect 

prospective conditions.
Executive Summary | 3

Final Cost Allocation (Two-Period Merger)

The CVP plant-in-service (construction) allocation is prepared annually to reflect changes in CVP construction costs and sub-allocation 

processes that vary year to year. The results of the final cost allocation, which reflects the merger of the Period 1 and Period 2 allocations

and sub-allocations, are presented in Table ES-1 and representative of 2013 construction costs. The proposed process for taking the final 

cost allocation results and applying to annual plant-in-service allocations is described in Chapter 12, Implementation of the Final Cost Allocation, 

of this report.

Table ES-1. Final Cost Allocation (Merge) – Construction (Nominal Dollars)

Type of Cost Period 1 Period 2 Period 1 (50%) Period 2 (50%)

Final Cost 

Allocation 

(Merge)

Authorized Purposes & Sub-Purposes

Water Supply – Irrigation $1,178,115,286 $1,068,517,722 $589,057,643 $534,258,861 $1,123,316,504

Water Supply – M&I $106,873,582 $142,321,083 $53,436,791 $71,160,542 $124,597,333

Power – Commercial $674,248,511 $609,891,724 $337,124,256 $304,945,862 $642,070,118

Flood Control $139,282,872 $331,281,759 $69,641,436 $165,640,880 $235,282,316

Water Quality $5,607,545 $89,358,743 $2,803,773 $44,679,372 $47,483,145

Recreation $74,998,433 $5,742,471 $37,499,217 $2,871,236 $40,370,453

Navigation $6,423,948 $0 $3,211,974 $0 $3,211,974

Fish & Wildlife Enhancement 1 – – – – –

Non-Reimbursable (Other)
4 | Central Valley Project Final Cost Allocation Study

Type of Cost Period 1 Period 2 Period 1 (50%) Period 2 (50%)

Final Cost 

Allocation 

(Merge)

Federal $258,046,528 $198,271,873 $129,023,264 $99,135,936 $228,159,200

State $250,429,656 $248,502,699 $125,214,828 $124,251,349 $249,466,177

State & Local $4,329,037 $4,467,386 $2,164,519 $2,233,693 $4,398,212

Repayment Contracts

Irrigation $361,392,079 $361,392,079 $180,696,040 $180,696,040 $361,392,079

M&I $227,656,572 $227,656,572 $113,828,286 $113,828,286 $227,656,572

Commercial Power $8,568,500 $8,568,500 $4,274,250 $4,274,250 $8,568,500

Facility List Sub-Total $3,295,972,549 $3,295,972,610 $1,647,986,276 $1,647,986,307 $3,295,972,584

Additional Repayment Obligations

Repayment Obligations – USACE

Irrigation $19,686,165 $19,686,165 $9,843,083 $9,843,083 $19,686,166

M&I $447,937 $447,937 $223,969 $223,969 $447,938

WAPA Retired Assets

Irrigation $8,464,815 $8,464,815 $4,232,408 $4,232,408 $8,464,816

M&I $1,207,155 $1,207,155 $603,578 $603,578 $1,207,156

Commercial Power $35,649,679 $35,649,679 $17,824,840 $17,824,840 $35,649,680
Executive Summary | 5

Type of Cost Period 1 Period 2 Period 1 (50%) Period 2 (50%)

Final Cost 

Allocation 

(Merge)

Non-Reimbursable (Federal) $213,468 $213,468 $106,734 $106,734 $213,468

Non-Reimbursable (State) $16,115 $16,115 $8,058 $8,058 $16,116

CA-OR Transmission Project $20,282,786 $20,282,786 $10,141,393 $10,141,393 $20,282,786

Additional Repayment Obligations 

Sub-Total

$85,968,120 $85,968,120 $42,984,063 $42,984,063 $85,968,126

Costs Not Allocated

Authorized Deferred Use $56,875,000 $56,875,000 $28,437,500 $28,437,500 $56,875,000

CVPIA $340,872,120 $340,872,120 $170,436,060 $170,436,060 $340,872,120

Folsom SOD – Not in Repayment $120,512,509 $120,512,509 $60,256,255 $60,256,255 $120,512,510

Costs Not Allocated Sub-Total $518,259,629 $518,259,629 $259,129,815 $259,129,815 $518,259,629

Total Cost $3,900,200,298 $3,900,200,359 $1,950,100,154 $1,950,100,185 $3,900,200,339

1. Fish and wildlife mitigation costs are allocated to applicable categories for repayment, including non-reimbursable costs.

Repayment Obligations

The summary of estimated repayment obligations for CVP construction costs is presented in Table ES-2. These repayment obligations 

reflect the construction costs allocated (and sub-allocated) to reimbursable and non-reimbursable purposes in Period 1, Period 2, and the 

final cost allocation. The breakdown of construction costs allocated across reimbursable sub-purposes is shown Table ES-3.
6 | Central Valley Project Final Cost Allocation Study

Table ES-2. Summary of Repayment Obligations – Construction Costs Only (Excludes IDC and OM&R)

Category

Period 1

Value ($)

Period 1

Percent of 

Total

Period 2

Value ($)

Period 2

Percent (%)

Period 2

Change 

from P1

Final Cost 

Allocation 

(Merge)

Value ($)

Final Cost 

Allocation 

(Merge)

Percent (%)

Final Cost 

Allocation 

(Merge)

Change 

from P1

Irrigation $1,206,266,266 30.93% $1,096,668,702 28.12% ($109,597,564) $1,151,467,486 29.52% ($54,798,780)

M&I $108,528,674 2.78% $143,976,175 3.69% $35,447,501 $126,252,427 3.24% $17,723,753 

Commercial 

Power

$730,180,976 18.72% $665,824,189 17.07% ($64,356,787) $698,002,584 17.90% ($32,178,392)

Repayment 

Contracts

$597,617,151 15.32% $597,617,151 15.32% $0 $597,617,152 15.32% $0

Nonreimbursable$739,347,602 18.96% $877,854,513 22.51% $138,506,911 $808,601,061 20.73% $69,253,459 

CVPIA $340,872,120 8.74% $340,872,120 8.74% $0 $340,872,120 8.74% $0 

Authorized 

Deferred Use

$56,875,000 1.46% $56,875,000 1.46% $0 $56,875,000 1.46% $0 

SOD – Not in 

Repayment

$120,512,509 3.09% $120,512,509 3.09% $0 $120,512,509 3.09% $0 

Total $3,900,200,298 100.00% $3,900,200,359 100.00% NA $3,900,200,339 100.00% NA

P1 = Period 1

SOD = Safety of Dams
Executive Summary | 7

Table ES-3. Reimbursable Costs Distribution – Construction Costs Only (Excludes IDC and OM&R)

Category1

Period 1

Value ($)

Period 1

Percent (%)

Period 2

Value ($)

Period 2

Percent (%)

Final Cost Allocation 

(Merge)

Value ($)

Final Cost Allocation 

(Merge)

Percent (%)

Irrigation $1,206,266,266 58.99% $1,096,668,702 57.52% $1,151,467,486 58.28%

M&I $108,528,674 5.31% $143,976,175 7.55% $126,252,427 6.39%

Commercial Power $730,180,976 35.71% $665,824,189 34.92% $698,002,584 35.33%

Total $2,044,975,916 100.00% $1,906,469,066 100.00% $1,975,722,497 100.00%

1. Values presented in this table do not include repayment contracts
8 | Central Valley Project Final Cost Allocation Study

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Chapter 1. Introduction | 9

Chapter 1. Introduction

This chapter provides general background on the CVP Final CAS, including an overview of public 

outreach and involvement.

1.1 Background & Overview

In 2010, Reclamation commenced efforts to complete a new cost allocation for the CVP that 

updates the costs allocated among the authorized eight purposes of the project:

• Water Supply

• Hydropower

• Flood Control

• Water Quality

• Recreation

• Navigation

• Fish and Wildlife Enhancement

• Fish and Wildlife Mitigation3 (treated as joint cost)

The final cost allocation proposed herein will be utilized for the allocation of repayment obligations

for CVP facilities subject to the 2030 repayment requirement. Reclamation conducted the final CAS 

in consultation with CVP stakeholders and other Federal agencies, including WAPA, USACE and 

USFWS through coordination on key issues and analyses. Information on the public outreach 

process is presented in Chapter 1.4.

1.1.1 Two Cost Allocation and Two-Period Repayment Approach

Through the stakeholder engagement process, it was identified that historic project operations and 

conditions differed significantly from operational conditions expected in the future. Reclamation 

policy (PEC 01-02) defines the appropriate period of analysis for the cost allocation as 100 years 

beyond the initial date of service (Reclamation 2015). Combining two separate cost allocations, each 

 3 The Central Valley Project Improvement Act (CVPIA) added “mitigation, protection, and restoration of fish and 

wildlife,” hereafter referred to as “fish and wildlife mitigation,” as an authorized purpose of the CVP. Fish and wildlife 

enhancement can share in joint costs if all requirements of P.L. 89-72 (Federal Water Project Recreation Act) are met, 

while fish and wildlife mitigation is not a purpose that shares joint costs. Any mitigation not specifically authorized under 

CVPIA is considered a joint cost that is shared among all other project purposes that can share in joint costs. The 

repayment of fish and wildlife mitigation costs is addressed in Section 5.11.1.
10 | Central Valley Project Final Cost Allocation Study

with a 100-year period of analysis, allows the CAS to include current/future operational conditions

in accordance with Reclamation policy.

The first period (Period 1) reflects historic conditions as utilized in the 1975 CVP cost allocation 

update (as updated through 2013). The second period (Period 2) reflects projected operations and 

benefits of the CVP4

. The final cost allocation represents a merger of the two periods (see Chapter 

11, Final Cost Allocation (Two Period Merger)).

This document focuses on the assumptions, costs, and benefits used in the cost allocation process

for period 2. The assumptions and methodology used to develop the cost allocation factors for 

Period 1 are documented separately, and references to the Period 1 allocation are presented for 

context only. More detailed information on the two-cost allocation and two-period repayment 

approach is presented in Chapter 5.1.

1.1.2 Costs to Be Allocated

The costs allocated in the final CAS are the plant-in-service costs for all CVP facilities, which 

include facilities owned and operated by Reclamation as well as power facilities owned and operated 

by WAPA that are considered an integral part of the CVP. Reclamation performs the cost allocation 

for WAPA’s CVP facilities; however, WAPA is responsible for recovering costs from its power 

customers. Chapter 3, Project Facilities and Costs provides details on project facilities and costs subject 

to the final cost allocation. Costs with prescribed allocations are treated as direct assigned costs (see 

Section 3.3).

1.1.3 Cost Allocation Versus Repayment

The cost allocation process is used to allocate project costs among its authorized purposes. Costs 

allocated across project purposes are identified as reimbursable and non-reimbursable costs. 

Reimbursable costs are then assigned to water and power customers for repayment. Nonreimbursable costs are not subject to repayment.

1.2 Purpose and Need for Study

The purpose of the Final CAS is to develop allocation factors which determine the final repayment 

obligations for each of the CVP customer classes. The allocation factors are used to determine 

repayment obligations for construction costs of project facilities with repayment targets of 2030. 

Reclamation policy, Federal legislation5

, and customer requests require the completion of the final 

CAS for the CVP.

The final CAS considers changes to the CVP’s authorized purposes and operations resulting from 

changes to legislation and evolving regulatory conditions. The CVP has continually added new 

 4 Period 2 analyses rely on recent information from the Sacramento and San Joaquin Rivers Basin Study (SSJRBS) to 

assess the potential differences in water supply availability that might occur between a no-climate-change scenario and 

various other future climate change projections (see Chapter 6.7 Hydrology Sensitivity Analysis). 5 Public Law 99-546 directed Reclamation to conduct and implement a final cost allocation study of the Central Valley 

Project. 
Chapter 1. Introduction | 11

features based on a financially and operationally integrated project. Re-operation of the CVP with 

the additions of new features complicates a clearly defined point of substantial completion. Congress 

and contractors have identified those facilities with repayment in 2030 as what constitutes the basis 

for the final allocation for the CVP.

1.3 Approval of Cost Allocations

Reclamation policy PEC P01 (Final Cost Allocations) (Reclamation 1995) indicates the 

Commissioner is authorized to approve the CVP Final CAS.

1.4 Public Outreach & Involvement

This CAS was initiated in 2010, and since that time, project information has been shared with 

stakeholders through a series of meetings, workshops, briefings, and the project website. An initial 

public meeting was held on October 1, 2010, to commence the project. Since that time, Reclamation 

has held over 30 additional meetings to solicit input and present information regarding cost 

allocation methodology and preliminary results and findings. Those stakeholders who commented 

on the Draft CVP Final CAS during the public review process (January 2019 – April 2019) were 

invited to a series of four listening sessions to provide Reclamation with additional context to 

comments and help prioritize efforts for completion of the study.

Throughout the process, Reclamation received over 700 written comments on the study, and 

stakeholders have provided input via direct contact with Reclamation staff. Comments were received 

from over 40 stakeholders including Federal agencies, CVP customers, regional and local 

governments and agencies, and special interest groups. Efforts were taken to review all stakeholder 

comments as they were received so that they could be incorporated into the development of the 

CAS, including the supporting technical analysis. All comments received on the Draft CVP Final 

CAS have been considered in the CVP Final CAS.
12 | Central Valley Project Final Cost Allocation Study

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Chapter 2. Overview of the Central Valley Project | 13

Chapter 2. Overview of the Central Valley 

Project

This chapter provides an overview of the CVP, including project operations and related legislation 

and agreements that are integral to the project. Information on CVP facilities included in the CAS is 

presented in Chapter 3, Project Facilities and Costs.

2.1 Project Overview

The CVP is the largest surface water storage and delivery system in California and the largest 

irrigation water supply project constructed and operated by Reclamation. Facilities and service areas 

of the CVP cover a large geographic area and include 35 of the State’s 58 counties. The CVP 

includes 20 reservoirs, with a combined storage capacity of nearly 12 million acre-feet; 8 power 

plants and 2 pumping-generating plants, with a combined capacity of approximately 2 million 

kilowatts; 2 pumping plants; and approximately 500 miles of major canals and aqueducts. The CVP 

supplies water to more than 200 long-term water contractors in the Central Valley, the San Francisco 

Bay Area, and the Santa Clara Valley.

Historically, approximately 90 percent of the water delivered by the CVP has been for agricultural 

uses. At present, increasing quantities of water are being provided to municipal customers, including 

the cities of Redding, Sacramento, Folsom, Tracy, and Fresno; most of Santa Clara County; and the 

northeastern portion of Contra Costa County.

The CVP has eight authorized purposes. Congress authorized the CVP to serve water supply, 

power, flood control, water quality, recreation, navigation, fish and wildlife enhancement, and fish 

and wildlife mitigation, with portions of the costs for CVP facilities to be reimbursed by the water 

and power users. Additional information on the authorized purposes of the CVP is presented in 

Chapter 5.7.

2.2 Project Area

The CVP is authorized as a single financially and operationally integrated multipurpose water supply 

project, providing water storage both north and south of the Sacramento-San Joaquin River/San 

Francisco Bay Delta (Delta). As shown in Figure 2-1, major CVP dams and reservoirs are located on 

the Trinity, Sacramento, American, Stanislaus, and San Joaquin Rivers. CVP water supplies north of 

the Delta are controlled by Shasta and Folsom Dams on the Sacramento and American Rivers, 

respectively. Water from the Trinity River is stored, re-regulated, and diverted through a system of 

dams, reservoirs, tunnels, and power plants to the Sacramento River to supplement the supply 

developed by Shasta Reservoir.
14 | Central Valley Project Final Cost Allocation Study

Figure 2-1. CVP Project Area

2.3 Project Development and Authorization

The CVP resulted from long-term interaction among State, Federal, and private parties sharing a 

common interest in developing California’s water resources. The CVP was authorized through a 

series of legislative acts, beginning with the Rivers and Harbors Act of 1935, which authorized 

construction of initial features on the Sacramento and San Joaquin Rivers and in the Delta by the 

USACE. The River and Harbors Act of August 26, 1937, reauthorized the CVP for construction 

under provisions of Federal reclamation laws by the Secretary of the Interior.
Chapter 2. Overview of the Central Valley Project | 15

Construction of the first major CVP facility, Shasta Dam, began in 1938. Successive congressional 

acts authorized additional facilities based on geographical proximity and purposes served. The final 

dam and reservoir, New Melones, was officially transferred to Reclamation from the USACE by P.L. 

87-874 in November 1979.

2.4 Project Facilities & Operations

Extending 400 miles through central California, the CVP is a complex, multipurpose network of 

dams, reservoirs, canals, hydroelectric power plants, and other facilities. The CVP provides flood 

protection for the Central Valley and supplies irrigation water throughout the valley thereby 

supporting California’s agricultural economy. It also supplies municipal and industrial water to major 

urban centers in the greater Sacramento and San Francisco Bay areas, as well as producing electrical 

power and offering various recreational opportunities. In addition, the project provides water to 

restore and protect fish and wildlife, and to enhance water quality.

Long-term contracts for CVP water, in total, exceed 9 million acre-feet per year. The CVP has longterm agreements to supply water to more than 200 contractors in 29 of California’s 58 counties.

Deliveries by the CVP include providing an annual average of 5 million acre-feet of water for farms; 

600,000 acre-feet of water for municipal and industrial (M&I) uses (enough water to supply about 

2.5 million people for a year); and water for wildlife refuges and maintaining water quality in the 

Sacramento-San Joaquin Delta. The CVP dedicates 800,000 acre-feet per year to fish and wildlife 

and their habitat and 410,000 acre-feet to State and Federal wildlife refuges and wetlands, pursuant 

to the Central Valley Project Improvement Act (CVPIA).

Overall, CVP operations are coordinated to obtain maximum yields and to deliver water into the 

main river channels and canals of the project in the most efficient and economical manner. Project 

operations are implemented in conjunction with State Water Project (SWP) operations based on the 

Coordinated Operations Agreement (COA), the Bay-Delta Accord, and other agreements. Irrigation 

and M&I water is delivered to project contractors from the main canals in accordance with longterm contracts negotiated with irrigation districts and other local organizations. Distribution of water 

from the main canals to the individual users is the responsibility of the local districts, which use 

distribution systems comprised of lateral canals and pipelines to convey water to individual farms 

and municipalities.

2.5 Key CVP Agreements and Legislation

There are a wide range of laws and agreements that affect CVP and SWP operations. Throughout 

the life of the CVP, the allocation of its costs has been affected directly or indirectly by Federal 

legislation, continuing up to the recent specific allocation of costs of certain actions and facilities 

mandated by the CVPIA. This has meant that different rules may apply to different groups of CVP 

facilities or facilities built during different periods of time. The current CVP cost allocation study 

must be understood in the context of these changing mandates and application of different 

procedures to different sets of CVP facilities. It is also important to note that the existing CVP water 
16 | Central Valley Project Final Cost Allocation Study

ratesetting process, dependent as it is on the allocation of CVP costs, has relied on this 

amalgamation of practices. The discussion below highlights several key provisions that play a critical 

role in CVP operations that in turn affect project costs and benefits and ultimately the allocation of 

project costs.

2.5.1 Coordinated Operations Agreement

In 1986, Reclamation and the State entered into a COA that described how the CVP and the SWP

are to be operated in a coordinated manner to jointly meet Delta salinity control and water quality 

standards as defined by the State Water Resources Control Board (SWRCB). The COA included 

many provisions concerning the joint operations of CVP and SWP, including methods to ensure 

that water demands in specific areas north of the Delta and in the Delta are met prior to exporting 

water to areas south of the Delta. In addition, COA provisions defined how much water the CVP 

and the SWP can export when the Delta conditions allow exports.

Title I of P.L. 99-546 directed the Secretary to operate the CVP in conformity with State water 

quality standards for the Delta. The act specified that costs associated with providing CVP water 

supplies for salinity control and complying with State water quality standards be allocated among 

project purposes and reimbursed in accordance with existing Reclamation law and policy.

2.5.2 State Water Resources Control Board Water Quality Requirements

The CVP and SWP are also operated pursuant to SWRCB decisions and orders related to water 

rights permits for the CVP and SWP. The SWRCB is responsible for setting water quality standards 

governing the operations of the CVP and SWP for the San Francisco Bay/Sacramento-San Joaquin 

Delta and Estuary. Under P.L. 99-546, both projects were authorized to operate in close 

coordination pursuant to the COA, which also required the CVP and SWP to share responsibility to 

meet the SWRCB Water Rights Decision 1485 (D-1485) water quality standards. In 1999, the 

SWRCB adopted Water Rights Decision 1641 (D-1641), amending certain water quality terms and 

conditions. Meeting D-1641 water quality standards requires exceeding the Delta outflow standards 

set by D-1485.

2.5.3 Central Valley Project Improvement Act

On October 30, 1992, the President signed into law the Reclamation Projects Authorization and 

Adjustment Act of 1992 (P.L. 102-575) that included Title 34, the CVPIA. The CVPIA amended the 

Act of August 26, 1937, the basic authorizing legislation for the CVP, to include fish and wildlife 

protection, restoration, and mitigation as project purposes having equal priority with irrigation and 

domestic uses, and fish and wildlife enhancement as a project purpose equal to power generation.

The CVPIA identified a number of specific measures to meet these new purposes. It also directed 

the Secretary of the Interior to operate the CVP consistent with these purposes, to meet the Federal 

trust responsibilities to protect the fishery resources of affected federally recognized Indian tribes, to 

meet all requirements of Federal and State law, and to achieve a reasonable balance among 

competing demands for CVP water.
Chapter 2. Overview of the Central Valley Project | 17

Many of the provisions included in the CVPIA identified specific measures intended to improve 

fishery conditions in Central Valley rivers and the Delta. In many cases, the provisions also provided 

specific cost-sharing and allocation criteria. As a result, the allocation of costs for CVPIA-mandated 

actions was directed by Congress, with Congress specifying the percentage of costs to be allocated to 

water and power users, the Federal government, and the State. Relevant examples are the actions 

specified in Section 3406(b)(4)(23) and refuge water supplies addressed in Section 3406(d).

The CVPIA also contains requirements that could affect CVP water availability and use without 

directing that a new cost allocation be undertaken or providing a cost allocation formula. Section 

3406(b)(2) of the CVPIA directed the Secretary to dedicate and manage 800,000 acre-feet of CVP 

yield for the primary purpose of implementing the fish, wildlife, and restoration purposes of the act, 

to assist the State in its efforts to protect Bay/Delta waters, and to help meet other legally imposed 

obligations on the CVP, including but not limited to additional obligations under the Federal 

Endangered Species Act (ESA). The dedication of this water reduced the capability of the CVP to 

deliver contracted amounts of water to M&I and irrigation contractors. Congress neither directed 

that a new cost allocation study be undertaken as a result of likely reductions in water contract 

deliveries nor provided a cost allocation formula related to the dedicated water. Additional 

information on the treatment of CVPIA costs in the final CAS is presented in Chapter 5.11.
18 | Central Valley Project Final Cost Allocation Study

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Chapter 3. Project Facilities and Costs | 19

Chapter 3. Project Facilities and Costs

This chapter presents the project facilities and associated costs included in the final CAS. Most of 

the facilities and costs are subject to the SCRB cost allocation methodology utilized in this study 

(described in detail in Chapter 4, Cost Allocation Methodology). Facility costs that are not included 

in the SCRB analysis but remain part of the overall CAS include direct assigned costs, repayment 

contracts, additional repayment obligations, and costs not allocated. These costs are accounted for in 

the final CAS summary tables presented in Chapter 10, Cost Allocation Results (Period 2) and Chapter 

11, Final Cost Allocation (Two Period Merger). Unless noted otherwise, the costs referenced in this 

chapter represent CVP plant-in-service (construction) costs only. Chapter 9, Cost Estimates outlines 

cost estimates for interest during construction (IDC) and operation, maintenance, and replacement

(OM&R) necessary for performing the SCRB analysis.

3.1 Project Facilities (CAS Facility List)

The CAS covers most CVP facilities that are considered plant-in-service based on Schedule 1 of the 

2013 CVP Financial Statement (see the CAS Facility List Attachment at the end of this report).

Facilities with prescribed repayment obligations are included in the CAS as direct assigned costs.

Facilities that support project benefits and do not have prescribed repayment obligations are 

allocated through the SCRB analysis. The cost of CVP facilities owned and operated by WAPA and 

identified as financially and operationally integrated with the CVP are included in the CAS.

The CAS allocates costs of project facilities in the following CVP divisions/units:

• Shasta and Trinity River Divisions

• Friant Division

• Sacramento River Division

• American River Division

• Delta Division

• San Felipe Division

• West San Joaquin Division, San Luis Unit

• Stanislaus (East Side) Division

3.2 Adjustments to the CVP Financial Statement

The CAS allocates plant-in-service costs shown in Schedule No. 1 of the 2013 CVP Financial 

Statement, which represent the costs as of September 30, 2013 (Reclamation 2013a). Several 

modifications to the 2013 Financial Statements are necessary to exclude costs that are not allocated 

through the CAS.
20 | Central Valley Project Final Cost Allocation Study

Facilities Not Considered Plant-In-Service: Schedule No. 1 of the CVP Financial Statement 

include costs associated with construction in abeyance, general construction, and O&M 

construction. These are costs expended, but not yet placed into plant-in-service. Costs for facilities

not yet placed in service are not allocated for repayment because they do not yet provide benefits to 

the project.

Land and Land Rights: Land and land rights (LLR) costs presented in Schedule No. 1 are the 

value of the land on which project facilities are constructed. LLR costs for facilities that are plant-inservice are included in the construction costs of each appurtenant facility and are allocated in the 

CAS. If a facility has not yet been placed in plant-in-service, the associated LLR costs for the facility 

are not allocated in the CAS.

Reimbursable Interest During Construction: IDC is an allowance for earnings foregone on 

funds used to construct the facility. IDC is included in the CAS for facilities placed into plant-inservice that are subject to the SCRB analysis. The reimbursable IDC costs for facilities in plant-inservice included in Schedule No. 1 have been removed before the SCRB analysis was performed

because the SCRB relies on an estimate of total IDC for the entire facility cost.

Depreciation Expense: All depreciation expenses are excluded from the CAS study because the 

allocation of construction costs and repayment requirements apply to original cost, not costs 

reduced through depreciation.

Other Costs Excluded: Other Schedule No. 1 values excluded from the CAS are associated with 

equipment, information technology software, and amortization.

Transferred Title Facilities: The construction cost of Coleman National Fish Hatchery is removed 

from the plant-in-service value for Shasta Dam and Reservoir shown on Schedule No. 1 of the 2013 

Financial Statement. Title to the hatchery was transferred from Reclamation to USFWS so the

construction cost of the hatchery is excluded from the CAS.

Operation, Maintenance, and Replacement (OM&R) Costs: There are costs referred to as 

extraordinary operations and maintenance (EOM) that are included as plant-in-service in Schedule 

No. 1 but are repaid to Reclamation as annual O&M costs. EOM costs are excluded from the SCRB 

analysis to avoid double counting with estimated OM&R costs presented in Chapter 9, Cost 

Estimates.

Financial System Reconciliation: In 2013, Reclamation adopted a new financial reporting system 

known as the Financial and Business Management System (FBMS) and discontinued use of the 

Federal Financial System (FFS). In the process, the FBMS system reclassified some assets formerly 

categorized as plant-in-service to buildings. For the CAS, the cost of these buildings is included as 

part of the plant-in-service costs being allocated.
Chapter 3. Project Facilities and Costs | 21

3.3 Direct Assigned Costs

CVP facility repayment obligations directly defined by legislation, agreement, or contract are not 

included in the SCRB analysis. Facility costs (or portions thereof) that are directly assigned are added 

to the applicable repayment category after the SCRB process is complete. Adding together the costs 

allocated by the SCRB process and the direct assigned costs provides the total CVP cost allocated, 

which represents a significant portion of the total repayment obligation of CVP contractors. In total, 

direct assigned costs, including IDC, accounted for in the CAS are $502,712,342.

6

The following facility or program costs that are designated as direct assigned costs include:

• State Share of San Luis Unit Construction ($248,310,255)

o The State’s share of costs of construction of the San Luis Unit is removed from the 

allocation process because only Federal costs are being allocated. P.L. 86-488 authorized 

construction of the San Luis Unit of the CVP and provided for the sharing of costs with 

the State of California.

• Archaeological, Cultural, and Historical ($4,245,665)

o The costs associated with archaeological, cultural, and historic investigations and 

documentation are directly assigned as Federal non-reimbursable. P.L. 93-291 provides 

that up to 1 percent of project construction costs can be spent on archaeological, 

cultural, and historical investigations and cataloging.

• Fish and Wildlife, Nimbus Dam ($40,000)

o Prior to completion of the fish hatchery, additional expenses were incurred during 

construction of Nimbus Dam to facilitate fish passage. The cost over-run is directly 

assigned as non-reimbursable fish and wildlife costs.

• Highway Improvement ($14,663,318)

o Highway improvements at New Melones Dam and San Luis Dam are directly assigned 

to Federal non-reimbursable. P.L. 87-874 provides that the cost of replacing highways 

with an improved version as part of a project is non-reimbursable.

• Safety, Security, and Law Enforcement ($25,476,432)

o Safety, Security, and Law Enforcement activities at the Folsom Unit, San Felipe 

Division, San Luis Unit, and the Shasta Unit are directly assigned as Federal nonreimbursable pursuant to P.L. 110-229.

 6 This value includes IDC that is direct assigned. Direct assigned IDC costs are not reflected in the CAS results 

presented in Chapters 10 and 11 or the CAS Facility List Attachment, which focus on CVP construction costs.
22 | Central Valley Project Final Cost Allocation Study

• Kesterson Reservoir Clean-up Program ($6,800,000)

o The costs of clean-up activities at Kesterson Reservoir resulting from selenium 

contamination from San Luis Drain is directly assigned as Federal non-reimbursable.

Language in Reclamation’s annual appropriations bill provides that $6,800,000 of the 

cost to clean up is considered Federal non-reimbursable expense.

• Capitalized Interest During Construction: ($31,112,020)

o New Melones Unit: IDC costs associated with the New Melones Unit are directly 

assigned as Federal non-reimbursable. When New Melones Dam was transferred to 

Reclamation by the USACE, $27,012,918 was included as capitalized IDC allocated to 

irrigation. Reclamation does not charge IDC on irrigation costs so the IDC was classified 

as non-reimbursable.

o San Felipe Division: IDC costs associated with the San Felipe Division are directly 

assigned as Federal non-reimbursable. $4,099,102 of IDC calculated against the M&I 

portion of the construction cost of the San Felipe Division is classified as Federal nonreimbursable pursuant to an agreement with division contractors.

• San Felipe Division Non-Reimbursable Construction Costs ($32,678,447)

o Ten percent of construction cost of the San Felipe Division is classified as Federal nonreimbursable pursuant to an agreement with division contractors. The non-reimbursable 

portion of construction costs is based on anticipated development of recreation and fish 

and wildlife facilities. Accordingly, these costs are assigned and split equally among nonreimbursable recreation and fish and wildlife purposes.

• American River Pumping Station ($3,589,560)

o The cost of restoring the American River Pumping Station for the Placer County Water 

Agency is a Federal non-reimbursable cost pursuant to P.L. 110-229.

• Safety of Dams (SOD) Program ($31,810,865)

7

o SOD costs are associated with the following facilities: Folsom Dam and Reservoir 

($26,385,404),8 Little Panoche Creek Detention Dam ($6,536), Los Banos Creek 

Detention Dam and Reservoir ($10,784), and O’Neill Dam Forebay and Waterway 

($5,408,141). Eighty-five percent of SOD costs are Federal non-reimbursable and 15 

percent are reimbursable pursuant to P.L. 98-404.

• Fish and Wildlife Activities ($103,829,746)

o Certain fish and wildlife facilities authorized separately from CVPIA have been directly 

assigned as reimbursable or non-reimbursable through legislation or agreement

($103,829,746).

o Fish and wildlife costs that are not authorized under CVPIA and not direct assigned are 

considered mitigation and are treated as joint costs allocated across all project purposes 

 7 This value includes both reimbursable and non-reimbursable SOD costs. 8 This value excludes Folsom Dam SOD costs that are not in repayment (refer to Section 3.6).
Chapter 3. Project Facilities and Costs | 23

by the SCRB process ($28,495,676). Refer to Section 5.11, Mitigation Costs, and the CAS 

Facility List Attachment for additional details.

• Recreation Cost Sharing ($156,034)

o Reclamation maintains cost sharing agreements on two recreation facilities in the CVP –

Lake Woollomes Recreation Facilities and San Justo Reservoir Recreation Facilities. The 

cost sharing agreements for these two facilities divide the obligation evenly between 

Federal non-reimbursable (as part of the recreation purpose) and State/local nonreimbursable. Accordingly, the cost of Lake Woollomes recreation facilities ($54,500) is 

allocated 50 percent to Federal non-reimbursable and 50 percent is direct assigned to 

local/State non-reimbursable pursuant to P.L. 89-72, Sec. 7(a). The cost of San Justo 

Reservoir recreation facilities ($257,568) is allocated 50 percent to Federal nonreimbursable and 50 percent is direct assigned to local/State non-reimbursable per 

Cooperative Agreement No. 4-FC-01430.

3.4 Defined Repayment Obligations

Defined repayment obligations of the CVP include repayment contracts between contractors and 

Reclamation and WAPA. These costs are excluded from the SCRB analysis.

• Reclamation Distribution System Repayment Contracts ($624,827,547)

Water distribution system costs subject to Reclamation repayment contracts are assigned 

directly to the applicable contractors, rather than through the CAS process. The costs of 

distribution systems that are not owned or financed by Reclamation are not within the 

scope of the CAS.

• Repayment Contracts, WAPA ($8,980,301)

Similar to repayments contracts for Reclamation facilities, WAPA has incurred costs that 

are directly repayable by a particular entity pursuant to contract and do not affect market 

power rates. The contract is with Lawrence Livermore Labs (Contract 89-SA-90001) in 

the amount of $8,980,301.

3.5 Additional Repayment Obligations

The final CAS accounts for costs that are not subject to the cost allocation but are included either as 

part of the water ratesetting process or the repayment obligation of commercial power. Accordingly, 

these costs are accounted for in Chapter 11, Final Cost Allocation (Two Period Merger), in an effort to 

provide a comprehensive overview of existing and future repayment obligations of project 

beneficiaries.

The following represents the additional costs included in the CVP water ratesetting process, and in 

the calculation of the repayment obligations for commercial power interests administered by WAPA.
24 | Central Valley Project Final Cost Allocation Study

• Repayment Obligations Assumed (USACE). Reclamation is responsible for repayment of 

costs for several projects constructed by USACE, including Hidden Reservoir on the Fresno 

River, Buchanan Reservoir on the Chowchilla River, and the Black Butte project on Stony 

Creek. Hidden Reservoir and Buchanan Reservoir were authorized by the Flood Control Act of 

1962, and the repayment obligations have been integrated into Reclamation’s ratesetting process 

where costs are allocated to the water supply purpose and distributed in total to the irrigation 

sub-purpose. The Black Butte project was authorized by the Flood Control Act of 1944, and 

subsequently P.L. 91-502 provided that the project would be financially integrated with the CVP. 

The water supply costs of the Black Butte project are sub-allocated to the irrigation and M&I 

sub-purposes based on relative water deliveries. Title (ownership) of all three projects remains 

with USACE. The total value of repayment obligations assumed from USACE for the three 

projects is $20,134,102.

• WAPA Retired Assets. Repayment obligations for commercial power include WAPA retired 

assets. The costs of retired assets are not included in the SCRB analysis because when a unit is 

replaced the cost is “removed” from Schedule 1 in WAPA’s Results of Operation and the new 

cost is included instead. Therefore, to include both the retired asset cost and replacement cost in 

the SCRB analysis would count the value of the capital twice. However, from a cost recovery 

perspective, WAPA needs to recover both the original cost and the replacement cost. Therefore,

the value of retired assets is included for cost recovery purposes. The total value of WAPA 

retired assets is $45,551,232.

• California-Oregon Transmission Project (WAPA). The SCRB analysis excludes the cost of 

the California-Oregon Transmission Project (COTP) because it is not directly connected to any 

CVP hydropower generation resources, nor used to move CVP hydropower to CVP preference 

power customers. However, the cost of the COTP ($22,135,133) represents a repayment 

obligation of commercial power.

3.6 Costs Not Allocated

The costs of facilities that have not yet entered repayment, facilities that have authorized deferred 

use, and CVPIA facilities are not allocated in the CAS, but a portion of these costs represent a 

future obligation of CVP water and power contractors. The results of the CAS will be used to 

allocate these costs at some future point in time where applicable.

• Facilities Not Yet in Repayment:

Folsom Safety of Dams: The Folsom Dam Safety and Flood Damage Reduction Joint 

Federal Project is a collaborative effort by Reclamation and USACE to address the dam 

safety hydrologic risk at the Folsom Facility (including Mormon Island Auxiliary Dam 

and several dikes) and improve flood protection. The Folsom project is included in 

plant-in-service in Schedule No. 1, but the costs are not allocated because the project has 

not yet entered repayment. The project took place over multiple years and work was 

completed in phases. As phases are completed, they are transferred from work in 

progress to plant-in-service. An agreement was reached between Reclamation and CVP 
Chapter 3. Project Facilities and Costs | 25

water contractors that the reimbursable 15 percent of project construction costs would 

not be placed into repayment status until 2021. The total value of Folsom SOD costs not 

in repayment is $120,755,3109

. The reimbursable costs will be allocated in accordance 

with the final cost allocation when it is completed, as directed by P.L. 99-546. 

Repayment will begin the year following substantial completion of construction of each 

SOD modification and be completed within 50 years as provided by the SOD Act. Note 

that these costs are not reflected in the CAS Facility List Attachment.

• Authorized Deferred Use:

o Folsom South Canal and Tehama-Colusa Canal: P.L. 89-161 and P.L. 90-65 

authorized construction of extra conveyance capacity in the Folsom South Canal and 

Tehama-Colusa Canal, respectively, to provide for an expanded service area which could 

receive project water, if necessary. If the additional irrigation service materializes, the 

cost of the additional capacity – $2,425,000 for Folsom South Canal and $54,450,000 for 

Tehama-Colusa Canal – is to be repaid by project beneficiaries in accordance with 

applicable cost allocation procedures. If not, the authorized deferred use costs would be 

repaid from revenues of the CVP. Specific procedures consistent with existing law and 

Reclamation policy will be developed for the repayment of authorized deferred use costs 

prior to 2030. In the interim, the construction costs of the additional capacity are 

deferred and not being recovered through water rates.

• CVPIA Facilities: The costs of CVPIA facilities are not allocated through the CAS. The 

repayment obligations for CVPIA facility costs are directly assigned to reimbursable and nonreimbursable obligations by statute. The sub-allocation of reimbursable costs between Irrigation, 

M&I, and commercial power users will be determined through a separate process based on the 

results of the CAS.

 9 This value represents costs in the 2013 CVP financial statements. The estimated total Folsom Facility SOD 

modification cost is $507,000,000, of which 15 percent ($76,050,000) is reimbursable.
26 | Central Valley Project Final Cost Allocation Study

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Chapter 4. Cost Allocation Methodology | 27

Chapter 4. Cost Allocation Methodology

This chapter discusses cost allocation principles and presents the process for implementing the 

SCRB methodology. Chapter 10 of this report, Cost Allocation Results (Period 2), presents the 

application of the SCRB process for the CAS, including the resulting allocation of CVP costs for the 

Period 2 allocation.

4.1 Cost Allocation Background and Objectives

Early efforts in the field of water resources development consisted of simple, single-purpose 

projects, but the trend soon shifted toward increasingly complex, multipurpose projects because one 

large project is typically a more efficient means of providing benefits across a wide geographic area 

and range than constructing multiple single-purpose projects. As a result, techniques have been 

developed for the distribution of the costs of facilities serving more than one project purpose.

Cost allocation is concerned with the distribution or assignment of the total costs of a multipurpose

project among its authorized purposes according to the principles of economic efficiency and equity.

Once costs are initially allocated to the appropriate purpose, they are assigned to project 

beneficiaries as reimbursable costs and to the appropriate Federal or State governments as nonreimbursable costs. For the CVP CAS, reimbursable costs are the costs that are repaid to the 

government through some form of upfront cost sharing, repayment (including designations through 

public laws), or other financial agreements. Specific legislation and Reclamation policy establish the 

framework for designating costs as reimbursable, non-reimbursable, or partially reimbursable for a 

given project.

Generally, cost allocations are first performed during project planning (before construction begins) 

to give beneficiaries an estimate of their repayment responsibility and to determine whether the 

project is financially feasible. Interim cost allocations are needed for projects with any substantive 

changes (additions, legislation, and other factors), including construction of facilities over a longer 

period of time placed into service in stages. When construction of a project is determined to be 

substantially complete, a final cost allocation is required for the purpose of repayment. At that point, 

most post-authorization planning, design, construction, and IDC costs are known and OM&R costs 

are more clearly defined.

The CVP is a complex multipurpose project composed of both single-purpose and multipurpose

facilities. The objective of the CVP CAS is to identify responsibilities for repayment of reimbursable 

costs by distributing the costs of multipurpose project facilities among the authorized purposes 

served by the CVP. Costs of single-purpose facilities, such as canals to provide M&I water and 

irrigation water, are directly assigned to the purposes they serve. Costs of multipurpose facilities, 

such as dams and reservoirs that are designed to serve more than one authorized purpose, are 

allocated to the appropriate authorized purposes through the SCRB allocation technique.
28 | Central Valley Project Final Cost Allocation Study

4.2 Separable Costs-Remaining Benefits Methodology

The SCRB method for allocating costs is Reclamation’s preferred approach for allocating costs 

amongst multipurpose projects. Reclamation has determined the SCRB methodology to be 

sufficiently comprehensive, particularly for projects where separable costs greatly exceed specific 

costs for any or all purposes.10

The SCRB method is based on the goal of identifying and allocating all project costs to authorized

purposes of the project. First, the SCRB approach looks to allocate the separable costs, which are 

the costs incurred that only support one authorized purpose. Once all separable costs have been 

defined, the SCRB approach allocates the costs that remain, which are referred to as joint costs. 

Joint costs are the remaining facility costs that serve multiple authorized purposes.

The SCRB process distributes joint costs that provide benefits to more than one purpose among all 

authorized purposes served by that facility. Joint costs are distributed among the appropriate 

authorized purposes proportional to the benefits received by each authorized purpose from the 

facility. Benefits, as outlined in Reclamation’s Directives and Standards for Project Cost Allocations 

(PEC 01-02) and pursuant to the Federal Principles and Guidelines (P&Gs) (WRC 1983), are 

measured from a national perspective as opposed to a localized increase or improvement to 

society.11

4.2.1 Steps in the SCRB Process

The 9 steps in performing a SCRB cost allocation for a multipurpose project are listed below.

Step 1: Determine total project costs to be allocated.

Step 2: Estimate benefits produced by each authorized purpose.

Step 3: Estimate the single-purpose alternative (SPA) cost for each authorized purpose.

Step 4: Determine the Justifiable Expenditure for each authorized purpose.

Step 5: Estimate Separable Costs

a. Estimate the Omitted Purpose Project Cost for each authorized purpose.

b. Estimate the Separable Costs for each authorized purpose.

Step 6: Determine the Remaining Justifiable Expenditure for each purpose.

Step 7: Determine the Joint Cost Factors for each authorized purpose.

 10 The Reclamation report, “Central Valley Project Cost Allocation Study,” May 2001, closely examined various cost 

allocation methods and at that time recommended that the existing method would remain in place; the 1975 allocation 

(with interim updates) was conducted using the SCRB method.

11 Although the 1983 P&Gs have been superseded by the current Principles, Requirements, and Guidelines (PR&Gs), 

the requirements regarding Reclamation and its approach for cost allocations remain unchanged.
Chapter 4. Cost Allocation Methodology | 29

Step 8: Allocate Joint Costs

a. Calculate Total Joint Costs to be allocated among all project purposes.

b. Allocate joint costs between each authorized purpose.

Step 9: Calculate total costs allocated to each authorized purpose.

Step 1: Determine total project costs to be allocated. Total plant-in-service project costs are 

gathered or estimated across all cost categories and then converted to a common price level12 for 

consistency and comparative purposes.13 Total costs are the sum of construction (includes planning, 

design, and construction), IDC, and the capitalized value of annual OM&R costs.

Step 2: Estimate benefits produced by each authorized project. Benefits represent the increase 

in the value of the national output of goods and services associated with each purpose derived from 

the provision of project water. Benefits are estimated annually across the entire period of analysis.

Annual benefits for each purpose may be estimated either as an average or individually for each year.

Average annual benefits are based on historical or estimated future hydrology by water year type.

Applying benefits by water year type to associated water year probabilities results in an expected 

average annual value. Like annual OM&R costs, annual benefits are assumed to occur each year of 

the period of analysis, thereby requiring discounting into a present value using a predetermined 

interest rate.

Step 3: Estimate the SPA Cost for each authorized purpose. The SPA Cost for each purpose 

reflects the costs of building and operating a theoretical single-purpose Federal project that would 

provide the same level of benefits, by purpose, as the multipurpose project. The SPA cost includes 

construction, IDC, and OM&R costs. A SPA may be located at the multipurpose project site, or at 

other sites, and several SPAs for different purposes may occupy the same site. Although a SPA may 

be a different size or an entirely different physical plan, it must be capable of producing the same 

level of benefits for any given purpose. Because each SPA is designed to support a single purpose 

only, the size of the SPA may be scaled down from the multipurpose project.

Step 4: Determine the Justifiable Expenditure for each authorized purpose. Justifiable 

Expenditure is the maximum amount of costs to be allocated to an authorized purpose. Justifiable 

Expenditure is determined by the lesser of the benefits produced by the authorized purpose or the

SPA costs. Justifiable Expenditure is used to allocate separable costs, because it is assumed that a

given purpose should not be assigned more costs than either 1) the value of the benefits the project 

generates for that purpose or 2) the costs of building a project exclusively for that purpose.

Step 5a: Estimate the Omitted Purpose Project Cost for each authorized purpose. Estimating 

the cost of the multipurpose project with each authorized purpose omitted allows for an estimate of 

the incremental cost of including each authorized purpose in the multipurpose project. The intent is 

to identify those costs that are attributable to a single purpose (separable costs) and those that 

 12 The time value of money suggests that a dollar obtained today would be more valuable than a dollar obtained a 

number of years from now because today’s dollar could be invested and earn interest. The foregone interest reflects the 

opportunity cost associated with the future year dollar. For this reason, cost and benefit dollar values obtained at various 

points in the future must be discounted (decreased) to a common year present dollar value.

13 Plant-in-service is the date the project or facility was effectively placed into service.
30 | Central Valley Project Final Cost Allocation Study

cannot be attributed to a single project purpose (joint costs). The total cost of the multipurpose

project is estimated for the project including all authorized purposes, then a series of estimates of 

the same multipurpose project with each authorized purpose omitted (omitted purpose projects) is 

made. Each omitted purpose project cost estimate is created by designing a project with the same 

benefits for all authorized purposes of the multipurpose project other than the purpose being 

omitted. The benefits for the omitted purpose are assumed zero.

Step 5b: Estimate the Separable Costs for each authorized purpose. Separable costs for each 

purpose equal the difference between the total costs of the multipurpose project (Step 1) and the 

estimated hypothetical total costs of the multipurpose project with the purpose removed (Step 5a).

Separable costs for each authorized purpose include the costs of single-purpose facilities (i.e., 

specific costs) plus a portion of joint costs directly attributed to that purpose, referred to as 

separable joint costs.14 Separable costs constitute the minimum costs that can be assigned to any 

given purpose.

Step 6: Determine the Remaining Justifiable Expenditure for each purpose. The remaining 

justifiable expenditure for each purpose equals the difference between the justifiable expenditure 

estimated in Step 4 and the separable cost estimated in Step 5b. Remaining justifiable expenditure 

provides the basis for allocating the joint costs.

Step 7: Determine the Joint Cost Factors for each authorized purpose. The Joint Cost factor 

for each authorized purpose is calculated by dividing the remaining justifiable expenditures for each 

purpose by the total remaining justifiable expenditure.

Step 8a: Calculate the Total Joint Costs to be allocated among all project purposes. Total 

Joint Costs is the difference between the sum of the Separable Costs for all authorized purposes 

(developed in Step 5b) and the Total Project Costs (developed in Step 1). Joint Costs are the costs of 

the multipurpose project that are not assignable through the estimation of Separable Costs.

Step 8b: Allocate joint costs between each authorized purpose. The Joint Cost Factors

calculated in Step 7 are used to distribute the total remaining joint costs among the authorized

purposes of the project. The Joint Cost Factor for each authorized purpose is multiplied by the 

Total Joint Cost to calculate the joint cost allocated to each purpose.

Step 9: Calculate total costs allocated to each authorized purpose. Add the Separable Cost and 

the Joint Cost for each project purpose to get the total cost allocated to each authorized purpose.

The sum of the costs allocated to each purpose equals the total project cost calculated in Step 1.

4.3 Sub-Allocation Process

Water and Power are two CVP authorized purposes which include multiple sub-purposes with 

different repayment requirements. As a result, after the SCRB analysis is complete, it is necessary to 

sub-allocate costs assigned to these purposes. Costs are sub-allocated on the basis of use or 

 14 Separable joint costs result from the reduced size of multi-purpose facilities when a given purpose is removed. The 

reduction in costs associated with the hypothetically re-sized facility reflects separable joint costs.
Chapter 4. Cost Allocation Methodology | 31

consumption, namely water deliveries and power generation. For the CAS, the sub-allocation of 

costs allocated to the water supply purpose is based on the proportion of water use across subpurposes, and costs allocated to the power purpose are sub-allocated based on the proportionate 

share of power use. When units are not comparable between water and power, costs are allocated 

based on the relative investment for each purpose. More information on the water and power suballocation process is presented in Chapter 10.3.
32 | Central Valley Project Final Cost Allocation Study

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Chapter 5. Key Concepts and Assumptions | 33

Chapter 5. Key Concepts and Assumptions

This chapter presents key concepts and assumptions used in the CVP CAS. The assumptions are

applied to the allocation methodology outlined in Chapter 4, Cost Allocation Methodology.

5.1 Two Cost Allocation and Two-Period Repayment Approach

Reclamation policy (PEC 01-02) states that 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. Since 

Shasta Dam was placed into service in 1945, major infrastructure additions, policy changes, and new 

regulations have altered the operations, authorized purposes, and benefits of the CVP. The SCRB 

methodology requires accurate estimation of benefits in order to appropriately allocate costs. Due to 

the substantial changes to the benefits and authorized purposes of CVP following the passage of 

CVPIA, Reclamation determined it prudent to evaluate the benefits of the CVP for two periods.

The first period (Period 1) allocation reflects historic operations and benefits as developed in the 

1975 CVP cost allocation. The second period (Period 2) cost allocation represents current

operations and benefits of the CVP following the passage of CVPIA. The final cost allocation

presented in the CAS merges Period 1 and Period 2 allocations, putting equal weight to each 

period.

15 The equal weight given to each period is supported by the approximate mid-point of the 

100-year repayment period coinciding with the passing of the COA in 1986, and the subsequent

changes to benefits and authorized purposes of the CVP.

The costs allocated in both Period 1 and Period 2 allocations are the total project costs presented in 

Chapter 3, Project Facilities and Costs, which consist of plant-in-service costs for both Reclamation and 

WAPA as of September 30, 2013.

5.2 Period of Analysis

For cost allocations, Reclamation is required to compare costs and benefits over the period of 

analysis. 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” (Reclamation 2013b).

Given that the economic life of the CVP is expected to exceed 100 years, the CAS uses a 100-year 

period of analysis.

 15 Note that the sub-allocation processes in Period 2 will be updated annually (see Chapter 12, Implementation of the Final 

Cost Allocation)
34 | Central Valley Project Final Cost Allocation Study

5.3 Base Year (2013)

Comparing costs and benefits that occur at different points in time requires that both benefits and 

costs be adjusted to a common price level for comparability. The year 2013 was selected as the base 

year because it corresponds to the underlying cost basis used in the CAS, namely the 2013 CVP 

financial statement. All historic costs are indexed to 2013 dollars. In addition, all prospective costs 

and economic benefits are measured in 2013 dollars.

5.4 Treatment of Post-Base Year Activities

Typically, the period of analysis is separated into historic and prospective conditions. Analysis of 

historic costs and benefits are estimated on actual observations, whereas prospective costs and 

benefits are forecasted. Estimation techniques are limited to information that is available at the time 

the analysis is initiated.

It is acknowledged that conditions in which the CVP operates vary over time as laws and policies 

change and other information becomes known. A common starting point for facts and data used to 

develop assumptions was selected corresponding to the base year of 2013 to maintain consistent 

data and assumptions across analyses. Future conditions known as of the base year and expected to 

exist over the 100-year period of analysis are included in the CAS. Reclamation has determined it 

prudent to utilize 2013 conditions to allow for timely completion of the CAS. Updating conditions, 

costs, and benefits would require Reclamation to perform the entire SCRB process again with new 

assumptions and would likely delay the completion of the CAS.

5.5 Interest Rate

Section 8 of PEC 01-02 states that all benefits and costs for allocation purposes will be placed on a 

comparable basis in relation to time of occurrence using the same interest rate and period of 

analysis. The interest rate (also referred to as discount rate) used for the CAS is 3.25 percent. The 

interest rate used complies with Section 80(b) of P.L. 93-251, which required a December 1968 

discount rate for facilities authorized prior to January 1969 (this rate is 3.25 percent). The interest 

rate used in the CAS is the same interest rate used in past CVP cost allocation studies.

5.6 Single CVP-Wide Allocation

Unlike the existing allocation (Period 1) which utilized the concept of project “bases” for various 

types of facilities that were grouped together and subject to separate cost allocations, the Period 2 

allocation treats CVP facilities across all divisions, units, regions, and programs as a single unit for 

the purposes of allocating costs. The Period 2 allocation returns to a project-wide approach because 

the CVP is financially and operationally integrated. The features constructed by USACE and the San 

Luis, Auburn-Folsom South, and San Felipe units have achieved their ultimate roles in the integrated 
Chapter 5. Key Concepts and Assumptions | 35

CVP. Through a single, integrated operational approach for the cost allocation, the final cost 

allocation factors can be clearly identified.

5.7 CVP Authorized Purposes

The CAS allocated costs among the following congressionally authorized purposes of the CVP:

water supply, power, flood control, water quality, recreation, navigation, fish and wildlife

enhancement, and fish and wildlife mitigation (which is treated as a joint cost for cost recovery). A 

description of each authorized purpose in the context of the cost allocation process is presented 

below.

5.7.1 Water Supply Purpose

The water supply purpose reflects the CVP’s ability to deliver water. The objective of this section is 

to identify the components of the water supply purpose, discuss how water supply is treated in the 

CAS, and describe the water supply sub-allocation process.

5.7.1.1 Water Supply as a Single Purpose

Typically, irrigation and M&I water are treated as separate project purposes within a cost allocation.

However, in the 1970 (Reclamation 1970) and updated 1975 (Reclamation 1975) CVP cost 

allocations, these purposes were combined into a water supply function which is further suballocated between irrigation, M&I, wildlife refuge, and waterfowl conservation based on the 

proportion of water delivered to each. This CAS similarly treats water supply as a single water supply 

function which is sub-allocated to specific water delivery purposes.

The use of a combined water supply purpose allows for adjustments to the proportionate share of 

costs allocated to irrigation and M&I as deliveries change over time. Additionally, when new units 

(San Luis and New Melones) are added to the project, the water supply approach allows for 

relatively easy incorporation of those costs into a CVP-wide allocation compared to treating 

irrigation and M&I as separate purposes. The 1970 cost allocation stated: “It was recognized that 

this approach may lose some conceptual correctness, but it was decided the accuracy lost is 

outweighed by the practical advantage gained from the water supply approach.”

5.7.1.2 Components of Water Supply

The water supply purpose for Period 2 is comprised of irrigation, M&I, wildlife refuge, and CVPIA 

Section 3406(b)(2) (referred to as B2) water. Irrigation water supplies support irrigated agriculture in 

the CVP service area. M&I water supplies support urban development by providing reliable water 

supplies to the expanding population base. The CVP also provides water to refuges throughout the 

State in an effort to help support wildlife populations. Finally, the B2 component of the water 

supply purpose is measured based on both the volume released for B2 actions during excess 

conditions and the reduction in Delta exports required to meet B2 actions during balanced 

conditions. (See the Hydrological Modeling Appendix for more details.) Any water stored for the 

purpose of meeting the SWRCB D-1485 as well as the reasonable and prudent alternatives (RPA) of 

the biological opinions (BO) is not considered part of the water supply purpose and is considered a 
36 | Central Valley Project Final Cost Allocation Study

joint cost in the CAS. Additionally, any water stored for the purpose of exceeding SWRCB D-1485 

is not considered part of the water supply purpose (included as part of the water quality purpose).

5.7.1.3 Sub-Allocation of Water Supply

Water supply costs are sub-allocated to irrigation, municipal and industrial, wildlife refuge, and B2 

functions on the basis of water use. Water supply delivery distributions are estimated by facility.

Because Period 2 is a prospective analysis, the water delivery data is based on CalSim 2 modeling 

that is reflective of the current operating and regulatory environment. Information on B2 water 

supplies is derived from CVPIA water accounting records.

5.7.1.4 Water Supply Benefits and Costs

Irrigation and M&I benefits are estimated individually to arrive at the water supply total benefit 

value. Benefits are not estimated for wildlife refuge and B2 water supplies as benefits exceed the 

SPA. More information on the water supply benefit analysis is presented in Chapter 7, Economic 

Benefits.

In terms of costs, conveyance and pumping facilities generally accommodate water supply deliveries, 

so all of their costs are assigned to the water supply purpose. Storage facilities, on the other hand, 

typically serve multiple purposes, including water supply. Separable costs of multipurpose facilities 

to water supply required additional analysis. The SPA for water supply is based on determining the 

hypothetical size of each reservoir if it only served water supply purposes, plus all single-purpose

water supply facilities.

5.7.2 Fish and Wildlife Enhancement Purpose

The fish and wildlife enhancement purpose is complex and requires additional attention to 

understand. CVPIA (P.L. 102-575) added “domestic uses and fish and wildlife mitigation, protection 

and restoration purposes” and “power and fish and wildlife enhancement” as authorized purposes 

for the CVP. For consistency with Reclamation practice, policy, and law, mitigation costs in the CAS 

are allocated to all project purposes as joint costs unless specified in specific legislation. The burden 

for operating the project is shared project-wide and not solely by the reimbursable purposes.

Fish and wildlife enhancement has requirements for allocating joint costs that have not been met, 

and therefore this purpose does not have costs allocated to it in the CVP. The Fish and Wildlife 

Coordination Act (60 Stat. 1080) dated August 14, 1946, and P.L. 85-624 dated August 12, 1958,

provided that “measures to prevent loss of and damage to wildlife resources” were to be nonreimbursable costs.

Additionally, under PL 89-72, to allocate joint costs to the fish and wildlife enhancement purpose, 

there must be a commitment by a non-Federal entity to manage project land and water areas for fish 

and wildlife, as well as to pay a portion of the separable costs. Unless project-specific legislation 

exists regarding the allocation of joint costs to the fish and wildlife enhancement purpose, 

Reclamation typically relies on Section 2 of the Federal Water Project Recreation Act (FWPRA)

(P.L. 89-72) of 1965, as amended, to determine how costs should be allocated to this purpose.
Chapter 5. Key Concepts and Assumptions | 37

Prior to project authorization, FWPRA requires that a non-Federal public entity commit in writing 

to administer project land and water areas for fish and wildlife enhancement, to bear a portion of 

separable costs allocated to fish and wildlife enhancement, and to bear all operating costs. Because 

no such commitments by non-Federal entities exist for the CVP, Reclamation determined that the 

Period 2 allocation would not allocate joint project costs to the fish and wildlife enhancement 

purpose.

5.7.3 Recreation Purpose

Reclamation relies on Section 2 of the FWPRA of 1965, as amended, to determine the allocation of 

joint costs to recreation. FWPRA requires that a non-Federal public entity commit in writing, prior 

to authorization, to administer project land and water areas for recreation, bear a portion of 

separable construction costs, and bear at least half of all operating costs.

Similar to fish and wildlife enhancement costs, absent any specific authorizing legislation and/or 

cost sharing agreements with non-federal entities for recreation facilities, no joint construction costs 

are allocated to the recreation purpose on a CVP-wide basis for Period 2. Certain single-purpose 

recreation facility costs are allocated to the recreation purpose as separable costs, including the 

Federal share of non-reimbursable costs associated with Lake Woollomes recreation facilities and 

San Justo Reservoir recreation facilities. The remaining portion of these recreation costs are also 

direct assigned to State and local entities pursuant to cost-sharing agreements.

5.7.4 Navigation Purpose

There are no costs allocated to the navigation purpose in Period 2. Navigation was originally a CVP 

purpose in recognition of historical commerce on the Sacramento River, which was supported by a 

CVP-authorized minimum flow of 5,000 cubic feet per second (cfs) at Chico Landing. However, 

there is no navigation currently supported by the CVP. The USACE has not dredged the reach

between Sacramento and Chico Landing to preserve channel depths for navigation purposes since 

1972. Furthermore, the CVP has no effect on the navigation of ocean-going ships calling at the 

ports of West Sacramento and Stockton.

5.7.5 Water Quality Purpose

For the Period 2 allocation, Reclamation has determined that it is appropriate to allocate joint 

project costs to the water quality purpose. Water quality benefits are estimated using the value of 

irrigation water as the most cost-effective source of water to meet water quality requirements. Water 

quality SPA costs are estimated using CalSim 2 hydrology modeling to identify the quantity of water 

stored specifically to exceed D-1485 water quality standards.

The SWRCB is responsible for setting water quality standards which govern the operations of both 

the CVP and the SWP for the San Francisco Bay/Sacramento-San Joaquin Delta and Estuary.

Under P.L. 99-546, both the CVP and SWP are authorized to operate in close coordination pursuant 

to a Delta cooperative operating agreement. The COA also authorized the CVP to be specifically 

operated to meet SWRCB’s D-1485 water outflow standard. P.L. 99-546 states:
38 | Central Valley Project Final Cost Allocation Study

The costs associated with providing Central Valley project water supplies for the purpose of salinity 

control and for complying with State water quality standards identified in exhibit A of the Agreement 

Between the United States of America and the Department of Water Resources of the State of 

California for the Coordinated Operations of the Central Valley Project and the State Water Project, 

dated May 20, 1985, shall be allocated among the project purposes and shall be reimbursed in 

accordance with existing Reclamation law and policy. The costs of providing water for salinity 

control and for complying with State water quality standards above those standards identified in the 

previous sentence shall be non-reimbursable.

CVP water supplies provide water quality benefits through increased river flows that help meet 

water quality standards. In terms of reimbursement of costs allocated to water quality, P.L. 99-546 

directs that costs associated with providing CVP water supplies for salinity control and complying 

with State water quality standards (D-1485) are to be allocated among purposes and reimbursed 

according to Reclamation law and policy. Costs of exceeding D-1485 water quality standards are

directed to be non-reimbursable. In 1999, the SWRCB adopted D-1641, amending certain water 

quality terms and conditions. Meeting D-1641 water quality standards requires exceeding the Delta 

outflow standards set by D-1485.

5.7.6 Flood Control Purpose

The CVP includes several dams and reservoirs authorized and constructed to meet multiple 

purposes, including flood control. There are facilities not authorized for flood control that do, in 

fact, provide flood protection, including Trinity Dam and Reservoir. Therefore, Trinity is included in 

the flood control analysis in the CAS, specifically the sizing of the flood control SPA. Flood control 

benefits are based on the value of flood damages prevented as estimated by the USACE. For SPA 

costs, reservoirs are re-sized for flood protection only based on hydrology analysis. All costs 

allocated to flood control are considered non-reimbursable.

5.7.7 Power Purpose

The power purpose in the CVP reflects hydropower generation at project facilities that are used for 

both commercial and project use purposes. Project use energy (PUE) is the power required to 

operate CVP facilities, such as pumping plants. Any power generated that is not used by the project 

is considered commercial power, which is marketed by WAPA.

The power purpose benefits are estimated using market prices. Power SPA costs are estimated based 

on a hypothetical thermal natural gas power plant, which is specifically authorized to serve the CVP.

Separable costs assigned to power in the SCRB process are limited primarily to single-purpose 

power facilities.

Costs allocated to the power purpose are sub-allocated between commercial power and PUE 

proportionate to their respective projected use of CVP power. PUE costs are further sub-allocated 

among irrigation, M&I, and wildlife refuges proportionate to their projected water use (similar to the 

water supply sub-allocation, with exception of B2 water supplies). Costs allocated to commercial 

power are reimbursable from CVP power preference customers.
Chapter 5. Key Concepts and Assumptions | 39

5.7.8 Fish and Wildlife Mitigation Purpose

P.L. 89-72, FWPRA, dated July 9, 1965, repealed the non-reimbursable provision for mitigation 

costs while maintaining only fish and wildlife enhancement costs as non-reimbursable. 

Consequently, fish and wildlife mitigation activities that were authorized and implemented between 

1946 and 1965 are treated as non-reimbursable costs, and mitigation activities implemented after 

1965 are considered reimbursable. Fish and wildlife mitigation activities have stipulations in 

legislation that also provide specific allocations, CVPIA being a clear example. Non-reimbursable 

fish and wildlife mitigation is different than fish and wildlife enhancement, which is also a nonreimbursable cost.

5.8 Allocation of New Melones Unit Cost

The New Melones Unit was first authorized in 1944 to be constructed by the USACE and upon 

completion was transferred to Reclamation for integration into the CVP. Reclamation has been 

using the USACE cost allocation for the New Melones Unit (House Doc 453, March 22, 1962) since 

it became an integrated part of the CVP. The initial USACE allocation was based on significant 

recreation development that was never realized. Reclamation continued to incorporate the USACE 

cost allocation into CVP allocations after the inception of the New Melones Unit.

Reclamation determined that no legislative authorities preclude the modification of the USACE 

allocation for New Melones (or other facilities constructed by USACE). The transfer of facilities to 

Reclamation included transfer of responsibility to achieve operational and financial integration into 

the CVP. The CAS reallocates New Melones costs as part of the CAS.

5.9 Water Distribution Systems (Repayment Contracts)

Distribution of water from CVP conveyance facilities (i.e., canals) to the individual water users is the 

responsibility of the local districts, which use distribution systems comprised of lateral canals and 

pipelines to convey water to individual farms and municipalities. The costs included in the SCRB 

process are those costs associated with storage and conveyance of water, but not any distribution 

system costs beyond the contractor turnout. Water distribution system costs subject to Reclamation 

repayment contracts are assigned directly to the applicable contractors, rather than through the CAS 

process. Privately-financed distribution systems are not within the scope of the CAS.

5.10 Safety of Dams Costs

Several dams in the CVP have been modified since their construction for seismic, security, and 

potential failure risks under Reclamation’s Safety of Dams program. These include Folsom Dam and 

Reservoir, Little Panoche Creek Detention Dam, Los Banos Creek Detention Dam and Reservoir, 

and O’Neill Dam Forebay and Waterway. SOD legislation stipulates that 15 percent of SOD costs 

are to be reimbursed by water and power users and the remaining 85 percent of costs are nonreimbursable. With the exception of recent SOD activities at Folsom Dam that are not in repayment 
40 | Central Valley Project Final Cost Allocation Study

(and not allocated in the CAS), all existing SOD-related costs are treated as direct assigned costs, and 

thereby excluded from the SCRB analysis. Reimbursable SOD costs are assigned to the reimbursable 

purposes according to Reclamation policy and practice described below.

On April 17, 2007, the Mid-Pacific Region of Reclamation requested approval from Reclamation’s 

Office of Program and Policy Services to utilize the CVP Irrigation and M&I Ratesetting Policies to 

repay these SOD costs assigned to water contractors. Under the ratesetting policy, reimbursable 

SOD costs are collected as storage from all CVP water contractors with the exception of Class 2 

water contractors in the Friant Division. In keeping with the spirit of a repayment contract, the split 

of repayment responsibility between water supply and commercial power remains static, while the 

split between irrigation and M&I varies annually depending on actual water use. Approval to use the 

ratesetting policy was granted September 21, 2007.

5.11 Mitigation Costs

Mitigation is broadly defined as project-related activities to avoid, minimize, or compensate for the 

adverse effects of project construction and operations on affected resources (i.e., environmental, 

archeological, or cultural). Within the CVP, mitigation costs are commonly associated with two types 

of activities:

• ESA-Related RPA Mandates. CVP facility costs associated with reservoir releases to augment 

fish flows mandated by the National Marine Fisheries Service (NFMS) of the National Oceanic 

and Atmospheric Administration (NOAA) and RPAs in the BOs prepared by the USFWS.

• Non-CVPIA Facilities. Other fish and wildlife facility costs not authorized under CVPIA.

Refer to the CAS Facility List Attachment for additional details.

5.11.1 Reimbursement of Mitigation Costs

For consistency with Reclamation practice, policy, and law, mitigation costs in the CAS are treated 

as joint costs and allocated to all project purposes unless specified in specific legislation. The burden 

for operating the project is shared project-wide and not solely by the reimbursable purposes.

5.12 Central Valley Project Improvement Act Costs

As a separate program, CVPIA also mitigates for impacts to fish and wildlife resources from the 

CVP. Mitigation under CVPIA is distinct from general mitigation costs referenced in Section 5.11 in 

that the activities are specifically authorized under CVPIA and have specific cost recovery 

assignments. There are different types of costs associated with the implementation of CVPIA. First, 

there are plant-in-service CVPIA facilities shown in Schedule No. 1 of the CVP financial statements. 

There are also CVPIA O&M costs that are recovered in part by payments to the CVPIA Restoration 

Fund. Finally, there are costs of CVP facilities (both construction and O&M) that get assigned to 

CVPIA activities that are recovered through the CVP water ratesetting process. The treatment of 
Chapter 5. Key Concepts and Assumptions | 41

CVPIA costs are described in Reclamation’s Business Practice Guidelines for CVPIA Receipts, 

Program Accounting, Cost Allocation, and Cost Recovery (BPG).

5.12.1 CVP Facility Costs Assigned to CVPIA

The portion of the cost of CVP facilities that is required to store and convey CVP water to meet 

CVPIA requirements is sub-allocated as part of the water supply purpose.16 The water supply suballocation assigns costs to the refuge water supplies outlined in section 3406(d)(1) of the CVPIA and 

the mitigation water supplies referenced in section 3406(b)(2) of the CVPIA.

CVPIA Section 3406(d)(1) Wildlife Refuge (also referred to as Refuge Water Supply):

Section 3406(d) of the CVPIA requires Reclamation to provide CVP water to meet Level 2 water 

demands and to obtain water supplies to meet Incremental Level 4 water demands for optimal 

waterfowl habitat management needs at identified wildlife refuges managed by the USFWS

(Reclamation 1989). Water supply costs associated with storage and delivery of Level 2 water

supplies are assigned to Level 2 as part of the water supply sub-allocation and are considered 

reimbursable by water and power users exclusively.

Incremental Level 4 water costs are associated with water acquisition independent from CVP water 

supplies. Although Incremental Level 4 refuge supplies are purchased from non-CVP sources, 

Incremental Level 4 refuge water supply costs associated with CVP conveyance facilities are 

captured as part of the water supply sub-allocation process and are considered non-reimbursable, 

and they are allocated 75 percent to Federal government and 25 percent to the State of California.

O&M costs of conveying both Level 2 and Incremental Level 4 water supplies are recovered 

independently as part of the CVPIA program. However, a portion of the construction costs of CVP 

conveyance facilities is also sub-allocated to refuges (both Level 2 and Incremental Level 4) as part 

of the water supply sub-allocation process and collected through water rates.

CVPIA Section 3406(b)(2) Water Supplies (also referred to as B2 Water Supply):

The sub-allocation of water supply costs includes the B2 sub-purpose, which is considered 

reimbursable. More information on the treatment of B2 costs is presented in Chapter 10, Cost 

Allocation Results (Period 2). Section 3406(b)(2) provides for the dedication and management of 

800,000 acre-feet (AF) of CVP yield to be used for the “primary purpose of implementing the fish, 

wildlife, and habitat restoration purposes and measures authorized by [CVPIA] (also referred to as 

B2 water supplies); to assist the State of California in its efforts to protect the waters of the San 

Francisco Bay/Sacramento-San Joaquin Delta Estuary; and to help meet such obligations as may be 

legally imposed upon the CVP under State or Federal law...including but not limited to additional 

obligations under the Federal ESA.”

 16 The sub-allocation of PUE costs also includes an allocation to the refuge water supply sub-purpose, but not B2 water 

supply.
42 | Central Valley Project Final Cost Allocation Study

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Chapter 6. Hydrological Modeling | 43

Chapter 6. Hydrological Modeling

This chapter briefly describes the hydrological modeling analyses and results developed to support 

the CAS. See the Hydrological Modeling Appendix for more detailed description of tools, assumptions,

and data used for the CVP CAS. The CAS relies on hydrological modeling for two main purposes:

(1) the development of hydrological inputs used to estimate the economic benefits presented in 

Chapter 7, Economic Benefits, and (2) the development of multipurpose facility SPA sizes discussed 

further in Chapter 8, Single-Purpose Alternatives. In addition, hydrological modeling was considered to 

estimate separable costs for multipurpose facilities (“omitted purpose analysis”) and it was 

determined that no re-sizing was necessary. The primary hydrological model used to support the 

CAS is CalSim 2, which models CVP reservoir storage and conveyance deliveries under a range of 

hydrological and regulatory conditions. An overview of the hydrological modeling and results for the 

water supply, water quality, hydropower, and flood control purpose are provided below. In addition,

sizing multipurpose storage facilities to meet CVPIA is described, followed by a brief description of

a hydrology sensitivity analysis.

6.1 Overview of the Hydrological Modeling

Hydrological model applications used in the CAS analysis include CalSim 2, Flow Tracker, and the 

Single Purpose Facility Sizing Model (Sizing Model). CalSim 2 is a reservoir-river simulation model 

developed by the California Department of Water Resources (DWR) and Reclamation commonly 

used for long-term water supply reliability planning.

The Flow Tracker model was developed to identify SWP storage releases made specifically for Delta 

outflow as input to the Sizing Model. Additional analysis included post-processing of CalSim 2 

results and evaluation of CVPIA records. A spreadsheet post-processor for CalSim 2 results refined 

the model’s representation of drought year allocation decisions to ensure that delivery results reflect 

recent operations. An evaluation was made of CVPIA 3406(b)(2) accounting records to determine 

the use of storage to accomplish the goals of this program.

The CAS analysis uses CalSim 2 to estimate project deliveries and flows under a range of regulatory 

environments17. CalSim 2 results are used as the basis for economic benefits of water supply, water 

quality, flood control, and hydropower as well as in the SPA sizing analyses. Flood control benefit 

and hydropower SPA facility sizing analyses do not directly use CalSim 2 output.

 17 CalSim 2 modeling incorporated the regulatory environment as of 2013 and is based on an historic 82-year 

hydrological record (1922–2003). The model has various constraints, including contract maximums, which are used as an 

upper bound for water deliveries. CalSim 2 estimates deliveries in consideration of the constraints, regulations, available 

water supply, and other factors explained in the Hydrological Modeling Appendix.
44 | Central Valley Project Final Cost Allocation Study

6.2 Water Supply Purpose

CalSim 2 input criteria is used to quantify the deliveries that define the water supply purpose and to 

determine the water supply SPA storage facility sizes for the major CVP reservoirs. Estimated 

deliveries are summarized by water year type for irrigation, M&I, and wildlife refuges (Level 2) in 

Table 6-1. Note that these deliveries are summarized from the post-processed CalSim 2 delivery 

results, which differ from the water deliveries used as input to the economic models (see the 

Economic Benefits Analysis Appendix for more details). Table 6-2 displays the full size and water supply 

SPA size for the five multipurpose CVP reservoirs that serve the water supply purpose – Friant, 

New Melones, Trinity, Shasta, and Folsom. Reservoir sizes are measured in thousand acre-feet 

(TAF). Note that water supply SPA sizes displayed here include volumes associated with CVPIA B2

management actions. Volumes associated with CVPIA B2 management actions are estimated 

separately, discussed below, and included in the CVP reservoir sizes used in cost estimates (see 

Chapter 8, Single-Purpose Alternatives).

Table 6-1. Estimated Annual Water Supply Deliveries by Water Year Type (TAF)

Delivery Type Wet

Above 

Normal

Below 

Normal Dry Critical

Irrigation 6,118 5,603 4,946 4,353 3,121

M&I 606 606 506 447 357

Level 2 Refuge 369 369 369 362 291

Table 6-2. Water Supply SPA Storage Facility Sizing (TAF)

CVP 

Reservoirs Full Size SPA Size (withoutCVPIA B2)1

SPA Size (CVPIA 

B2) Total SPA Size

Trinity 2,447 709 24 733

Shasta 4,552 1,391 44 1,435

Folsom 967 181 10 191

New Melones 2,420 640 2 642

Friant 524 476 0 476

1. Includes dead pool storage requirements
Chapter 6. Hydrological Modeling | 45

6.3 Water Quality Purpose

Water quality responsibilities of the CVP are expressed both by salinity standards, which are met by 

flow, and by flow requirements that can be surrogates for temperature or dissolved oxygen. Under 

the complex combined operations of the CVP and SWP, water that is provided to meet a water 

quality standard at one location can also be used to satisfy a delivery or water quality standard at 

another location. It can thus be difficult to discern a specific operation for incremental water quality.

Quantifying the differences between CVP operations to meet D-1485 and D-1641, and determining 

the storage necessary to accomplish this, were the goals of the hydrology analysis for the water

quality purpose. Separate CalSim 2 studies were developed to represent system operations under 

both D-1641 and D-1485. A comparison of results between these scenarios shows differences in 

river flows, Delta outflow, deliveries, exports, and storage conditions, particularly in the Sacramento 

River basin. The differences in deliveries between these studies reflect the water deliveries that are 

foregone in order to meet the higher water quality standards of D-1641. These foregone deliveries 

were used as inputs to economic benefits models to calculate the representation of economic benefit 

for the water quality purpose. Table 6-3 displays estimated annual delta outflows and foregone 

irrigation, M&I, and refuge water deliveries by water year type.

Table 6-3. D-1641 Estimated Annual Water Requirements by Source and Water Year 

Type (TAF)

Parameter Wet

Above 

Normal

Below 

Normal Dry Critical

Delta Outflows1,2 0 0 206 338 449

Foregone Irrigation Deliveries 34 114 167 118 171

Foregone M&I Deliveries 2 5 7 4 10

Total 36 119 380 460 630

1. Represents CVP portion of Delta outflow requirement

2. CalSim 2 modeling shows that estimated Delta outflow requirements in wet and above normal years 

are negative; these values have been adjusted to zero.

Table 6-4 shows the storage facility Sizing Model results for the SPA for water quality. New Melones 

does not appear in Table 6-4 because the difference in SPA is negligible. New Melones does meet 

water quality standards at Vernalis and dissolved oxygen standards at Ripon, but overall differences 

in the combinations of criteria between D-1485 and D-1641 resulted in the reservoir needing to be 

the same size under both regulatory environments. Friant does not serve a water quality purpose.
46 | Central Valley Project Final Cost Allocation Study

Table 6-4. SPA Storage Size Results for the Water Quality Purpose (TAF)

CVP 

Reservoir

Full 

Size

D-1485 with 

Current 

Deliveries

D-1641 

with 

Current 

Deliveries

Difference = 

SPA storage 

size for 

water quality

Minimum 

Storage

(Deadpool)

Total

SPA

Size1

Trinity 2,447 1,793 1,905 112 240 353

Shasta 4,552 3,361 3,567 206 550 756

Folsom 967 718 757 39 90 129

1. Includes storage requirements for CVPIA B2 water quality objectives

6.4 Hydropower Purpose

Estimated energy generation in the CVP system is the basis of the hydropower economic benefit 

analysis and thermal plant SPA sizing for the hydropower purpose (see Section 8.5 for details on the 

thermal plant SPA). The long-term generation (LTGEN) model (developed by Reclamation and 

WAPA) converted monthly data of reservoir releases from the CalSim 2 hydrology model to 

estimate hourly CVP power generation available to meet preference power and project use 

requirements. The LTGEN model estimated monthly power generation and use in megawatt hours 

(MWh) for each CVP power facility based on CalSim 2 modeling.

CalSim 2 delivery and release data is used as an input for the LTGEN model to estimate the annual 

amount of energy that would be produced by CVP power facilities for the 100-year period of 

analysis. Table 6-5 displays the CVP system estimated annual energy generation and consumption by 

water year type.

Table 6-5. Estimated Annual Power Generation and Consumption by Water Year Type (GWh)

Power 

Component Wet

Above 

Normal

Below 

Normal Dry Critical

Energy Generation 6,463 5,211 4,226 3,909 3,024

Energy Use 1,417 1,216 1,126 1,017 694

Net Generation 5,046 3,995 3,100 2,891 2,330

6.5 Flood Control Purpose

CalSim 2 output is used to develop SPA storage facility sizing for the flood control purpose. The 

CVP storage facilities which operate for flood control are Trinity, Shasta, Folsom, New Melones, 
Chapter 6. Hydrological Modeling | 47

and Friant (Millerton). All of these facilities except for Trinity include flood control in their 

authorizing legislation. The flood control rule method is used for determining the SPA sizes of a 

reservoir, which involves selecting the largest value for required flood space in a reservoir from the 

historical flood control diagrams and adding this to the dead pool space. Table 6-6 provides a 

summary of sizing results produced by this method.

Table 6-6. SPA Storage Size Results for the Flood Control Purpose (TAF)

CVP 

Reservoir

Minimum 

Flood 

Control 

Rule

Storage 

Capacity

Flood 

Space 

Required

Minimum 

Storage 

(Dead 

Pool)

Flood 

Control 

SPA Size

Shasta 3,250 4,552 1,302 550 1,852

Folsom 367 967 670 90 690

New Melones 1,970 2,420 450 80 530

Millerton 351 524 174 135 309

Trinity has a unique flood control mandate relative to the other four facilities since flood control is 

not an explicitly authorized purpose. Instead the dam operates to protect downstream assets under 

the Trinity River Mainstem Fishery Restoration ROD. Due to the unique nature of the flood control 

mandate for Trinity, a daily hydrology model analysis is used to determine the flood control SPA for 

Trinity of 578 TAF.

6.6 Sizing Multipurpose Storage Facilities to Meet B2 Objectives

CVPIA Section 3406(b)(2), or B2, dedicates an annual portion of project yield for the “primary 

purpose of implementing the fish, wildlife, and habitat restoration purposes and measures 

authorized by this title; to assist the State of California in its efforts to protect the waters of the San 

Francisco Bay/Sacramento-San Joaquin Delta Estuary; and to help meet such obligations as may be 

legally imposed upon the Central Valley Project under State or Federal law following the date of 

enactment of this title, including but not limited to additional obligations under the Federal 

Endangered Species Act.”

Reclamation records of annual B2 accounting specify how much B2 water is ultimately used by 

purpose, although water that is ultimately exported is not included in the accounting. Existing 

analysis identified the water storage requirements specifically for B2 to be 208 TAF, excluding B2 

water that is ultimately exported as irrigation or M&I water. This figure can be broken into three 

pieces: B2 actions attributed to the water supply purpose (79 TAF); B2 for RPA mitigation (69 

TAF); and B2 for water quality (60 TAF) (see the Hydrological Modeling Appendix).

The CAS considers the storage cost of producing CVPIA instream flow actions and of exports that 

are foregone due to CVPIA Delta actions. Due to the continuous and evolving nature of CVPIA 
48 | Central Valley Project Final Cost Allocation Study

accounting methodologies, it has not been possible to include a consistent long-term plan for B2 

actions in the CalSim 2 model. Consequently, daily accounting records detailing historical storage 

releases and export reductions used for actions from 2008 to 2014 were analyzed.

The required storage for B2 water supply actions is calculated as the 2008-2014 average annual total 

of the volume of releases designated to have been made for B2 actions during excess conditions and 

the average annual volume of exports reduced for B2 actions during balanced conditions. This 

average annual volume is distributed among the storage facilities based on proportional B2 releases 

from each reservoir (instream release element) and distribution of north-of-Delta CVP reservoir 

sizes (export reduction element). Table 6-7 displays the estimated storage reserves used to meet B2 

action management for Trinity, Shasta, Folsom, and New Melones storage facilities.

Table 6-7. Estimated Average Annual Storage Requirements Used to Meet B2 Water Supply 

Objectives (TAF) 

B2 Objective Trinity Shasta Folsom New Melones Total

B2 – Water Supply 24.1 43.7 9.6 1.6 79.0

6.7 Hydrology Sensitivity Analysis

The CAS relies on recent information from the Sacramento and San Joaquin Rivers Basin Study 

(SSJRBS) to assess the potential differences in water supply availability that might occur between a 

no-climate-change scenario and various other future climate change projections (see the Hydrology 

Sensitivity Analysis Attachment to the Hydrological Modeling Appendix for more details).

The SSJRBS modeling generated a substantial amount of quantitative information, some of which is

used for this CAS assessment. The assessment is composed of specific statistical tests, which 

describe how the hydrology may differ under various climate projections (i.e., warm-dry, hot-dry, 

hot-wet, warm-wet, and central tendency). One statistical test compared the hydrologic inflows into 

the Sacramento and San Joaquin Valleys under a no-climate-change scenario to the inflows under a 

range of future climate projections by annual total and monthly distribution, and in groups of 

average annual totals by water year type. Another test compared CVP water deliveries under a noclimate-change scenario to CVP deliveries under a range of future climate projections. The results of 

the statistical assessment were used to qualitatively characterize potential climate change effects on 

CVP benefits and SPAs estimated for the CAS.

Since the central tendency projection includes a relatively large ensemble of 175 different 

projections, it is believed that it provides a reasonable and appropriate reference point to compare 

its associated inflows/deliveries to those associated with the no-climate-change projection. The 

results of the tests indicate that the inflows into the Sacramento and San Joaquin Valleys associated 

with the no-climate-change scenario and the inflows associated with the central tendency climate 

projection are not significantly different. Similarly, no significant difference was found between the 
Chapter 6. Hydrological Modeling | 49

no-climate-change and central tendency projections in terms of total CVP deliveries. The results of 

the climate change statistical tests indicate, in terms of inflows and deliveries, the hydrology used in 

the CAS was reasonable and appropriate and by extension, that the estimate of benefits and SPA

sizing of storage facilities was reasonable. See the Hydrology Sensitivity Analysis Attachment to the 

Hydrological Modeling Appendix for more details.
50 | Central Valley Project Final Cost Allocation Study

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Chapter 7. Economic Benefits | 51

Chapter 7. Economic Benefits

This chapter presents the results of the economic benefit analyses prepared for the CAS. The 

economic benefits for each authorized purpose are used to evaluate the justifiable expenditure for 

each authorized purpose in the SCRB analysis. The justifiable expenditure for each authorized 

purpose is the lesser of the SPA cost (presented in Chapter 9, Cost Estimates) and the economic 

benefits of the authorized purpose described in this chapter. Detailed documentation of the 

economic benefit analyses prepared for the CAS is presented in the Economic Benefits Analysis 

Appendix.

7.1 Overview of the Economic Benefits Analyses

The economic valuation approach for the CVP CAS is consistent with the Federal Economic and 

Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies (P&G) 

(WRC 1983). The P&G indicate the Federal objective of water and related land resources project 

planning is to contribute to national economic development consistent with protecting the nation’s 

environment, pursuant to national environmental statutes, applicable executive orders, and other 

Federal planning requirements.

CVP CAS economic benefits are estimated for the four purposes that generate benefits and meet 

cost-sharing requirements: water supply, water quality, flood control, and power. Water supply 

benefits are attributed to two water supply sub-purposes, irrigation and M&I. Water quality benefits 

are based on the water supply required to meet water quality standards. Flood control benefits are 

based on the avoided flood damages provided by CVP facilities. Power benefits are based primarily 

on the market value of power produced by CVP hydropower generation facilities, in conjunction 

with ancillary service and capacity benefits.

7.2 Economic Analysis Parameters

The economic benefits presented in this chapter are based on analysis of operations of the CVP 

over a 100-year period. The operational conditions assumed over the 100-year period are designed 

to be representative of the benefits and authorized purposes under current regulatory conditions. 

The methodology used to estimate economic benefits has the following common elements, except 

where noted:

• Hydrology outputs from the CalSim 2 model presented in the Hydrological Modeling Appendix are 

used as inputs for the economics models, with the exception of flood control which are based 

on damages avoided as estimated by the USACE.

• All benefit values are presented in 2013 dollars.

• The annual economic benefits attributed to each project purpose are estimated for each water 

year type. A representative annual benefit is developed for each project purpose by calculating 
52 | Central Valley Project Final Cost Allocation Study

the weighted average of benefits based on the distribution of water year types in the hydrologic

record.

• The total benefit estimated for each project purpose in the SCRB reflects the present value of 

the representative annual benefit received each year over a 100-year period using a discount rate 

of 3.25 percent.

• The benefits estimated for each water-year type are based on the 82-year hydrological record

(1922 – 2003) in CalSim 2. Subsequent to model runs and prior to completion of the CAS, 

additional water-year type data through 2013 became available. Reclamation, in coordination 

with CAS stakeholders agreed to include the water years 2004 – 2013 for the sole purpose of 

computing water-year type weights. The different water-year types are weighted based on the 

relative distribution in the hydrologic record extended through 2013. Water year classifications 

are based on the SWRCB Sacramento Valley index. The weights across the five water-year types 

are:

o Wet (30.4 percent)

o Above Normal (14.1 percent)

o Below Normal (18.5 percent)

o Dry (22.8 percent)

o Critical (14.1 percent)

7.3 Irrigation Water Supply Benefits

This section presents a summary of the methodology and results of the analysis used to estimate 

economic benefits attributed to CVP irrigation water supplies. More detailed information about the 

irrigation benefit analysis is in the Economic Benefit Analysis Appendix to this report.

7.3.1 Irrigation Benefits – Methodology

Irrigation water supply benefits are based on the change in net farm income that results from the 

application of CVP water to irrigate crops. The Irrigation water supply benefits are quantified using 

the Statewide Agricultural Production (SWAP) model and irrigation water delivery data developed 

with the CalSim 2 hydrological model (see Chapter 6, Hydrological Modeling). The SWAP model is a 

regional agricultural production and economic optimization model used to simulate the decisions of 

farmers across agricultural land in California. The SWAP model has been used to estimate CVP 

irrigation benefits for numerous Reclamation and DWR studies. The SWAP model assumes growers 

select the level of inputs such as cropping acreages, labor, and water use to maximize profit subject 

to resource, market, and technology constraints. The SWAP model used for the CAS was calibrated 

to observed cropping patterns and land use data (year 2010 data).

7.3.2 Irrigation Benefits – Results

The economic benefits associated with CVP irrigation water supplies are estimated as the additional 

profit realized by farmers across SWAP regions from applying CVP water supplies. Irrigation
Chapter 7. Economic Benefits | 53

benefits are comprised of four components: net farm income (excluding water and land fallowing 

costs), avoided surface water costs, avoided groundwater pumping costs,

18 and avoided land 

fallowing costs. Table 7-1 displays estimated irrigation benefits attributed to the CVP. The greatest 

benefits occur in wet years ($877.2 million annually) based on the relatively high quantity of CVP 

surface water that is delivered while the lowest benefits occur in critical years ($176.9 million 

annually).

Table 7-1. Estimated Annual Economic Benefits of CVP Irrigation Water Supplies, by Water 

Year Type ($millions)

Benefit Wet

Above 

Normal

Below 

Normal Dry Critical

Weighted 

Average

Irrigation $877.2 $642.3 $485.7 $316.6 $176.9 $544.7

The weighted average annual irrigation benefit ($544.7 million) is capitalized over the 100-year 

period of analysis using a 3.25 percent interest rate. The present value of estimated CVP irrigation 

benefits is approximately $16.1 billion.

7.4 Municipal & Industrial Water Supply Benefits

The economic benefits associated with CVP M&I water are estimated as the avoided costs 

associated with CVP M&I surface water deliveries. Additional information about the M&I benefit 

analysis is presented in the Economic Benefit Analysis Appendix to this report.

7.4.1 M&I Benefits – Methodology

M&I water supply benefits are estimated as the avoided costs of water supply reliability with-CVP in 

place relative to costs without-CVP in place. M&I benefits are estimated using two economic 

planning models widely used in California. The Least Cost Planning Simulation Model (LCPSIM) 

and the Other Municipal Water Economics Model (OMWEM) are used to estimate CVP M&I 

benefits with water delivery data developed with the CalSim 2 hydrological model (see Chapter 6,

Hydrological Modeling). The LCPSIM is used to estimate M&I benefits in the San Francisco Bay Area 

and OMWEM is used to estimate benefits to CVP contractors outside the San Francisco Bay Area.

A small portion of CVP M&I contractors’ benefits are estimated using output from OMWEM and 

are not modeled directly in OMWEM or LCPSIM. The results from each model are combined for 

estimating total benefit by creating a weighted average based on acre-foot deliveries to customers in 

each area.

 18 The irrigation benefits presented in this study do not account for projected groundwater conditions anticipated under 

the Sustainable Groundwater Management Act (SGMA) enacted in 2014. Implementation of SGMA over the period of 

analysis will likely increase the value of irrigation benefits in the CVP; however, additional irrigation benefits will not 

affect the results of the cost allocation as the water supply SPA costs represent the justifiable expenditure for that 

authorized purpose in the SCRB analysis.
54 | Central Valley Project Final Cost Allocation Study

LCPSIM and OMWEM models are annual time-step urban water service system simulation and 

optimization models with the objective of finding the least-cost water management strategy for a 

region, given the mix of demands and available supplies. The models estimated benefits based on 

the least-cost water management strategy for a region using the most likely non-Federal options that 

would be implemented in the absence of the CVP. The two models have been used to estimate CVP 

M&I benefits for numerous Reclamation and DWR studies and were selected because of the need to 

estimate system-wide benefits rather than benefits at the margin of the California water market.

The models use contract delivery data (modeled in CalSim 2), local water supply information, and 

imported water information (if applicable) to simulate the decision-making needed to meet 2030 

water demand levels at the lowest economic cost. The models include shortage management 

measures (e.g., use of regional carryover storage, water market transfers, and contingency 

conservation) and shortage allocation rules to reduce regional costs and losses associated with 

shortage events. The models also include long-term regional demand reduction and supply 

augmentation measures (e.g., toilet retrofit programs and wastewater recycling) that reduce the 

frequency, magnitude, and duration of shortage events.

7.4.2 M&I Benefits – Results

Table 7-2 presents CVP M&I benefits by water year type. The benefits represent the avoided costs 

of water supply reliability with-CVP in place relative to costs without-CVP in place. The M&I water 

supply benefit is estimated to be approximately $220 million. The total benefit is estimated as the

weighted average of expected costs with-CVP, minus weighted average expected costs without-CVP 

($207.6 million), plus the total benefits of other CVP M&I contractors not included in OMWEM or 

LCPSIM ($12.4 million).

Table 7-2. Estimated Annual Economic Benefits of CVP M&I Water Supplies, by Water Year 

Type ($millions)

Benefit Wet

Above 

Normal

Below 

Normal Dry Critical

Weighted 

Average

CVP M&I Benefits 

Estimated with LCPSIM 

and OMWEM

$213.2 $201.2 $190.6 $223.1 $198.9 $207.6 

CVP M&I Benefits for Other 

CVP Contractors

$12.4 

Total $220.0 

The weighted average value of M&I benefits is estimated to be $220 million annually. The present 

value of CVP M&I benefits is approximately $6.5 billion based on a project life of 100 years and a 

discount rate of 3.25 percent.
Chapter 7. Economic Benefits | 55

7.5 Water Quality Benefits

This section presents a summary of the methodology and results of the analysis used to estimate the 

economic benefits attributed to water quality provided by the CVP. Additional information about 

the water quality benefit analysis is presented in the Economic Benefit Analysis Appendix to this report.

7.5.1 Water Quality Benefits – Methodology

Water quality benefits for the CAS are based on the foregone value of the next best use of the water 

used to meet water quality standards. CVP water quality benefits are based on the irrigation value of 

water which is estimated using the SWAP model. Water Quality benefits are quantified using the 

SWAP model and foregone water delivery data developed with the CalSim 2 hydrologic model (see 

Chapter 6, Hydrological Modeling).

The fundamental premise of the water quality benefit analysis is that all CVP water required to meet 

incremental D-1641 water quality (above D-1485 requirements, also referred to as incremental 

difference) requirements must be valued, including foregone irrigation and M&I/refuge deliveries 

and Delta outflows. As shown in Chapter 6, Hydrological Modeling (Table 6-3), this quantity ranges 

from a low of 36 TAF in wet years to nearly 630 TAF in critical years, averaging 172 TAF across all 

water years.

7.5.2 Water Quality Benefits – Results

The water quality benefits for the CVP are based on SWAP modeling, which provided a proxy value 

for water quality benefits using agricultural values. The benefits reported by SWAP are calculated 

based on changes in net farm income, surface water and groundwater costs, and land fallowing 

costs.

Table 7-3 displays estimated water quality benefits attributed to the CVP. Water quality benefits are 

estimated to be $49.4 million annually, on average. The greatest benefits occur in critical years 

($103.3 million annually) based on the relatively large quantity of CVP water that is needed to meet 

incremental D-1641 water quality standards. Conversely, the lowest benefits occur in wet years ($7.0 

million annually).

Table 7-3. Estimated Annual Economic Benefits of CVP Water Quality, by Water Year Type 

($millions)

Benefit Wet

Above 

Normal

Below 

Normal Dry Critical

Weighted 

Average

Water Quality $7.0 $21.4 $60.7 $80.6 $103.3 $49.4

For the CAS, annual water quality benefits are discounted over the 100-year period of analysis using 

a 3.25 percent interest rate. The present value of estimated CVP water quality benefits is estimated 

to be approximately $1.5 billion.
56 | Central Valley Project Final Cost Allocation Study

7.6 Flood Control Benefits

The CVP is composed of several dams and reservoirs that are authorized and constructed to meet 

multiple purposes, including flood control. Flood control benefits are estimated for Shasta, Folsom, 

New Melones, and Friant CVP dams/reservoirs.

There are several other CVP facilities that provide flood control benefits which have not been 

quantified for the CAS. These facilities include Trinity Dam and Reservoir, Los Banos Creek 

Detention Dam, and Whiskeytown Dam and Reservoir. Although these facilities provide flood 

control benefits, they have not been quantified due to lack of available data. As such, the benefits 

provided in this paper represent a lower bound of flood control benefits provided by the CVP.

The omission of flood control benefits at these facilities does not affect the cost allocation because 

the flood control SPA (and not benefits) represents the justifiable expenditure for flood control in 

the SCRB calculations. Additional information about the flood control benefit analysis is presented 

in the Economic Benefit Analysis Appendix to this report.

7.6.1 Flood Control Benefits – Methodology

The flood control benefit estimates are made for Shasta Dam and Reservoir, Folsom Dam and 

Reservoir, the New Melones Dam and Reservoir, and Friant Dam and Reservoir using historical 

annual damages-prevented information provided by the USACE, Sacramento District. The USACE 

calculates annual damages prevented by comparing downstream river stages at selected sites under 

regulated flow conditions and unregulated flow conditions. The river stages under each condition 

are then compared to a stage-damage curve which describes the amount of damages that could be 

expected based on a range of river stages representing high exceedance probability to low 

exceedance probability flow events. The lower amount of damages under the with-project condition 

as compared to the without-project condition reflects the positive effects of reservoir operations on 

downstream flows and are considered to be the damages prevented (benefits). The USACE dataset 

on flood control benefits used for this report covers historical conditions through the year 2010.

The estimates of nominal flood control benefits are updated to October 2013 price levels using the 

Gross Domestic Product (GDP) Implicit Price Deflator.

7.6.2 Flood Control Benefits – Results

The total damages prevented are divided by the number of years of record, by facility, to derive an 

average annual damages-prevented value. For example, the total damages prevented for Shasta Dam 

and Reservoir over the entire period of record for that reservoir (1952 to 2010) were approximately 

$29.0 billion (2013 dollars). This value is then divided by 59 (the number of years in the period of 

record for Shasta Dam) to derive an average annual value for prevented flood damages of 

approximately $491.5 million (note that the period of record for each dam and reservoir varies).

Table 7-4 displays the average annual flood control damages-prevented values for each 

dam/reservoir. Total flood control benefits are estimated to be nearly $1.3 billion annually, on 

average.
Chapter 7. Economic Benefits | 57

Table 7-4. Estimated Annual Economic Benefits of CVP Flood Control, ($millions)

CVP Reservoir Benefits (Annual)

Shasta $491.5

Folsom $761.2

New Melones $15.9

Friant (Millerton) $18.8

Total $1,287.3

For the CAS, annual flood control benefits are discounted over the 100-year period of analysis using 

a 3.25 percent interest rate. The present value of estimated CVP flood control benefits is 

approximately $38.0 billion. As noted above, the estimated benefits represent a lower bound of 

flood control benefits provided by the CVP.

7.7 Power Benefits

This section summarizes the results, and the analytical method used to estimate the economic 

benefits attributable to CVP hydropower generation. Treatment of the San Luis pump-generating 

unit in relation to hydropower and water supply benefits is also discussed. Power benefits are 

estimated based on the actual or simulated market prices associated with CVP hydropower services. 

Additional information about the power benefit analysis is presented in the Economic Benefit Analysis 

Appendix to this report.

7.7.1 Power Benefits – Methodology

Hydropower benefits are estimated in consultation with WAPA. The value of power benefits 

evaluated for the CAS is composed of the following three elements: (1) forecasted California 

Independent System Operator (CAISO) hourly day-ahead market prices for energy from PLEXOS

model, (2) forecasted CAISO hourly day-ahead market prices for ancillary services from PLEXOS 

model, and (3) planning capacity/resource adequacy to meet expected future demand/load growth 

considerations by applying CAISO market prices for resource adequacy to the estimated capacity 

provided by the CVP resource. CVP energy generation is estimated using output from CalSim 2 and 

LTGEN models (see Chapter 6, Hydrological Modeling, for more details), and inputs into the PLEXOS 

model used a forecasted database used by the California Public Utilities Commission for energy 

resource planning (see the Economic Benefits Analysis Appendix for more details).

Energy, ancillary services, and planning capacity/resource adequacy components of estimated annual 

CVP hydropower benefits are described below:
58 | Central Valley Project Final Cost Allocation Study

• Energy – Electricity generation that is scheduled to be provided when it is most valuable, if 

possible.

• Ancillary Services – For the purposes of the CVP CAS, only include spinning, non-spinning, 

and replacement reserves used in estimating power benefits. Other ancillary services as defined 

by Western Electricity Coordinating Council/North American Electric Reliability Corporation 

operating criteria are not included for consistency with the services under contract to CVP 

Power Preference Customers.

• Capacity/Resource Adequacy – Amount of electric power for which a generating unit, 

generating station, or other electrical apparatus is rated either by the user or manufacturer.

Capacity is valuable because of the need for sufficient machine capability to meet the peak 

electrical load hour during the hottest summer day. Resource Adequacy is a mandatory planning 

and procurement process to ensure resources are secured by Load Serving Entities to meet the 

ISO’s forecast system, local, and flexible capacity needs.

The PLEXOS Model is used to estimate energy and ancillary service benefits. The PLEXOS model 

was selected for use in the CVP CAS based on a variety of factors including (but not limited to) its 

relative ability to accurately simulate different future scenarios given specific constraints, as well as 

its widespread usage in the power industry. It simulates power markets by optimizing energy, 

ancillary services, generation, and transmission utilization subject to physical and operational 

constraints. Two simulations were run to determine CVP power benefits. The first covered the 

entire Western Electricity Coordinating Council’s (WECC) system to generate projected pricing and 

ancillary services data, including CVP facilities. A subsequent simulation optimized the dispatch of 

the CVP facilities using the projected pricing and ancillary services data generated in the first 

simulation. The simulated generation data is a 2024 baseline year used to calculate annual benefits 

across the period of analysis used in the study. The PLEXOS model used output data from LTGEN 

(i.e. total monthly generation) as inputs that were incorporated into the simulation to estimate 

benefits. Please refer to the Economic Benefits Analysis Appendix for a more detailed description of the 

model and reasons for its usage to estimate economic benefits for the CVP CAS.

Capacity/resource adequacy is estimated outside of the PLEXOS model. Although WAPA only 

markets two non-firm variable products, energy and ancillary services, some of WAPA’s customers 

claim their CVP allocation for capacity purposes, thus avoiding certain CAISO costs related to 

short-term operational requirements to ensure grid reliability. These grid reliability requirements are 

referred to as resource adequacy. Using the CAISO market value for resource adequacy is 

considered to be representative of the actual value that WAPA preference power customers realize 

when claiming CVP capacity benefits. A CAISO market-based price for resource adequacy is used as 

a proxy for that value now and for the foreseeable future, since its value is calibrated to the amount 

of capacity present in the existing and predicted future system.

7.7.1.1 LTGEN and PLEXOS Adjustments for Flood Bypass

After the PLEXOS CVP benefit simulation was completed, it was determined that the version of 

the LTGEN model used to develop inputs to the PLEXOS model overestimated generation when 

compared to the historical generation levels due to underestimation of generator flood bypasses. A 

methodology was developed to isolate the missed flood bypass from LTGEN to adjust the power 
Chapter 7. Economic Benefits | 59

benefits estimated by PLEXOS. This post-process adjustment of LTGEN and PLEXOS results was 

performed for the energy component of the power benefits in the CAS. An analysis was performed 

to map the historical record to the respective CalSim 2 data input to LTGEN and the energy 

benefits were reduced by water year type. Further explanation of this analysis can be found in the 

Economic Benefits Analysis Appendix.

Table 7-5 displays the resulting energy benefits that include the post-process adjustment to the 

PLEXOS results that are informed by the LTGEN analysis.

7.7.1.2 Treatment of San Luis Unit Pump-Generating Unit

The San Luis Unit is part of both the Federal CVP and the California SWP. Authorized by the San 

Luis Act in June 1960 (Public Law 86-488), it is jointly operated by Reclamation and the DWR 

primarily for the purpose of water supply. Two features of the San Luis Unit are pump-generating 

(“pump-gen”) plants – the O’Neill Pump-Generating Plant and the William R. Gianelli PumpGenerating Plant. These two facilities pump water into the O’Neill Forebay and San Luis Reservoir 

respectively, for off-stream storage. During water operations, water is either released for delivery 

from O’Neill Forebay into the Delta Mendota Canal or from San Luis Reservoir back through the 

pump-turbines of both facilities to generate reclaimed energy. The reclaimed energy helps offset 

part, but not all of the cost of pumping water into San Luis Reservoir.

Because the energy required to pump water into the reservoir is greater than the energy generated 

when the water is released for delivery, all of the energy generated by these pump-gen plants is 

considered to be an offset to the cost of pumping. Accordingly, the total cost of both pump-gen 

plants, as well as the value of the energy generated by them, was assigned to the water supply 

purpose. As a result, it was necessary to adjust (reduce) the energy power benefits modeled in 

PLEXOS by the value of generation produced by the pump-gen plants and add that value to the 

water supply benefits. This adjustment factor (0.975) was multiplied by the estimated annual energy 

generation benefits prior to calculating the discounted net present value over the planning horizon. 

The adjustment factor did not affect the benefits attributed to ancillary services or resource 

adequacy.

7.7.2 Power Benefits – Results

The estimated energy and ancillary service CVP power benefits are shown in Table 7-5, and 

estimated total hydropower benefits are shown in Table 7-6. As discussed above, the benefit values 

used in the CAS for the power purpose are the values of CVP energy generated without the San Luis 

Unit. The value of energy generated by the O’Neill and Gianelli pump-generating plants is

subtracted from the estimated hydropower benefit and added to the estimated water supply benefit.

The energy generation benefits reported in Table 7-5 are subject to the adjustment described in the 

previous section. In addition (shown in Table 7-6), the estimated capacity/resource adequacy value 

is added and total hydropower benefits (without San Luis Unit) and other benefits are estimated to 

be nearly $193.9 million annually.
60 | Central Valley Project Final Cost Allocation Study

Table 7-5. Estimated Annual CVP Hydropower Benefits, by Water Year Type ($millions) 

Benefit

Component Wet

Above 

Normal

Below 

Normal Dry Critical

Weighted 

Average

Energy $228.1 $201.5 $170.6 $155.1 $115.4 $181.1

Ancillary 

Services

$0.7 $0.5 $0.4 $0.4 $0.5 $0.5

Total $228.7 $202.1 $171.0 $155.5 $116.0 $181.6

Table 7-6. Estimated Annual Total CVP Hydropower Benefits ($millions)

For the CAS, annual power benefits are discounted over the 100-year period of analysis using a 3.25 

percent interest rate. The present value of CVP power benefits is approximately $5.7 billion.

7.8 Summary of Economic Benefits

For the CAS, all of the CVP economic benefits are based on a 100-year prospective analysis as 

discussed in more detail in Chapter 5, Key Concepts and Assumptions, of this report. All results are

discounted to a present value in 2013 dollars using 3.25 percent interest rate. Table 7-7 displays the 

total benefits for each of the purposes analyzed. These values are used as inputs to the SCRB 

analysis presented in Chapter 10, Cost Allocation Results (Period 2).

CVP Hydropower Energy and Ancillary Service Benefit (with San Luis Unit) $181.6

Less: San Luis Unit Energy Benefit (Water Supply Cost Saving Benefit) $4.5

CVP Hydropower Energy and Ancillary Service Benefit $177.1

Plus: CVP Capacity (Resource Adequacy) Benefit $16.8 

Total Estimated Annual CVP Hydropower Benefit $193.9
Chapter 7. Economic Benefits | 61

Table 7-7. Summary of Estimated Economic Benefits of the CVP (2013 Dollars) ($millions)

Type of Benefit (Purpose) Average Annual Benefit

Present Value Benefit

(100 Years)

Water Supply $769.2 $22,702.5

Irrigation $544.7 $16,076.1 

M&I $220.0 $6,492.7 

San Luis Unit Pump-Gen $4.5 $133.7

Water Quality $49.4 $1,457.6 

Flood Control $1,287.3 $37,992.2 

Hydropower $193.9 $5,723.6
62 | Central Valley Project Final Cost Allocation Study

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Chapter 8. Single-Purpose Alternatives | 63

Chapter 8. Single-Purpose Alternatives

This chapter presents an overview of the development of the single-purpose alternatives required 

for the SCRB analysis. The cost estimates associated with the SPAs are presented and described in

Chapter 9, Cost Estimates (see Table 9-4). Additional facility-level information supporting the SPA 

cost analysis is presented in the Cost Estimates Summary Table Appendix.

8.1 Conceptual Approach to Single-Purpose Alternative Analyses

The SCRB analysis requires SPA costs for each authorized project purpose that will share in joint 

project costs. In the context of the CAS, these purposes are water supply, water quality, flood 

control, and power. The SPA cost is the cost of the most likely federally financed alternative that 

provides the same level of benefits to a particular purpose as the existing project. As explained in 

Chapter 4, Cost Allocation Methodology, the lesser of the economic benefits or SPA costs constitute the 

justifiable expenditure for each purpose in the SCRB process. The focus of this chapter is the 

methodology for development of the SPAs for the water supply, water quality, flood control, and 

power purposes. SPA cost estimates are not required for the recreation, fish and wildlife 

enhancement, and navigation purposes because they do not share in joint costs.

In order to formulate the SPA for each project purpose, existing CVP facilities were evaluated to 

determine if they were required to provide the benefits for that purpose, and if so, whether the 

facility would need to be modified for that purpose only. The exception to this process is the power 

SPA, which is based on a thermal power plant that provides power benefits equivalent to the 

existing project rather than existing CVP hydropower facilities. Once the features (and appropriate 

scale of features) are identified for each SPA, cost estimates are developed. The SPA cost for each 

respective purpose is the sum of construction, IDC, and OM&R19 costs for all features that support 

that purpose (see Chapter 9, Cost Estimates).

8.1.1 Single-Purpose Facilities

The cost of each single-purpose facility is included in the respective SPA that it serves. For example, 

a single-purpose water supply canal is included in the water supply SPA only. Because singlepurpose facilities do not support other purposes by definition, they do not need to be re-sized and 

are included at full scale in the applicable SPA. The individual single-purpose facilities included in 

each SPA are presented in the SPA descriptions below.

8.1.2 Multipurpose Facilities

Because multipurpose facilities serve more than one purpose, they had to be hypothetically re-sized, 

as necessary, to provide only the benefits of the specific purpose being evaluated. In other words, 

the SPA sizing analysis calculated operations for multipurpose facilities as if the one purpose being 

evaluated was its sole function. For the CAS, a small group of multipurpose facilities (primarily dams 

 19 OM&R costs include “soft” costs that are attributable to the CVP as a whole rather than a specific project feature; soft 

costs were added to all SPAs.
64 | Central Valley Project Final Cost Allocation Study

and reservoirs) are re-sized for the water supply, water quality, and flood control SPAs using CalSim 

2 hydrology modeling described in Chapter 6, Hydrological Modeling, and the Hydrological Modeling 

Appendix to this report.

Other multipurpose facilities were not re-sized for any given SPA. In other words, the full size (and 

cost) of the facility is required to provide the benefits for any given SPA. Other multipurpose

facilities that could not be resized that are included as part of all SPAs include:

• Centralized Water & Power System Control

• Spring Creek Debris Dam and Reservoir

• CVP Radio Network

• Clear Creek Tunnel

• Telemetering Equipment

• Permanent Operating Facilities – Folsom

• Permanent Operating Facilities – Trinity

• Keswick-Carr Microwave System

• Radio Stream Gauges

• Permanent Operating Facilities – Shasta

• Whiskeytown Dam & Reservoir

• Radio Rain Gauges

8.1.3 Mitigation

In addition, some facilities (or portions of facilities) in the CVP are considered mitigation costs. In 

theory, mitigation activities are addressing adverse impacts of the CVP as a whole so it is not 

appropriate to assign mitigation to any single purpose. Instead, for the purpose of estimating SPA 

costs, mitigation costs are included, in total, as part of each SPA. Mitigation activities that are 

included as part of all SPAs include:

• Tracy Fish Collection Facility – Replace Transformers

• Red Bluff Diversion Dam – Mitigation

• Tehama-Colusa Canal – Mitigation

• San Luis Unit Fish and Wildlife Facility

• Trinity River Restoration Project
Chapter 8. Single-Purpose Alternatives | 65

8.1.4 Activities with Direct Assigned Costs

Direct assigned costs are not included in the SPAs developed for each project purpose. Direct 

assigned costs do not contribute towards CVP project benefits and would not be required to operate 

the CVP if it were operated for any single purpose.

8.1.5 Summary of SPA Approach

In summary, the total cost of each SPA includes the estimated cost of the re-sized multipurpose

reservoirs (if applicable) plus the cost of non-diminishable multipurpose facilities, all single-purpose 

facilities for each respective purpose, and mitigation costs. The SPAs exclude direct assigned costs.

An overview of each respective SPA is presented below.

8.2 Water Supply SPA

8.2.1 Multipurpose Facility Resizing

Conceptually, the hydrology analysis for the water supply SPA is based on reservoir sizing as if the 

CVP was operated solely for the purpose of water supply. Because of geographical considerations in 

the CVP, single-reservoir scenarios had limited applicability because one reservoir typically could not 

provide water to the entire CVP service area. For this reason, multiple reservoirs are included in the

water supply SPA.

The SPA for water supply is based, in part, on reservoir storage required to provide CVP water for 

irrigation, M&I, and wildlife refuge deliveries, and meeting CVPIA B2 requirements. Five 

multipurpose CVP reservoirs served the water supply purpose: Friant, New Melones, Trinity, Shasta, 

and Folsom. Friant provides for direct diversions into the Madera Canal and Friant Kern Canal.

New Melones provides water for CVP contracts with Stockton East Water District and Central San 

Joaquin Water District, along with settlement obligations to Oakdale Irrigation District and South 

San Joaquin Irrigation District. Trinity, Shasta, and Folsom collectively provide water for CVP water 

users in the Sacramento and American River basins and exports at Jones Pumping Plant. The 

hydrology sizing model described in the Hydrological Modeling Appendix is used in determining what 

size each of these facilities had to be so that only the water supply purpose of the CVP was served.

In addition, costs associated solely with B2 actions (79 TAF) are included in the water supply 

purpose SPA.

20 See Chapter 6 Hydrological Modeling (Table 6-2) for the multipurpose reservoir sizes 

included as part of the Water Supply SPA.

8.2.2 Multipurpose Facilities – Other

Other multipurpose facilities that could not be resized that are included as part of the Water Supply 

SPA are presented above in Section 8.1.2.

 20 Historically, the treatment of B2-related costs has not been included in the water supply purpose for the purpose of 

sub-allocating costs. Several options were considered for the CAS and it was decided that costs associated solely with B2 

actions (79 TAF) would be included in the water supply purpose SPA.
66 | Central Valley Project Final Cost Allocation Study

8.2.3 Single-Purpose Facilities

Single-purpose facilities that are included as part of the Water Supply SPA include:

• Folsom South Canal

• Permanent Operation Facilities – Folsom 

South

• Folsom Dam Pumping Plant –

Enhancement

• Folsom Pumps – 4160 Feeder Cable 

Replacement

• Clayton Canal & Pumping Plant

• Columbia Mowry Pumping Plant

• Contra Costa Canal

• Contra Costa Canal System – Deferred 

Maintenance

• Contra Costa Pumping Plant

• Contra Loma Dam & Reservoir

• Delta Cross Channel

• Delta-Mendota Canal

• Delta-Mendota Intake Channel

• Delta-Mendota Canal California Aqueduct

Intertie

• Martinez Dam & Reservoir

• Permanent Operating Facilities – Tracy

• Shortcut Pipeline

• Tracy Pumping Plant

• Ygnacio Canal & Pumping Plant

• Friant-Kern Canal

• Madera Canal

• 4-M Water District

• Colusa County Water District Relift 

Pumping Plant

• Colusa Service Area – Cortina

• Colusa Service Area – Davis

• Colusa Service Area – Other

• Corning Canal

• Corning Canal Pumping Plant

• Corning Canal Relift Pumping Plant

• Glenn Valley Water District Relift 

Pumping Plant

• Dunnigan Water District Relift Pumping 

Plant

• Glide Irrigation District Relift Pumping 

Plant

• Kanawha Water District Relift Pumping 

Plant

• La Grande Water District

• Orland-Artois Water District Relift 

Pumping Plant

• Permanent Operating Facilities –

Arbuckle

• Permanent Operating Facilities – Red 

Bluff

• Permanent Operating Facilities – Red 

Bluff Suboffice

• Permanent Operating Facilities – Willows

• Permanent Operating Facilities – Willows 

Suboffice

• Pilot Research Pumping Plant

• Proberta Water District Relift Pumping 

Plant

• Red Bluff Diversion Dam

• Tehama-Colusa Canal

• Westside Water District Relift Pumping 

Plant
Chapter 8. Single-Purpose Alternatives | 67

• Arroyo Pasajero

• B.F. Sisk San Luis Dam & Reservoir

• Dos Amigos Pumping Plant

• Dos Amigos Switchyard

• Little Panoche Creek Detention Dam &

Reservoir

• Los Banos Creek Detention Dam &

Reservoir

• O’Neill Dam, Forebay & Wasteway

• Permanent Operating Facilities –

State/Federal

• San Luis Canal

• San Luis Canal Turnouts

• San Luis Drain

• San Luis Switchyard

• William R. Gianelli Pumping-Generating 

Plant

• Coalinga Canal

• Los Banos Substation

• O’Neill Pumping Plant

• O’Neill Pumping Plant Intake Channel

• O’Neill Switchyard Station

• Permanent Operating Facilities – San Luis

• Pleasant Valley Pumping Plant

• San Luis Relift Pumping Plant – Pleasant 

Valley Water District

• San Luis Relift Pumping Plant –

Westlands Water District

• Toyon Pipeline

• Clear Creek Conveyance

• Cow Creek Conveyance System

• Wintu Pumping Plant

8.2.4 Mitigation Activities

Mitigation activities that are included as part of the Water Supply SPA are presented above in 

Section 8.1.3.

8.3 Water Quality SPA

8.3.1 Multipurpose Facility Resizing

The Period 2 allocation treats the costs of meeting water quality requirements associated with 

D-1485 as joint costs assigned to all project purposes. Actions for salinity control and actions for

compliance with State water quality standards exceeding D-1485 are assigned to the water quality 

purpose as non-reimbursable, consistent with the COA. The SPA reservoir storage required to 

satisfy water quality standards of D-1641 over those of D-1485 is analyzed by calculating the SPA 

for satisfying D-1641 and the SPA for satisfying D-1485 and then taking the difference between the 

two to determine the incremental storage cost. This difference in cost is used as the SPA cost 

estimate for the water quality purpose.

The Delta outflow that is required to meet water quality standards in the Delta depends on export 

level. In order to correctly identify the increment of SPA storage required to satisfy the D-1641 

water quality standards compared to those in D-1485, the increment had to be defined given the 
68 | Central Valley Project Final Cost Allocation Study

same level of export and delivery. See Chapter 6 Hydrological Modeling (Table 6-4) for the Water 

Quality SPA storage sizing requirements. New Melones is not included because the difference in 

cost of New Melones to meet D-1485 versus D-1641 is negligible. Friant did not serve a water 

quality purpose since water is not released from the reservoir to meet water quality standards under 

either D-1485 or D-1641.

8.3.2 Multipurpose Facilities – Other

Other multipurpose facilities that could not be resized that are included as part of the Water Quality 

SPA are listed above in Section 8.1.2.

8.3.3 Single-Purpose Facilities

There are no single-purpose facilities that are included as part of the Water Quality SPA.

8.3.4 Mitigation Activities

Mitigation activities that are included as part of the Water Quality SPA are presented above in 

Section 8.1.3.

8.4 Flood Control SPA

8.4.1 Multipurpose Facility Resizing

The CVP storage facilities operated for flood control are Trinity, Shasta, Folsom, New Melones, and 

Friant. All of these facilities except Trinity included flood control in their authorizing legislation.

Trinity provides protection to downstream assets under guidelines set by the Trinity River Mainstem 

Fishery Restoration Record of Decision (ROD) and therefore is included as part of the flood 

control SPA.

Flood control rules limit the volume of water that may occupy space in a reservoir, mandating that a 

certain amount of empty space be maintained in order to accommodate anticipated seasonal runoff.

The flood control rule method for determining the single-purpose size of a reservoir selects the 

largest value for required flood space in a reservoir from the historical flood control diagrams and 

adds this value to the minimum operating storage level in the reservoir, or dead pool, to calculate the 

SPA size for each reservoir. SPA sizes for the four flood control reservoirs are shown in Chapter 6 

Hydrological Modeling (Table 6-6).

8.4.2 Multipurpose Facilities – Other

Other multipurpose facilities that could not be resized that are included as part of the Flood Control 

SPA are listed above in Section 8.1.2.

8.4.3 Single-Purpose Facilities

There are no single-purpose facilities that are included as part of the Flood Control SPA.
Chapter 8. Single-Purpose Alternatives | 69

8.4.4 Mitigation Activities

Mitigation activities that are included as part of the Flood Control SPA are presented above in 

Section 8.1.3.

8.5 Power SPA

8.5.1 Power SPA – Thermal Facility

Under past policy and practice, Reclamation has typically used a hydropower-based single-purpose 

power alternative when conducting cost allocation studies. However, a nuclear power single-purpose 

power alternative has been used in prior CVP cost allocation studies based on the premise that the 

CVP authorizing legislation (50 Stat. 850) authorized Reclamation to construct a steam generator 

plant.

For the CVP Final CAS, a thermal (natural gas) power plant was determined as the most likely 

alternative constructed by the Federal government in the absence of CVP hydropower plants.21 Past 

precedent and authorizing CVP legislation has given Reclamation the discretion to use a thermalbased SPA for the power purpose of the CVP. The thermal-based SPA is configured and sized to 

incorporate existing CVP operational limitations and constraints, including the required associated 

transmission facilities needed to serve power customers.

Consequently, the thermal-based SPA reflected the current level of benefits associated with power 

generation and associated ancillary services provided by the CVP. The thermal power SPA is sized 

to generate enough energy to provide not only the amount of energy used by project beneficiaries 

but to account for system losses as well. The SPA cost for the thermal power facility include all 

costs, including design and construction, ownership costs, emission reduction credits, environmental 

mitigation, fuel (natural gas) costs, and other costs. The CVP power generation is estimated based 

on CalSim 2 and LTGEN modeling (see Section 6.4).

The CVP produces (at plant) an average of about 4,828.74 GWh/year. The capacity of a thermal 

SPA power plant needed to produce the same amount of energy was estimated to be 1,190 MW.

The type of thermal plant used to estimate facility capitalized costs was a 500 MW combined cycle 

plant without duct-firing. The heat rate used to estimate SPA costs was 6,750 Btu/kWh (British 

thermal units/kilowatt hours). Life-cycle costs are based on a period of 100 years using an interest 

rate of 3.25 percent and assuming a 40-year lifespan of a typical plant. The cost of fuel used for the 

analysis was $4.24/MMBtu (million British thermal units) for natural gas.

8.5.2 Multipurpose Facilities

There are no multipurpose facilities included as part of the Power SPA.

 21 Because the Power SPA does not involve re-operation of existing CVP hydropower facilities, no hydrology analysis 

was required.
70 | Central Valley Project Final Cost Allocation Study

8.5.3 Single-Purpose Facilities

The only single-purpose facilities that are included as part of the Power SPA are select transmission 

facilities owned and operated by WAPA.

8.5.4 Mitigation Activities

Mitigation activities that are included as part of the Power SPA are presented above in Section 8.1.3.
Chapter 8. Single-Purpose Alternatives | 71

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72 | Central Valley Project Final Cost Allocation Study

Chapter 9. Cost Estimates

This chapter outlines the cost estimating methods developed at an appraisal level for the CVP CAS 

and presents the cost estimates used as inputs to the SCRB analysis. More detailed cost estimate

results are presented in the Cost Estimates Summary Tables Appendix.

9.1 Cost Estimating Overview

The SCRB methodology requires several sets of cost estimate inputs. These include total project 

costs, as well as separable costs and SPA costs by authorized purpose. The cost analysis is conducted 

at the facility level to account for the complexity and quantity for all of the CVP features. The 

facility-level analysis also facilitates the water ratesetting process described in Chapter 12, 

Implementation of the Final Cost Allocation.

The SCRB methodology requires separate cost estimates for (1) construction, (2) IDC, and (3) 

OM&R of project facilities over the 100-year period. The sum of these three cost components is 

considered the total cost of any given facility. Although these cost components are tracked 

separately, the calculations within the SCRB process are based on total costs of all three cost 

components over a 100-year period. The approach used to estimate each type of cost varies as 

explained below.

SCRB also requires that all cost estimates be in constant price level to allow a consistent 

comparison. As a result, all cost estimates are indexed to the base year 2013 (see Section 5.3). The 

nominal (unindexed) cost of facilities are tracked in order to reconcile to actual costs in the CVP 

financial records.

There are several fundamental tenets underlying the cost estimating used for the CAS.

• Costs are estimated at an appraisal level.

• Cost indexing is required to adjust price levels to the CAS base year (2013).

• Estimated facility costs are based on a wide range of data sources, including Reclamation 

financial reports, historical construction pricing, material quantities from completion reports, 

and contract administration documentation.

9.1.1 Appraisal-Level Analysis

Reclamation uses several different levels of detail when estimating costs in the context of project 

planning and development, including preliminary, appraisal, and feasibility levels within the planning 

phase of Reclamation’s design process (Reclamation 2007). Of these approaches, appraisal and 

feasibility levels have been deemed suitable for the purpose of cost allocation (Reclamation 2013b). 

Appraisal level are used due to the number of facilities being considered in this CAS. A feasibilitylevel analysis for the CAS would require further refinement of the cost estimates, including the need 

for detailed estimates created during the design, solicitation, and construction stages of each facility. 
Chapter 9. Cost Estimates | 73

This would have significantly increased the complexity, cost, and reproducibility of the CAS cost

estimates.

The appraisal-level analysis is most pertinent in the context of facility re-sizing, which is integral to 

the SPA and separable cost analysis required for SCRB. In an appraisal-level analysis, a minimum of 

roughly 85 percent of the total costs to be estimated should be identified. For the CAS, costs are 

assigned to the identified line items. The remaining 15 percent of costs are allocated to unlisted 

items or contingencies for the facilities that required re-sizing. Historical documentation of the costs 

to construct each of the facilities are used to establish the appropriate number of line items.

9.1.2 Cost Indexing

The CVP has been under construction for over 70 years; therefore the plant-in-service costs22 in the 

financial statements have widely varying cost bases. In order to compare costs of the CVP that occur 

at different points in time, nominal costs of project facilities are converted to a common price level 

corresponding to the CAS base year of 2013 using the Building Costs Index (BCI).

9.2 Cost Categories

9.2.1 Construction Costs

Construction costs are the costs of labor, land, materials, and financing to plan, design, and 

construct a project facility or feature for the purpose of providing new or additional benefits.

Construction costs of a project feature include both contract costs and non-contract costs, such as 

direct labor, direct materials, and indirect costs through the point the facility is placed into plant-inservice. Construction costs exclude IDC.23 Project construction costs are estimated using 

information from several different data sources, mainly existing financial records and contract 

administration records.

9.2.2 Interest During Construction Costs

IDC represents the cost to finance the construction of projects.

24 IDC is reimbursable by certain 

project purposes (or beneficiaries), namely M&I and commercial power. As such, only those 

facilities that serve M&I and commercial power include IDC for repayment in Schedule 1 of the 

CVP financial statements. For example, facilities that solely serve irrigation do not include IDC in 

Schedule 1. To ensure that all facilities are evaluated consistently in the SCRB analysis, estimates for 

IDC are required for each facility based on the total cost of the facility.

 22 In order to index nominal costs to the base year, the date when each project facility began to provide beneficial use is 

documented. This is referred to as the plant-in-service date. 23 Plant-in-service values presented in Schedule 1 of the CVP financial statements include both construction costs and 

interest during construction, which required that IDC be deducted from the plant-in-service values to derive 

construction-only costs. 24 Specifically, IDC represents interest accumulated during the construction period. This interest is added to the cost of 

the long-term asset so that the interest is not recognized in the current period as interest expense. Instead, the interest 

becomes a fixed asset and is included in the depreciation of the long-term asset.
74 | Central Valley Project Final Cost Allocation Study

To ensure that IDC is not double counted in certain facilities, actual IDC is first deducted from 

facilities that have it recorded in the 2013 Financial Statements, then IDC is estimated for all 

facilities using annual compound interest. For consistency with Reclamation Policy, IDC is not 

included for facilities constructed prior to 1955 and simple interest calculations are used for 

construction that occurred between 1955 and 1982. The CAS discount rate of 3.25 percent is used in 

calculating estimated IDC.

9.2.3 Operation, Maintenance, and Replacement Costs

OM&R cost estimates are required for each facility for the SCRB analysis. Due to the large number 

of facilities and data gaps for individual facilities, the OM&R cost analysis is conducted based on 

representative facility types (or categories). The six categories of facilities included (1) canals, (2) 

dams and reservoirs with subcategories of embankment and concrete dams, (3) pumping plants and 

power plants, (4) switchyards, (5) general project soft costs, and (6) WAPA facilities.

Annual OM&R expenses are estimated for each representative facility using a two-step process. The 

first step determines the estimated O&M cost by representative facility. This is accomplished by 

averaging indexed O&M expenditures for the most recent 10 years of reported costs to arrive at an 

average annual value. Reclamation’s O&M index is used for this purpose (Reclamation 2017). The 

second step determines the estimated replacement costs for a representative facility in each O&M 

facility category. The estimates exclude overhead costs that are not attributable to any given facility 

or purpose. Overhead costs are treated as joint costs of the CVP.

Determining replacement costs is accomplished by estimating the cost and timing of replacement

for each item. The expected occurrence cycles are determined from the Reclamation/WAPA 

Replacement Book (2006). Large scale rehabilitation, maintenance, replacement, and extraordinary 

maintenance (RAX) activities occur on a predictable schedule. Subsequently, for facilities in each 

category, estimated replacement costs are calculated by pro-rating replacement costs for the 

representative facility based on the relative magnitude of construction costs of the representative 

facility compared to all facilities in the same category. The results from steps one (O&M) and two 

(replacements) are added together to produce each facility’s total OM&R cost. Total OM&R cost 

estimates are capitalized over the 100-year period of analysis using the project interest rate of 3.25 

percent.

9.3 Cost Estimating Methodology

Cost estimates for total facility costs, separable costs, and SPA costs are required from the SCRB 

analysis. The methods used to develop these cost estimates vary by type of facility. Each facility in 

the CVP is characterized as either single-purpose or multipurpose. Single-purpose facilities are 

considered separable to the purpose they serve. For example, the total cost of a single-purpose water 

supply canal is a separable cost to the water supply purpose. Single-purpose facilities are also 

assigned in their entirety to each applicable SPA. The cost estimating process for multipurpose 

facilities requires the hypothetical re-sizing of the facility for each authorized purpose in the

separable cost and SPA cost analyses.
Chapter 9. Cost Estimates | 75

9.3.1 Costs Used in the SCRB Process

Total Facility Costs

Total project costs are estimated for all CAS facilities. Total project costs serve as the starting point 

for facility re-sizing efforts described below. Separate cost estimates are developed for construction, 

IDC, and OM&R, which together represent total costs. The plant-in-service date of each facility is 

used to index nominal costs to the base year. Plant additions and RAX costs that occurred after the 

plant-in-service date are considered construction costs and indexed to the base year from the year in 

which they occur.

Separable Cost Analysis

Separable costs are project costs that are attributable to a single purpose. Separable costs for each 

authorized purpose are calculated as the difference between total costs of a multipurpose project and 

the cost of the project with that purpose excluded.

The cost of single-purpose facilities is separable to the purpose those facilities serve. The separable 

costs of a multipurpose facility’s costs are evaluated by determining if the multipurpose facility can 

be re-sized as a result of eliminating each authorized purpose from the multipurpose project.

Multipurpose facilities that cannot be re-sized by removing any authorized purpose are considered 

to be non-diminishable. Non-diminishable facilities are treated as joint costs in the SCRB analysis.

Multipurpose facilities that could be re-sized based on the removal of authorized purposes are 

defined as diminishable. Friant Dam and Los Banos Creek Detention Dam are the only 

multipurpose dams considered diminishable, and which do not include a power purpose. As a result, 

these dams could be re-sized in the separable cost analysis. It was determined that these facilities 

should be re-sized and would not incur joint costs. Total costs of Friant Dam are distributed 

between water supply (58.56 percent) and flood control (41.44 percent), while Los Banos Creek 

Detention Dam costs are distributed to water supply (24.06 percent), flood control (68.66 percent), 

and recreation (7.28 percent).

Single-Purpose Alternative Cost Analysis

The SPA is the least cost alternative which would likely be built as a single-purpose Federal project, 

and that would provide the same benefit to each purpose individually as the multipurpose project 

provides. For the purpose of the CAS, the following four SPAs are developed: (1) water supply, (2) 

flood control, (3) water quality, and (4) power. All of the SPAs except for power are based on resizing of existing CVP facilities. The power SPA is based on a thermal natural gas-powered facility 

tying into the existing CVP power transmission grid. The estimation of costs associated with the 

thermal power SPA is discussed below.

With exception of the power SPA, all single-purpose facilities are assigned to the applicable SPA 

they serve. Non-diminishable, multipurpose facilities that could not be attributed to any one purpose 

are included at full scale in all SPA costs. Each diminishable multipurpose facility is re-sized to serve 

each respective authorized purpose of the CVP.
76 | Central Valley Project Final Cost Allocation Study

Multipurpose Facilities – Diminishable

The SCRB process requires that existing facilities be re-sized, if possible, to calculate costs of the 

SPA for each project purpose and to estimate separable costs of each purpose. Approximately 30 

facilities on the CAS Facility List are treated as multipurpose features of the CVP. The multipurpose 

facilities identified as diminishable facilities are re-sized and corresponding cost estimates are 

developed. Table 9-1 presents the diminishable facilities considered and treatment in the CAS.

Developing cost estimates for re-sized facilities involved multiple steps. The first step documents

the costs required to construct the facility, which identifies the construction contracts and their 

subcomponents for each facility throughout the facility’s life and use of Reclamation’s financial 

reports. Next, estimating the new height of the dam and reservoir was determined using the water 

volumes needed to provide the same level of benefits for each purpose. This would help determine 

the volume, square footage, and change of each major cost driver (MCD) (i.e., concrete and other 

large expenses) from the original construction cost.

Cost estimations are generated by identifying and adjusting the MCD, using AutoCAD and LIDAR 

surveying models, developing cost curves, and developing engineering and construction inspecting–

based assumptions on the re-sized quantities to arrive at total estimated costs. The MCDs for each 

contract are separated by identifying the line items that produced at least 85 percent of the costs.

Cost curves based on the MCDs for each facility allows for re-sizing of the facilities while 

accounting for unit cost variations due to economies of scale and regional influences. The 

proportional cost is determined by comparing the original facility to the scaled facility.

All of the diminishable multipurpose facilities are dams that store water and include power facilities, 

except for Friant Dam and Los Banos Creek Detention Dam. On further evaluation, for 

multipurpose facilities with a power purpose, it was found that despite these facilities’ original 

designations as diminishable, it was determined that the facility sizes would not vary in the 

multipurpose without cost analysis. In other words, eliminating any purpose from these 

multipurpose facilities would not result in a re-sized facility because the facility would still need to 

provide the benefits of all remaining purposes. Therefore, regardless of the purpose removed, the 

facility size could not be diminished without affecting the benefits of one or more of the remaining 

purposes. Accordingly, there are no separable costs of these facilities.

Additional consideration was required for determining separable costs to the power purpose with 

respect to specific power features (as opposed to facility sizing discussed below). Power components 

of multipurpose facilities (primarily power plants and switchyards) are considered to be bolt-on 

accessories and separable to the power purpose. An adjustment to the multipurpose facility dam cost 

was considered to account for the material used to replace the bolt-on accessories, and it was 

determined any cost change would be less than unlisted items and contingencies for the identified 

dams. Consequently, the cost of removing the power purpose from these multipurpose dams was 

determined to be negligible. This approach resulted in no separable costs assigned to the power 

purpose from the multipurpose dams in the SCRB analysis. The only separable costs of the power 

purpose were the accumulated cost of single-purpose power facilities.
Chapter 9. Cost Estimates | 77

Table 9-1. Diminishable Multipurpose Facilities

Diminishable Facilities Treatment in CAS Analysis

Shasta Dam For SPA analysis, these facilities were re-sized based on hydrology. For 

separable costs, the power purpose necessitated the same size dam.

Folsom Dam For SPA analysis, these facilities were re-sized based on hydrology. For 

separable costs, the power purpose necessitated the same size dam.

New Melones Dam For SPA analysis, these facilities were re-sized based on hydrology. For 

separable costs, the power purpose necessitated the same size dam.

Trinity Dam For SPA analysis, these facilities were re-sized based on hydrology. For 

separable costs, the power purpose necessitated the same size dam.

Friant Dam and Permanent 

Operating Facilities

For SPA analysis, this facility was re-sized based on hydrology. Because 

Friant only serves two project purposes, water supply and flood control, 

all Friant Dam and reservoir costs were allocated as separable costs to 

these two functions.

Nimbus Dam For the SPA analysis, this facility was re-sized. There are no separable 

costs to water supply. There are separable costs to power, which consists 

of the power generating equipment.

Los Banos Creek Detention 

Dam

For the SPA analysis, this facility was re-sized based on the separable cost 

factors. Because Los Banos Dam only serves two project purposes, water 

supply and flood control, all Los Banos Dam and reservoir costs were 

allocated as separable costs to these two functions.

Multipurpose Facilities – Non-Diminishable

Non-diminishable facilities are facilities for which the cost of the facility does not change if any 

authorized purpose is removed from the project. The full cost of non-diminishable facilities is

included in each SPA because there are no costs considered separable to any one purpose. Table 9-2 

provides the list of non-diminishable facilities and summarizes the reasons for the determinations.

Table 9-2. Non-Diminishable Multipurpose Facilities

Non-Diminishable Facilities Reason for Non-Diminishable Designation1

CVP radio rain gauges Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.

Shasta radio rain gauges Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.

Trinity radio rain gauges Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.

Shasta radio stream gauges Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.
78 | Central Valley Project Final Cost Allocation Study

Non-Diminishable Facilities Reason for Non-Diminishable Designation1

Trinity radio stream gauges Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.

CVP radio network Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.

CVP telemetering equipment Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.

Centralized water and power 

systems control

Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.

Keswick-Carr Microwave Systems Provided a function for the entire CVP and the size remained 

relatively the same no matter the size of the CVP.

Shasta permanent operating 

facilities

Provided a function for the named facility and the size remained 

relatively the same regardless of the purpose

Union Hills Reservoir1 Land obtained for the facility would not change regardless of size 

or purpose

Clear Creek Tunnel Tunnel costs would not significantly change if the tunnel size was 

reduced because of the custom equipment and complexity of the 

construction.

Spring Creek Debris Dam and 

Reservoir

The dam was originally sized and constructed to hold back 

contaminated water from upstream mining and release as needed 

to mitigate stream poll. None of the purposes served by this facility 

could be altered, and therefore the facility could not be re-sized, 

resulting the total cost of this facility to be joint costs.

Whiskeytown Dam and Reservoir Costs were not separable to a single purpose due to operational 

requirements, unclear required volumes of water for specific 

purposes, and could not be built smaller for water supply, power, 

or flood control individually based on available data.

1. Although a non-diminishable facility, Folsom Sly Park/Union Hills Reservoir is not included in any SPAs 

because it does not support the benefits of any project purpose.

9.3.2 Mitigation Costs

Mitigation costs are treated as joint project costs in the CVP CAS. CVPIA facility costs are excluded 

from the CAS and are being handled through a separate process. For more information on 

mitigation costs, refer to Section 5.11.

9.3.3 Direct Assigned Costs

Direct assigned costs are costs that have been identified, legislatively or by agreement, as having a 

clear direction regarding repayment. The costs of direct assigned features are excluded from the 

SCRB process. Cost estimates for project facilities with direct assigned costs are adjusted to remove 

direct assigned costs. Generally, the total cost of each project facility is pro-rated based on the 

proportion of unindexed facility cost that is direct assigned relative to total project cost. Direct 
Chapter 9. Cost Estimates | 79

assigned costs are not treated as separable costs to any purpose or included in any of the SPA cost 

estimates. For more information on direct assigned costs, refer to Section 3.3.

9.4 CAS Cost Estimates

As described above, the cost estimating process for the CAS resulted in three sets of indexed cost 

estimates: (1) total facility costs, (2) cost estimates for each respective SPA (i.e., water supply, flood 

control, water quality, and power), and (3) cost estimates of the multipurpose project with each of 

the individual purposes removed (i.e., the multipurpose without purpose project estimates). For each 

set of costs, all three cost components are estimated, namely construction, IDC, and OM&R, which

are used as inputs to the SCRB analysis.

As shown in Table 9-3, the total cost of the CVP that is used in the SCRB process is approximately 

$17.0 billion (2013 dollars), which is comprised of construction costs ($11.2 billion), IDC ($476.9 

million), and the present value of annual OM&R costs ($5.3 billion). These cost estimates exclude 

direct assigned costs excluded from the SCRB process.

Table 9-3 also shows the estimate of separable costs by purpose. Separable costs are computed as 

the difference of total project cost and the omitted-purpose cost for each purpose. Accounting for 

all three cost components, the total separable costs attributed to each purpose is: water supply ($6.1 

billion), power ($4.6 billion), flood control ($171.4 million), recreation ($15.1 million), water quality 

($0), fish and wildlife enhancement ($0), and navigation ($0).

Table 9-3. SCRB Total and Separable Cost Estimates (2013 Dollars)

Purpose Total Cost

Multipurpose

Without Cost Separable Costs

Construction $11,183,353,145

Water Supply $6,727,205,449 $4,456,147,695 

Power $9,149,317,479 $2,034,035,666 

Flood Control $11,033,241,465 $150,111,679 

Recreation $11,169,443,333 $13,909,811 

Water Quality $11,183,353,145 $0 

Fish and Wildlife 

Enhancement $11,183,353,145 $0 

Navigation $11,183,353,145 $0 
80 | Central Valley Project Final Cost Allocation Study

Purpose Total Cost

Multipurpose

Without Cost Separable Costs

IDC $476,904,929

Water Supply $303,477,679 $173,427,250 

Power $356,116,945 $120,787,985 

Flood Control $469,177,350 $7,727,579 

Recreation $476,725,189 $179,740 

Water Quality $476,904,929 $0 

Fish and Wildlife 

Enhancement $476,904,929 $0 

Navigation $476,904,929 $0 

OM&R $5,337,474,656

Water Supply $3,909,489,262 $1,427,985,394 

Power $2,926,261,359 $2,411,213,297 

Flood Control $5,323,898,239 $13,576,417 

Recreation $5,336,423,175 $1,051,481 

Water Quality $5,337,474,656 $0 

Fish and Wildlife 

Enhancement $5,337,474,656 $0 

Navigation $5,337,474,656 $0 

TOTAL CVP $16,997,732,730

Water Supply $10,940,172,390 $6,057,560,340 

Power $12,431,695,782 $4,566,036,948 
Chapter 9. Cost Estimates | 81

Purpose Total Cost

Multipurpose

Without Cost Separable Costs

Flood Control $16,826,317,054 $171,415,676 

Recreation $16,982,591,697 $15,141,033 

Water Quality $16,997,732,730 $0 

Fish and Wildlife 

Enhancement $16,997,732,730 $0 

Navigation $16,997,732,730 $0 

Table 9-4 presents the SPA cost estimates. Accounting for all three cost components, the total SPA 

cost by purpose: water supply SPA ($11.0 billion), power SPA ($9.4 billion), flood control ($5.3 

billion), and water quality ($4.1 billion). No SPA cost estimates were required for fish and wildlife 

enhancement, recreation, and navigation.

Table 9-4. Total Estimated SPA Costs by Purpose1 (2013 Dollars)

Type of 

Cost

Water Supply 

SPA

Power 

SPA

Flood Control 

SPA

Water Quality 

SPA

Construction $7,830,971,993 $1,617,562,352 $3,745,324,665 $2,643,732,657 

IDC $310,143,077 $76,621,927 $152,354,756 $106,206,497 

OM&R $2,831,470,890 $7,681,334,972 $1,429,937,241 $1,343,915,357 

Total Cost $10,972,585,960 $9,375,519,251 $5,327,616,662 $4,093,854,511 

1. SPA cost estimates were not developed for the following purposes: fish and wildlife enhancement, 

recreation, and navigation.
82 | Central Valley Project Final Cost Allocation Study

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Chapter 10. Cost Allocation Results (Period 2) | 83

Chapter 10. Cost Allocation Results (Period 2)

This chapter presents the Period 2 cost allocation, which reflects expected future operation and 

benefits of the CVP. The results of the Period 2 allocation are based on the SCRB analysis and 

related sub-allocation process, as well as the costs, benefits, and assumptions outlined throughout 

this report. In addition, this chapter also carries the allocation through to the facility level to facilitate 

the water ratesetting process.

10.1 Application of SCRB to the CAS

The SCRB method is used as the starting point to allocate costs to the authorized purposes of the 

CVP (see Chapter 4, Cost Allocation Methodology). However, allocation of costs at the purpose level 

does not define repayment responsibilities; therefore, sub-allocation of costs is necessary. SCRB 

requires estimation of the benefits for each project purpose and the costs for each SPA that 

provides comparable benefits. The lesser of the benefits estimated for each purpose and SPA cost 

sets the limit of the amount that can be allocated to a particular project purpose. This is defined as 

the justifiable expenditure. The next step is to identify the separable costs for each project purpose, 

which are costs attributed to a single purpose.

Separable costs are calculated as the difference in the total multipurpose project cost and the cost of 

the project without a particular purpose included. The separable costs for each project purpose are 

then deducted from the justifiable expenditures for each purpose to derive the remaining justifiable 

expenditures. The remaining joint costs of the project are the total project costs less the total 

separable costs. Remaining joint costs are allocated to each project purpose based on the percentage 

share of the remaining justifiable expenditures (i.e., joint cost factors). The allocation of separable 

costs and remaining joint costs for each project purpose are added together to derive the total cost 

allocated to each purpose.

The SCRB analysis excludes direct assigned costs where repayment responsibilities have been set 

either through legislation and/or agreement (see Section 3.3). Specifically, where Congress has 

provided clear direction regarding the reimbursement of specific project features, or where 

Reclamation has entered into agreements regarding repayment, the costs of such features are

deducted prior to implementing the SCRB analysis. After the SCRB analysis is completed, direct 

assigned costs are added back to the appropriate repayment category based on the provisions in the 

associated legislation or agreement.

The results of the SCRB analysis are shown in Table 10-1 (2013 dollars). The total SCRB costs 

subject to the cost allocation is approximately $17.0 billion. Based on the comparison of economic 

benefits and SPA costs, the driver of justifiable expenditure for each project purpose is as follows:25

 25 The purposes not listed below (i.e., recreation, navigation, and fish and wildlife enhancement) do not share in joint 

costs, so they are not considered in determining justifiable expenditure across project purposes.
84 | Central Valley Project Final Cost Allocation Study

• Water Supply: SPA costs ($11.0 billion)

• Power: Benefits ($5.7 billion)

• Flood Control: SPA costs ($5.3 billion)

• Water Quality: Benefits ($1.5 billion)

The separable costs across project purposes are as follows:

• Water Supply: $6.1 billion

• Power: $4.6 billion

• Flood Control: $171.4 million

• Water Quality: $0

• Recreation: $15.1 million

• Navigation: $0

• Fish and Wildlife Enhancement: $0

The joint cost factors26 (shown under the row titled “Remaining Justifiable Expenditure Percentage 

by Purpose” in Table 10-1) are calculated by dividing the remaining justifiable expenditures for each 

purpose by the total remaining justifiable expenditure. These factors are applied to the joint cost 

pool totaling approximately $6.2 billion (2013 dollars) and are the only numbers from the SCRB 

process that are used in the facility-level allocation presented in Section 10.2.

• Water Supply: 38.74 percent

• Power: 9.12 percent

• Flood Control: 40.64 percent

• Water Quality: 11.49 percent

• Recreation: NA

• Navigation: NA

• Fish and Wildlife Enhancement: NA

The total allocation of costs represents the sum of separable and joint costs. The total allocated costs 

across project purposes is as follows (2013 dollars):

• Water Supply: $8.4 billion

• Power: $5.1 billion

• Flood Control: $2.7 billion

• Water Quality: $710.9 million

 26 Total may not sum to 100 percent due to rounding.
Chapter 10. Cost Allocation Results (Period 2) | 85

• Recreation: $15.1 million

• Navigation: $0

• Fish and Wildlife Enhancement: $0
86 | Central Valley Project Final Cost Allocation Study

Table 10-1. SCRB Results – Period 2 (2013 Dollars)

SCRB Component Water Supply Power Flood Control

Fish & 

Wildlife 

Enhancement

Recreation NavigationWater 

Quality Total

Total Costs to Be Allocated

Construction $11,183,353,145 

IDC $476,904,929 

OM&R $5,337,474,656 

Total $16,997,732,730 

Economic Benefits

Benefits by Purpose $22,702,486,987 $5,723,645,968 $37,992,213,836 $0 $0 $0 $1,457,558,518 $67,875,905,309

SPA Costs

Construction $7,830,971,993 $1,617,562,352 $3,745,324,665 $0 $0 $0 $2,643,732,657 $15,837,591,667 

IDC $310,143,077 $76,621,927 $152,354,756 $0 $0 $0 $106,206,497 $645,326,257 

OM&R $2,831,470,890 $7,681,334,972 $1,429,937,241 $0 $0 $0 $1,343,915,357 $13,286,658,460 

Total $10,972,585,960 $9,375,519,251 $5,327,616,662 $0 $0 $0 $4,093,854,511 $29,769,576,384 

Justifiable Expenditure 1

Justifiable Expenditure by 

Purpose

$10,972,585,960 $5,723,645,968 $5,327,616,662 $0 $0 $0 $1,457,558,518 $23,481,407,108

Separable Costs 2

Construction $4,456,147,695 $2,034,035,666 $150,111,679 $0 $13,909,811 $0 $0 $6,654,204,851 

IDC $173,427,250 $120,787,985 $7,727,579 $0 $179,740 $0 $0 $302,122,554 

OM&R $1,427,985,394 $2,411,213,297 $13,576,417 $0 $1,051,481 $0 $0 $3,853,826,589 

Total $6,057,560,339 $4,566,036,948 $171,415,675 $0 $15,141,032 $0 $0 $10,810,153,994 

Remaining Justifiable 

Expenditure 3

Remaining Justifiable 

Expenditure, by Purpose

$4,915,025,621 $1,157,609,020 $5,156,200,987 $0 $0 $0 $1,457,558,518 $12,686,394,146

Remaining Justifiable 

Expenditure Percentage 4
Chapter 10. Cost Allocation Results (Period 2) | 87

SCRB Component Water Supply Power Flood Control

Fish & 

Wildlife 

Enhancement

Recreation NavigationWater 

Quality Total

Remaining Justifiable 

Expenditure Percentage, by 

Purpose

38.74% 9.12% 40.64% 0.00% 0.00% 0.00% 11.49% 100.00%

Allocation of Joint Costs

Construction $1,754,705,278 $413,276,176 $1,840,806,651 $0 $0 $0 $520,360,641 $4,529,148,294

IDC $67,715,062 $15,948,560 $71,037,762 $0 $0 $0 $20,081,009 $174,782,375

OM&R $574,802,352 $135,380,067 $603,007,244 $0 $0 $0 $170,458,552 $1,483,648,067

Total $2,397,222,692 $564,604,803 $2,514,851,657 $0 $0 $0 $710,900,202 $6,187,578,736

Allocation of Total Costs

Construction $6,210,852,973 $2,447,311,842 $1,990,918,330 $0 $13,909,811 $0 $520,360,641 $11,183,353,597

IDC $241,142,312 $136,736,545 $78,765,341 $0 $179,740 $0 $20,081,009 $476,904,947

OM&R $2,002,787,746 $2,546,593,364 $616,583,661 $0 $1,051,481 $0 $170,458,552 $5,337,474,804

Total $8,454,783,031 $5,130,641,751 $2,686,267,332 $0 $15,141,032 $0 $710,900,202 $16,997,733,348

1. Lesser of Benefits or SPA Costs

2. Total Multipurpose Cost minus Multipurpose w/o each purpose

3. Justifiable Expenditure minus Separable Costs

4. Also referred to as joint cost allocation factors
88 | Central Valley Project Final Cost Allocation Study

10.2 Facility-Level Cost Allocation

To accommodate Reclamation’s ratesetting process, the costs in Period 2 are allocated separately by 

facility. Facility-level cost allocation factors are estimated for each project feature based on separable 

costs for each facility and the allocation of joint costs using the joint cost factors derived from the 

SCRB process. The composite allocation factors (incorporating both separable and joint costs) are

used to allocate total cost to the authorized purposes for each facility. Costs allocated to the water 

supply and power purposes are then sub-allocated to the applicable sub-purposes for repayment.

Lastly, the direct assigned costs are allocated to the appropriate repayment category. The Cost 

Allocation Spreadsheet Appendix to this report presents the summary tables that represent the facilitylevel allocation for Period 2.

The development of facility-level cost allocation factors involved several steps. First, the remaining 

joint costs by facility are estimated by subtracting the sum of the separable costs from the total cost 

to be allocated for each facility (Cost Allocation Spreadsheet Appendix, Table 1). The remaining joint 

costs are then allocated to the authorized purposes using the joint cost allocation factors which are

calculated in the SCRB process (Cost Allocation Spreadsheet Appendix, Table 1). Next, the total allocated 

costs by authorized purposes are estimated for each facility by summing the separable costs and that 

portion of joint costs allocated to the purpose (Cost Allocation Spreadsheet Appendix, Table 2).

Finally, the composite cost allocation factors are derived by dividing the total cost allocated to each 

purpose by the total cost of the feature (Cost Allocation Spreadsheet Appendix, Table 2). These 

composite factors remain constant for the Period 2 allocation.

10.3 Sub-Allocation of Costs

The sub-allocation of water and power costs is necessary to assign costs to the applicable repayment 

category for water ratesetting purposes. Because the ratesetting calculations are based on nominal 

costs, the sub-allocation process uses unindexed costs (Cost Allocation Spreadsheet Appendix, Tables 3, 

4, and 5). To accommodate the sub-allocation process, total unindexed cost for each facility are 

multiplied by the facility-level composite cost allocation factors to distribute the cost among 

authorized purposes (Cost Allocation Spreadsheet Appendix, Tables 6, 7, and 8). Repayment 

responsibilities for costs allocated to the water supply and power purposes are determined through 

the sub-allocation process described below.

10.3.1 Water Supply Cost Sub-Allocation

For the Period 2 cost allocation, water supply costs are sub-allocated to the following sub-purposes: 

irrigation, M&I, wildlife refuge, and CVPIA functions.27 The water supply sub-allocation is 

performed on the basis of water use (measured in acre feet). Water supply sub-allocation factors 

 27 The inclusion of B2 water supply as a water supply sub-purpose is a new concept. B2 releases that were included in 

the water supply purpose relate to releases under excess conditions that could not be recaptured for other purposes, 

such as water quality. In other words, only those B2 releases that flow to the ocean because they could not be used for 

any other purpose were included as part of the water supply purpose.
Chapter 10. Cost Allocation Results (Period 2) | 89

representing water use distributions are estimated for 15 different delivery areas and operational 

contexts (Cost Allocation Spreadsheet Appendix, Table 9). Because Period 2 represents a prospective 

analysis, the water use data is based primarily on CalSim 2 modeling, which reflects 

current/projected operations and regulatory constraints.

Information on B2 water supplies are derived from CVPIA water accounting records reported by 

the Central Valley Operations (CVO) office. The various water supply sub-allocation distributions 

are assigned to each CVP facility that has a water supply allocation based on location and 

operational considerations. The sub-allocation of water supply costs (construction, IDC, and 

OM&R) by facility are shown in Cost Allocation Spreadsheet Appendix, Tables 10, 11, and 12.

10.3.1.1 Sub-allocation of Wildlife Refuge and B2 Water Supply Costs

The water supply sub-allocation involves additional sub-allocation of costs assigned to the wildlife 

refuge and B2 sub-purposes due to differing repayment requirements. Specifically, refuge water 

supply costs are sub-allocated to Level 2 and Incremental Level 4 refuge deliveries. CalSim 2

provides projected delivery quantities for Level 2 refuge water supplies. Projected Incremental Level 

4 refuge deliveries are estimated based on a 10-year average of historic refuge delivery data.

Additional consideration of Incremental Level 4 deliveries in the water supply sub-allocation is 

required in order to allocate costs to applicable facilities and to avoid double-counting of water 

across water supply sub-purposes. Incremental Level 4 water delivered by Reclamation is derived 

from non-CVP sources, including project water that was originally allocated to CVP water users but 

subsequently permanently or temporarily assigned or transferred to the refuge program. In cases 

where reimbursable project water is transferred for the purposes of meeting non-reimbursable 

Incremental Level 4 demands, these water supplies are modeled as irrigation and/or M&I deliveries 

in CalSim and the water supply sub-allocation process. This modeling is appropriate because the 

water users are charged and compensated for that water, and it should not be sub-allocated to 

Incremental Level 4. There is non-CVP derived water that utilizes south-of-Delta CVP conveyance 

facilities to meet Incremental Level 4 demands, namely the Delta-Mendota Canal, which is 

accounted for in the water supply sub-allocation process.28 Specifically, it is estimated that 10 

percent of Incremental Level 4 south-of-Delta refuge deliveries are derived from non-CVP sources 

and are conveyed through the Delta-Mendota Canal, which is reflected in the water supply suballocation distributions.

Costs allocated to Incremental Level 4 refuge water supplies are non-reimbursable and are suballocated 75 percent to the Federal government and 25 percent to the State of California. Costs 

allocated to Level 2 refuge water and B2 water are considered reimbursable in the Period 2 

allocation, thereby assigned to water and power users only. These costs are sub-allocated to 

irrigation, M&I, and commercial power based on the proportion of reimbursable costs across the 

three sub-purposes as shown in Section 10.5, Table 10-2, and the Cost Allocation Spreadsheet Appendix, 

Table 16. The Cost Allocation Spreadsheet Appendix Tables 17, 18, and 19 present the sub-allocation of 

reimbursable refuge and B2 water supply costs.

 28 Incremental Level 4 water that comes from north-of-Delta sources does not utilize CVP conveyance facilities.
90 | Central Valley Project Final Cost Allocation Study

10.3.2 Power Cost Sub-Allocation

For Period 2, costs allocated to the power purpose are sub-allocated between commercial power and

project use energy. Power costs that are sub-allocated to the PUE function are subject to the water 

supply sub-allocation process described above in Section 10.3.1. The power sub-allocation in Period 

2 is based on LTGEN modeling results which are derived from CalSim 2 output, accounting for 

adjustments for the San Luis Unit.29

The power sub-allocation utilizes one uniform sub-allocation distribution across all power facilities 

based on system-wide power generation and use with one exception.

30 Specifically, average annual 

project use energy consumption (minus San Luis Unit generation) is estimated to be 1,033.71 GWh,

and average annual CVP power generation is estimated to be 4,514.60 GWh resulting in the 

following power sub-allocation factors: commercial power (77.103%) and PUE (22.897%).31 The 

average annual PUE is the total energy use at the pumping plant minus the generation of the San 

Luis Unit. The average annual CVP power generation is the at-plant generation minus regeneration 

by the San Luis Unit and estimated transmission losses. The sub-allocation factors are calculated 

using the following equations:

PPPPPP SSSSSS⎼aaaaaaaaaaaaaaaaaaaa FF FF = TT UUUU aaaa PP PPPP PP PP − SS LL GG

TT CCCC GG − TT LL

CC PP PP SSSSSS⎼aaaaaaaaaaaaaaaaaaaa FF FF = 11 − PPPPPP SSSSSS⎼aaaaaaaaaaaaaaaaaaaa FF FF

The sub-allocation of power costs by facility is shown in Cost Allocation Spreadsheet Appendix Tables 

13, 14, and 15.

10.4 Allocation of Direct Assigned Costs

Direct assigned costs are incorporated into the cost allocation after the water supply and power suballocation is completed. Only direct assigned costs that are plant-in-service (i.e., construction) are 

assigned to sub-purposes. Estimates of IDC and OM&R are not developed for direct assigned costs.

Direct assigned costs are designated as either reimbursable or non-reimbursable based on legislation 

and/or agreements (see Section 3.3). The sub-allocation of direct assigned costs by facility is shown 

in Cost Allocation Spreadsheet Appendix Table 20. Direct assigned costs categorized as reimbursable are 

further sub-allocated to the reimbursable sub-purposes based on the distribution of reimbursable 

construction costs shown in Section 10.5 (Table 10-2).

 29 For the purposes of the Period 2 allocation, power generation at O’Neill and Giannelli pump-generation facilities in 

the San Luis Unit (117.038 GWh annually) was removed from power sub-allocation calculations because these facilities 

serve the water supply purpose only.

30 The costs associated with the Pacific Alternating Current Intertie (PACI) transmission system is sub-allocated 100 

percent to commercial power.

31 The calculated sub-allocation factors will be replaced during the implementation phase using real-time data. LTGEN 

results are not adjusted by the process described in Chapter 7.7.1.2 and the Economic Benefits Analysis Appendix for the 

calculation of CVP energy generation economic benefits.
Chapter 10. Cost Allocation Results (Period 2) | 91

10.5 Sub-Allocation of Reimbursable Costs

Reimbursable costs are allocated only to the three reimbursable sub-purposes (i.e., irrigation, M&I, 

and commercial power). In these cases, the sub-allocation follows the distribution of costs across the 

three sub-purposes through the water supply and power sub-allocation process. Separate 

distributions of reimbursable costs for construction, IDC, and OM&R costs are shown in Table 

10-2.

Table 10-2. Reimbursable Purpose Allocation Percentages (Nominal Dollars)

SubPurposeConstruction 

($)

Construction 

(%)

IDC 

($)

IDC 

(%)

OM&R 

($)

OM&R 

(%)

Irrigation $990,835,007 58.7% $71,523,621 57.2% $2,007,374,630 46.4%

M&I $131,817,462 7.8% $8,045,878 6.4% $319,563,407 7.4%

Commercial 

Power

$566,051,934 33.5% $45,491,632 36.4% $1,997,332,755 46.2%

Total $1,688,704,403 100.0% $125,061,131 100.0% $4,324,270,792 100.0%

10.5.1 Allocation of Reimbursable SOD Costs

The allocation of SOD costs is defined by legislation. Specifically, 85 percent of SOD costs are nonreimbursable and 15 percent are reimbursable. Reimbursable SOD costs in Period 2 do not follow 

reimbursable cost distributions in Table 10-2. Instead, these costs follow the cost allocation factors 

for the appurtenant facility from the existing Period 1 allocation to distribute costs among the water 

supply and power purposes (see Section 5.10 for more information). Water supply costs are further 

sub-allocated using the Period 2 water supply sub-allocation factors (Cost Allocation Spreadsheet 

Appendix, Table 9) and all power costs are allocated to commercial power. The allocation of 

reimbursable SOD costs is presented in Cost Allocation Spreadsheet Appendix, Table 21.

10.6 Cost Allocation Summary (Period 2)

The results of the Period 2 cost allocation, including the water supply and power sub-allocation and 

assignment of direct assigned costs and repayment contracts is presented in Table 10-3. Table 10-3 

focuses on the allocation of construction costs only. The allocation of estimated IDC and OM&R 

costs at the facility level are presented in the appendix; however, these costs are not presented here 

because they have been estimated for the purpose of the SCRB analysis only and do not represent 

actual costs subject to repayment.32

 32 Reimbursable IDC will be re-calculated for Period 2 based on the results on the Period 2 construction allocation (see 

Section 12.3.2). OM&R costs that are included in water rates are projected costs that are estimated annually; these costs 

will be allocated pursuant to the CAS results (refer to Section 12.4).
92 | Central Valley Project Final Cost Allocation Study

Table 10-3. Cost Allocation Summary – Period 2 (Nominal Dollars)1

Cost Category Construction

Irrigation Water Supply

Water Supply Sub-Allocation $870,012,164

Project Use Energy – Power Sub-Allocation $120,822,843

Refuge Water Supply (Level 2) – Water Supply Sub-Allocation $54,759,215

B2 Water Supply – Water Supply Sub-Allocation $2,930,463

Refuge Water Supply (Level 2) – PUE Sub-Allocation $8,251,601

SCRB Allocation & Sub-Allocation Sub-Total $1,056,776,286

Direct Assigned Cost – Safety of Dams $3,017,064

Direct Assigned Cost – Other $8,724,372

Direct Assigned Cost Sub-Total $11,741,436

Irrigation Total $1,068,517,722

Municipal and Industrial Water Supply

Water Supply Sub-Allocation $108,329,815

Project Use Energy – Power Sub-Allocation $23,487,647

Refuge Water Supply (Level 2) – Water Supply Sub-Allocation $7,284,986

B2 Water Supply – Water Supply Sub-Allocation $389,859

Refuge Water Supply (Level 2) – PUE Sub-Allocation $1,097,765

SCRB Allocation & Sub-Allocation Sub-Total $140,590,072

Direct Assigned Cost – Safety of Dams $570,349

Direct Assigned Cost - Other $1,160,662

Direct Assigned Cost Sub-Total $1,731,011

M&I Total $142,321,083
Chapter 10. Cost Allocation Results (Period 2) | 93

Cost Category Construction

Refuge Water Supply (Non-Reimbursable) 

Refuge Water Supply (Incremental Level 4) – Water Supply Sub-Allocation $539,800

Refuge Water Supply (Incremental Level 4) – PUE Sub-Allocation $229,974

Non-Reimbursable Refuge Water Supply Total $769,774

Commercial Power

Power Sub-Allocation $566,051,934

Refuge Water Supply (Level 2) – Water Supply Sub-Allocation $31,283,269

B2 Water Supply – Water Supply Sub-Allocation $1,674,137

Refuge Water Supply (Level 2) – PUE Sub-Allocation $4,714,040

SCRB Allocation & Sub-Allocation Sub-Total $603,723,380

Direct Assigned Cost – Safety of Dams $1,184,217

Direct Assigned Cost - Other $4,984,127

Direct Assigned Cost Sub-Total $6,168,344

Commercial Power Total $609,891,724

Flood Control

Flood Control Total $331,281,759

Fish and Wildlife Enhancement

Fish and Wildlife Enhancement Total $0

Recreation

Recreation Total $5,742,471

Navigation

Navigation Total $0

Water Quality

Water Quality Total $89,358,743
94 | Central Valley Project Final Cost Allocation Study

Cost Category Construction

Direct Assigned Costs (Non-Reimbursable)

Federal – Safety of Dams $27,039,235

Federal - Other $170,655,307

Direct Assigned Cost – Federal Sub-Total $197,694,542

State $248,310,255

Direct Assigned Cost – State Sub-Total $248,310,255

State & Local $4,467,386

Direct Assigned Cost – State & Local Sub-Total $4,467,386

Repayment Contracts

Irrigation $361,392,079

M&I $227,656,572

Commercial Power $8,568,500

Total Allocated Costs (SCRB) $2,228,242,485

Total Direct Assigned Costs 2 $470,112,974

Total Repayment Contracts $597,617,151

Total Costs for Repayment $3,295,972,610

1. The table excludes additional repayment obligations and costs not allocated discussed in Section 3.5

and Section 3.6, respectively.

2. Direct assigned costs reflect construction costs only and therefore do not match the values reported in 

Section 3.3.

NA = Not Applicable
Chapter 11. Final Cost Allocation (Two-Period Merge) | 95

Chapter 11. Final Cost Allocation (Two-Period 

Merge)

This chapter presents the results of the final CVP cost allocation which represents the merger of the 

Period 1 allocation (historic allocation) and Period 2 allocation (prospective allocation). The two 

periods are merged based on an equal weighting as outlined in the two cost allocation and twoperiod repayment approach (see Section 5.1). The information presented in this chapter for the final 

cost allocation focuses on the allocation of CVP construction cost and the resultant assignment of 

costs for repayment purposes, which will be incorporated into the water ratesetting process.

The Period 1 allocation is based on the 1975 cost allocation factors and current sub-allocation 

process. Reclamation prepares an annual update to the interim allocation of the CVP for plant-inservice (construction) and O&M costs. The 2013 annual plant-in-service allocation is the basis for 

the allocation of costs associated with construction and IDC for Period 1.33 The Period 2 allocation 

is based on the prospective analysis of CVP costs and benefits described in this report. The final 

cost allocation is a merge of the Period 1 and Period 2 allocations as described in Chapter 5, Key 

Concepts and Assumptions.

11.1 Final Cost Allocation Results

11.1.1 Construction Allocation

The results of the two-cost allocation and two-period repayment merge of construction costs are 

shown in Table 11-1. The table shows the total allocation for both Period 1 and Period 2, the 

weighted allocation for both periods, and the merger of the two periods that represents the final cost 

allocation. The total costs allocated in each period are equal; however, the costs are distributed 

differently based on different allocation of costs in Period 1 and Period 2. The total of the allocated 

costs in the two cost allocation two-period repayment merger is $3,900,200,339.

Table 11-1 includes plant-in-service costs that are included in the CAS Facility List as well as other 

costs that are part of the annual CVP cost allocation that are assigned to water and power users for 

repayment. Repayment contracts and additional repayment obligations are not affected by the Period 

2 allocation, and therefore, these costs are fixed across the two periods. Costs not allocated, 

including CVPIA, authorized deferred use and recent Folsom SOD costs, are shown separately in 

Table 11-1.

 33 The 2013 plant-in-service allocation is used for consistency with the base year (2013) used in the CAS.
96 | Central Valley Project Final Cost Allocation Study

Table 11-1. Final Cost Allocation (Merge) – Construction (Nominal Dollars)

Type of Cost Period 1 Period 2 Period 1 (50%) Period 2 (50%)

Final Cost 

Allocation 

(Merge)

Authorized Purposes & Sub-Purposes

Water Supply – Irrigation $1,178,115,286 $1,068,517,722 $589,057,643 $534,258,861 $1,123,316,504

Water Supply – M&I $106,873,582 $142,321,083 $53,436,791 $71,160,542 $124,597,333

Power – Commercial $674,248,511 $609,891,724 $337,124,256 $304,945,862 $642,070,118

Flood Control $139,282,872 $331,281,759 $69,641,436 $165,640,880 $235,282,316

Water Quality $5,607,545 $89,358,743 $2,803,773 $44,679,372 $47,483,145

Recreation $74,998,433 $5,742,471 $37,499,217 $2,871,236 $40,370,453

Navigation $6,423,948 $0 $3,211,974 $0 $3,211,974

Fish & Wildlife Enhancement 1 – – – – –

Non-Reimbursable (Other)

Federal $258,046,528 $198,271,873 $129,023,264 $99,135,936 $228,159,200

State $250,429,656 $248,502,699 $125,214,828 $124,251,349 $249,466,177

State & Local $4,329,037 $4,467,386 $2,164,519 $2,233,693 $4,398,212

Repayment Contracts

Irrigation $361,392,079 $361,392,079 $180,696,040 $180,696,040 $361,392,079

M&I $227,656,572 $227,656,572 $113,828,286 $113,828,286 $227,656,572
Chapter 11. Final Cost Allocation (Two-Period Merge) | 97

Type of Cost Period 1 Period 2 Period 1 (50%) Period 2 (50%)

Final Cost 

Allocation 

(Merge)

Commercial Power $8,568,500 $8,568,500 $4,274,250 $4,274,250 $8,568,500

Facility List Sub-Total $3,295,972,549 $3,295,972,610 $1,647,986,277 $1,647,986,307 $3,295,972,584

Additional Repayment Obligations

Repayment Obligations – USACE

Irrigation $19,686,165 $19,686,165 $9,843,083 $9,843,083 $19,686,166

M&I $447,937 $447,937 $223,969 $223,969 $447,938

WAPA Retired Assets

Irrigation $8,464,815 $8,464,815 $4,232,408 $4,232,408 $8,464,816

M&I $1,207,155 $1,207,155 $603,578 $603,578 $1,207,156

Commercial Power $35,649,679 $35,649,679 $17,824,840 $17,824,840 $35,649,680

Non-Reimbursable (Federal) $213,468 $213,468 $106,734 $106,734 $213,468

Non-Reimbursable (State) $16,115 $16,115 $8,058 $8,058 $16,116

CA-OR Transmission Project $20,282,786 $20,282,786 $10,141,393 $10,141,393 $20,282,786

Additional Repayment Obligations 

Sub-Total

$85,968,120 $85,968,120 $42,984,063 $42,984,063 $85,968,126

Costs Not Allocated

Authorized Deferred Use $56,875,000 $56,875,000 $28,437,500 $28,437,500 $56,875,000
98 | Central Valley Project Final Cost Allocation Study

Type of Cost Period 1 Period 2 Period 1 (50%) Period 2 (50%)

Final Cost 

Allocation 

(Merge)

CVPIA $340,872,120 $340,872,120 $170,436,060 $170,436,060 $340,872,120

Folsom SOD – Not in Repayment $120,512,509 $120,512,509 $60,256,255 $60,256,255 $120,512,510

Costs Not Allocated Sub-Total $518,259,629 $518,259,629 $259,129,815 $259,129,815 $518,259,629

Total Cost $3,900,200,298 $3,900,200,359 $1,950,100,154 $1,950,100,185 $3,900,200,339 

1. Fish and wildlife mitigation costs are allocated to applicable categories for repayment, including non-reimbursable costs
Chapter 11. Final Cost Allocation (Two-Period Merge) | 99

11.1.2 IDC Allocation

The merge of IDC costs for repayment purposes is shown in Table 11-2. IDC subject to repayment 

is different than estimated IDC used in the SCRB analysis and reflects actual IDC in the CVP 

financial records. IDC estimated for the CAS and SCRB analysis is at the appraisal level, and IDC 

for repayment in Period 2 will be calculated during implementation in accordance with Reclamation 

accounting guidelines. The merger of IDC costs will be completed after the final cost allocation is 

complete and IDC is calculated for Period 2 based on the methodology presented in Section 12.3.2.

The values presented in Table 11-2 includes non-reimbursable IDC costs. Non-reimbursable IDC is 

associated with the New Melones Unit ($27.0 million) and the San Felipe Division ($4.1 million).

For the New Melones Unit, these costs are direct assigned as non-reimbursable because Reclamation 

does not charge IDC on irrigation costs; and for the San Felipe Division, these costs are direct 

assigned as non-reimbursable pursuant to an agreement between Reclamation and water contractors.

Additional information on non-reimbursable IDC costs is presented in Section 3.3. Nonreimbursable IDC costs will remain fixed across Period 1 and Period 2 and are not subject to 

repayment.

Table 11-2. Final Cost Allocation (Merge) – IDC1,2

Category

Period 1

(Total)

Period 2

(Total)

Period 1 

(50%)

Period 2 

(50%)

Final Cost 

Allocation 

(Merge)

M&I $5,606,224 TBD $2,803,112 TBD TBD

Commercial Power $54,755,940 TBD $27,377,970 TBD TBD

Non-Reimbursable 3 $31,114,589 $31,114,589 $15,557,295 $15,557,295 $31,114,589

Repayment 

Contracts – M&I 4

$35,778,896 $35,778,896 $17,889,448 $17,889,448 $35,778,896

Repayment 

Contracts –

Commercial Power 4

$411,801 $411,801 $205,901 $205,901 $411,801

Total $127,255,650 TBD $63,627,825 TBD TBD

1. Includes IDC for both Reclamation and WAPA facilities

2. Excludes IDC associated with CVPIA facilities and Folsom SOD (Not in Repayment)

3. This value represents IDC that is included in the CVP Financial Statements but has been direct assigned 

as non-reimbursable based on legislation and/or agreement.

4. IDC associated with repayment contracts will remain fixed across Period 1 and Period 2.

TBD = To be determined
100 | Central Valley Project Final Cost Allocation Study

11.1.3 OM&R Allocation

The allocation of OM&R costs is not subject to the two-period merger because they reflect 

prospective costs only. Reclamation will continue to allocate OM&R costs annually using the results 

of the Period 2 allocation only. Additional information related to the methodology that will be used 

to allocate projected OM&R costs is presented in Section 12.4.

11.1.4 Summary of Repayment Obligations

The summary of repayment obligations for construction costs is presented in Table 11-3.

Repayment obligations shown in Table 11-4 reflect the costs allocated (and sub-allocated) to 

reimbursable and non-reimbursable purposes in Period 1, Period 2, and the final cost allocation. The 

breakdown of construction costs allocated across reimbursable sub-purposes is shown in Table 11-4.
Chapter 11. Final Cost Allocation (Two-Period Merge) | 101

Table 11-3. Summary of Repayment Obligations – Construction (Excludes IDC and OM&R)

Category Period 1 ($)

Period 1

(%) Period 2 ($)

Period 2

(%)

Period 2

(Change 

from P1)

Final Cost 

Allocation 

($)

Final Cost 

Allocation 

(%)

Final Cost 

Allocation 

(Change 

from P1)

Irrigation $1,206,266,266 30.93% $1,096,668,702 28.12% ($109,597,564) $1,151,467,486 29.52% ($54,798,780)

M&I $108,528,674 2.78% $143,976,175 3.69% $35,447,501 $126,252,427 3.24% $17,723,753 

Commercial Power $730,180,976 18.72% $665,824,189 17.07% ($64,356,787) $698,002,584 17.90% ($32,178,392)

Repayment Contracts $597,617,151 15.32% $597,617,151 15.32% $0 $597,617,152 15.32% $0

Non-reimbursable $739,347,602 18.96% $877,854,513 22.51% $138,506,911 $808,601,061 20.73% $69,253,459 

CVPIA $340,872,120 8.74% $340,872,120 8.74% $0 $340,872,120 8.74% $0 

Authorized Deferred Use $56,875,000 1.46% $56,875,000 1.46% $0 $56,875,000 1.46% $0 

SOD – Not in Repayment $120,512,509 3.09% $120,512,509 3.09% $0 $120,512,509 3.09% $0 

Total $3,900,200,298 100.00% $3,900,200,359 100.00% NA $3,900,200,339 100.00% NA

P1 = Period 1

SOD = Safety of Dams
102 | Central Valley Project Final Cost Allocation Study

Table 11-4. Reimbursable Cost Distribution – Construction (Excludes IDC and OM&R)

Category1 Period 1 ($) Period 1 (%) Period 2 ($) Period 2 (%) Final Cost Allocation ($) Final Cost Allocation (%)

Irrigation $1,206,266,266 58.99% $1,096,668,702 57.52% $1,151,467,486 58.28%

M&I $108,528,674 5.31% $143,976,175 7.55% $126,252,427 6.39%

Commercial Power $730,180,976 35.71% $665,824,189 34.92% $698,002,584 35.33%

Total $2,044,975,916 100.00% $1,906,469,066 100.00% $1,975,722,497 100.00%

1. Values presented in this table do not include repayment contracts.
Chapter 12. Implementation of the Final Cost Allocation | 103

Chapter 12. Implementation of the Final Cost 

Allocation

This chapter presents the proposed approach for implementing the final cost allocation in the 

context of the CVP water ratesetting and power repayment processes.

12.1 Cost Allocation and Repayment

The primary purpose of cost allocation is to determine the assignment of costs to project 

beneficiaries for repayment. As repayment requirements differ by law among the authorized 

purposes served by a project, a systematic and impartial process of allocation is required to quantify 

and assign those costs that are clearly associated with a particular purpose, and to equitably 

apportion the remaining joint costs that serve multiple purposes. The cost allocation process is the 

basis for assigning costs to project beneficiaries for repayment.

Allocated costs and estimated repayment must be determined independently. Costs are not to be 

allocated to a particular purpose based on the ability (or inability) of certain beneficiaries to repay 

allocated costs. All project purposes are to receive an equitable share of the efficiencies (and cost 

savings) provided of a multipurpose project. Therefore, all purposes should receive comparable 

treatment in the cost allocation process.

Project costs have been allocated to reimbursable and non-reimbursable purposes as presented in 

Chapter 11, Final Cost Allocation (Two Period Merge) (see Table 11-4). The reimbursable costs in the 

final cost allocation serve as the foundation for assigning water costs for repayment through the 

CVP water ratesetting process and establishing power repayment obligations.

12.2 CVP Water Ratesetting Policy

The water ratesetting process is used to calculate water service rates that recover the Federal 

investment in constructing and operating and maintaining the CVP. The legislation guiding the 

recovery of the Federal investment through water service rates is the Reclamation Project Act of 

1939 (Act). Water service contracts are authorized under Sections 9c(2) and 9e of the Act for M&I 

and irrigation water, respectively. Water service contracts are used in cases like the CVP where there 

are a wide range of multipurpose facilities serving different purposes and beneficiaries (contractors).

For water contractors, costs are allocated to and recovered from beneficiaries based on the amount 

of water received (i.e., water service). The basic unit of measurement for water deliveries, and thus 

cost recovery, is acre-feet of water.

For water service contracts, the Act requires the Secretary of the Interior to establish water rates for 

the sale of water to “produce revenue at least sufficient to cover annual O&M costs and the 
104 | Central Valley Project Final Cost Allocation Study

appropriate share of fixed charges (construction costs) of the project.” Reclamation has broad 

discretion under the Act for developing and implementing ratesetting policies. Formal water 

ratesetting policies are in place for the CVP. Specifically, Reclamation has the following two 

ratesetting policies which together apply to over 200 water service contractors within the CVP:

• The CVP Irrigation Ratesetting Policy (Reclamation 1988)

• The Interim CVP M&I Ratesetting Policy (Reclamation 1993)

To facilitate the CVP water ratesetting process, an allocation of construction (plant-in-service) cost 

is performed annually, which assigns costs to the water supply sub-purposes of irrigation and M&I.

Generally, construction costs are to be recovered over 50 years. The majority of CVP facilities 

currently in place have costs that are recoverable through 2030. Costs are recovered through water 

rates based on cost pools. The following cost pools are used in the CVP: storage, conveyance, 

conveyance pumping, and CVP-wide costs.

There are also facility costs attributed to PUE which is allocated further to storage, conveyance 

pumping, and direct pumping cost pools based on the energy utilized over a 50-year period. Each 

cost pool is pro-rated across water contractors that benefit from the service based on chargeable 

water over the 50-year period.

Generally, O&M water rates are also based on cost pools. For O&M, the two main cost pools are 

storage and water marketing. Similar to construction, an annual O&M allocation is prepared that 

assigns costs to project purposes, and costs allocated to irrigation and M&I are ultimately assigned 

to cost pools and divided by the estimated water deliveries to develop an estimated water rate 

($/AF) for that year. Subsequently, the estimated costs are trued up to determine the allocation of 

actual O&M costs in each cost pool. The total reimbursable cost in each cost pool is pro-rated 

among the water contractors required to pay for that service based on actual chargeable water.

12.3 Project Repayment (Construction & IDC Costs)

12.3.1 Construction Costs

The CVP plant-in-service (construction) allocation is prepared annually to reflect changes in CVP 

construction costs and sub-allocation processes that vary year to year. The results of the final cost 

allocation presented in Chapter 11 is representative of 2013 plant-in-service (construction) costs and 

water supply and power sub-allocation distributions developed as part of this study that are based on 

modeled conditions. However, when the final cost allocation is implemented annually, Reclamation 

will apply the final cost allocation results to current costs and operational conditions that are in 

effect at the time the annual plant-in-service allocation is prepared taking into consideration 

applicable ratesetting and Reclamation policy.
Chapter 12. Implementation of the Final Cost Allocation | 105

12.3.2 IDC Costs

IDC subject to repayment will be re-calculated for the Period 2 allocation34. The re-calculation of 

IDC in Period 2 is required to reflect the new cost allocation factors, specifically the allocation of 

costs to M&I and commercial power, which are the only two sub-purposes that are assigned 

reimbursable IDC. The process that will be used to re-calculate IDC in Period 2 will take into 

consideration applicable ratesetting and Reclamation policy. Once IDC is re-calculated for Period 2, 

it will be merged with the IDC in Period 1 (which is fixed) for inclusion in CVP water rates and 

power repayment obligations.

12.4 Cost Recovery (OM&R Costs)

For the purposes of the SCRB analysis, estimated OM&R costs were developed; however, these 

costs are not used in the ratesetting process. For ratesetting purposes, the annual CVP OM&R

allocation is prepared separately from the plant-in-service (construction) allocation and represents a 

prospective analysis that covers projected OM&R costs for the subsequent fiscal year. The annual 

OM&R cost projections are derived from the budget prepared for the MP Region annually.

Projected OM&R costs are ultimately reconciled to actual OM&R expenses after they become 

available

The structure of the OM&R cost allocation is different than the plant-in-service allocation. The 

plant-in-service allocation is based primarily on CVP facility costs, while the OM&R allocation not 

only covers ongoing costs associated with CVP facilities, it also covers more generalized OM&R

costs.

After the final cost allocation is implemented, the allocation of annual OM&R costs will be based on 

the Period 2 allocation to the extent practicable. The allocation is intended to represent current 

operating conditions of the CVP. Specifically, the facility-level cost allocation factors from the 

Period 2 allocation will be applied to facility-level OM&R costs where applicable. For more 

generalized OM&R costs, appropriate cost allocation factors will be developed consistent with cost 

allocation principles, Reclamation policy, and applicable laws and regulations.

12.5 Future CVP Investments

Future investments in the CVP, such as CALFED projects, are currently being considered under the 

WIIN Act (PL 114-322). In the event that a future investment will be accompanied with outstanding 

repayment obligations, the feasibility report for such investment will provide a cost allocation for 

repayment of such investments. OM&R costs accompanying future investments will be incorporated 

into the OM&R allocation directly or through the cost allocation that accompanies such an 

investment (see CMP 09-04).

 34 Reclamation will proportionately change IDC when allocated construction amounts change and proportional 

adjustments are appropriate. Otherwise, IDC will be either based on those computed for the period 2 allocation or 

estimated per IDC policy (FIN 07-21).
106 | Central Valley Project Final Cost Allocation Study

12.6 Allocation of CVPIA Costs

Concurrent with the CVP CAS, a reconciliation of CVPIA expenditures is being conducted to 

determine whether CVPIA revenues are sufficient to recover CVPIA expenditures. Section 

3406(b)(4) states that the reimbursable share “shall be allocated among project water and power 

users in accordance with existing project cost allocation procedures.” The allocation of CVPIA costs 

is specified in the BPG.
CAS Facility List | 107

CAS Facility List

CVP Cost Allocation Study Facility List (FY 2013) 1,2

In the table below, direct assigned costs (DAC) and costs not allocated3 (CNA) are excluded from SCRB cost allocation.

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

CVP (General)

Centralized 

Water and 

Power System 

Control

$32,473,924 $0 $0 $0 $0 $0 $0 $32,473,924 $0

CVP Radio 

Network

$2,506,417 $0 $0 $0 $0 $0 $0 $2,506,417 $0

Telemetering 

Equipment

$130,180 $0 $0 $0 $0 $0 $0 $130,180 $0

American River 

Division

Carrier 

Current 

Equipment -

Folsom

$32,139 $0 $0 $0 $0 $0 $0 $32,139 $0
108 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Folsom Dam 

& Reservoir, 

Safety of 

Dams (in 

Repayment)

$26,385,404 $0 $26,385,404 $0 $0 $0 $0 $0 $0

Folsom Dam 

& Reservoir

$103,754,844 $0 $0 $0 $0 $0 $0 $103,754,844 $0

Folsom Dam 

Pumping 

Plant -

Enhancement

$3,144,844 $0 $0 $0 $0 $0 $0 $3,144,844 $0

Folsom 

Powerplant

$26,598,010 $0 $0 $0 $0 $0 $0 $26,598,010 $0

Folsom 

Switchyard 

(American 

River Division)

$1,396,335 $0 $0 $0 $0 $0 $0 $1,396,335 $0

Nimbus Dam 

& Reservoir

$6,809,933 $0 $0 $40,000 $0 $0 $0 $6,769,933 $0

Nimbus Fish 

Protection 

Facility

$1,239,913 $1,239,913 $0 $0 $0 $0 $0 $0 $0
CAS Facility List | 109

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Nimbus 

Power Plant

$6,517,250 $0 $0 $0 $0 $0 $0 $6,517,250 $0

Nimbus 

Switchyard

$147,460 $0 $0 $0 $0 $0 $0 $147,460 $0

Permanent 

Operating 

Facilities -

Folsom

$11,635,054 $0 $0 $0 $0 $0 $0 $11,635,054 $0

Replace 4160 

Feeder Cable 

- Folsom 

Pumps

$351,247 $0 $0 $0 $0 $0 $0 $351,247 $0

Replace 

Transformer 

K3A - Folsom

$1,435,519 $0 $0 $0 $0 $0 $0 $1,435,519 $0

Security 

Improvements 

- Folsom

$15,399,932 $0 $0 $15,399,932 $0 $0 $0 $0 $0

Union Hills 

Reservoir

$80,000 $0 $0 $0 $0 $0 $0 $80,000 $0

Auburn-Folsom 

South Unit
110 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

American 

River 

Pumping 

Station

$3,589,560 $0 $0 $3,589,560 $0 $0 $0 $0 $0

Folsom-South 

Canal 

$6,696,654 $0 $0 $0 $0 $0 $2,425,000 $4,271,654 $0

Folsom-South 

Canal -

Recreation 

Facilities

$334,213 $0 $0 $0 $0 $0 $0 $334,213 $0

No Hands 

Bridge

$1,192,567 $0 $0 $0 $0 $0 $0 $1,192,567 $0

Permanent 

Operating 

Facilities -

AuburnFolsom South

$10,142 $0 $0 $0 $0 $0 $0 $10,142 $0

Delta Division

Automated 

Meters

$678,598 $0 $0 $0 $0 $0 $0 $678,598 $0
CAS Facility List | 111

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Carrier 

Current 

Equipment -

Tracy

$189,212 $0 $0 $0 $0 $0 $0 $189,212 $0

Clayton Canal $473,804 $0 $0 $0 $0 $0 $0 $473,804 $0

Colombia 

Mowry

$911,474 $0 $0 $0 $0 $0 $0 $911,474 $0

Contra Costa 

Canal

$5,581,989 $0 $0 $0 $0 $0 $0 $5,581,989 $0

Contra Costa 

Canal System 

- Deferred 

Maintenance

$542,664 $0 $0 $0 $0 $0 $0 $542,664 $0

Contra Costa 

Water District 

- Distribution 

System

$1,166,455 $0 $0 $0 $0 $1,166,455 $0 $0 $0

Contra Costa 

Fish Screen 

[PL 102-575, 

Sec. 

3406(b)(5)]

$30,062,388 $0 $0 $0 $30,062,388 $0 $0 $0 $0
112 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Contra Costa 

Pumping 

Plant

$748,821 $0 $0 $0 $0 $0 $0 $748,821 $0

Contra Loma 

Dam &

Reservoir

$4,514,442 $0 $0 $0 $0 $0 $0 $4,514,442 $0

Contra Loma 

Dam &

Reservoir -

Recreation 

Facilities

$205,367 $0 $0 $0 $0 $0 $0 $205,367 $0

Delta Cross 

Channel

$2,990,960 $0 $0 $0 $0 $0 $0 $2,990,960 $0

DeltaMendota 

Canal

$80,251,070 $0 $0 $0 $0 $0 $0 $80,251,070 $0

DeltaMendota 

Intake

$1,931,474 $0 $0 $0 $0 $0 $0 $1,931,474 $0
CAS Facility List | 113

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

DeltaMendota 

CanalCalifornia 

Aqueduct

Intertie

$24,399,087 $0 $0 $0 $0 $0 $0 $24,399,087 $0

Martinez 

Reservoir

$617,604 $0 $0 $0 $0 $0 $0 $617,604 $0

Permanent 

Operating 

Facilities -

Tracy

$1,209,979 $0 $0 $0 $0 $0 $0 $1,209,979 $0

Plain View 

Water District 

- Distribution 

System

$544,760 $0 $0 $0 $0 $544,760 $0 $0 $0

Shortcut 

Pipeline

$4,725,196 $0 $0 $0 $0 $0 $0 $4,725,196 $0

Tracy Fish 

Collection 

Facility -

Replace 

Transformers

$18,716 $0 $0 $0 $0 $0 $0 $18,716 $18,716
114 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Tracy Fish 

Protection 

Facility

$6,114,254 $6,114,254 $0 $0 $0 $0 $0 $0 $0

Tracy (Jones) 

Pumping 

Plant

$25,930,750 $0 $0 $0 $0 $0 $0 $25,930,750 $0

Tracy 

Switchyard

$2,561,553 $0 $0 $0 $0 $0 $0 $2,561,553 $0

Ygnacio Canal $373,012 $0 $0 $0 $0 $0 $0 $373,012 $0

Ygnacio 

Pumping 

Plant

$51,194 $0 $0 $0 $0 $0 $0 $51,194 $0

Friant Division $0

DelanoEarlimart 

Irrigation 

District -

Distribution 

System

$10,560,037 $0 $0 $0 $0 $10,560,037 $0 $0 $0
CAS Facility List | 115

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Exeter 

Irrigation 

District -

Distribution 

System

$3,485,126 $0 $0 $0 $0 $3,485,126 $0 $0 $0

Friant Dam &

Reservoir

$30,115,010 $0 $0 $0 $0 $0 $0 $30,115,010 $0

Friant-Kern 

Canal

$98,534,937 $0 $0 $0 $0 $0 $0 $98,534,937 $0

Ivanhoe 

Irrigation 

District -

Distribution 

System

$2,150,984 $0 $0 $0 $0 $2,150,984 $0 $0 $0

Lake 

Woollomes -

Recreation 

Facilities

$54,500 $0 $0 $27,250 $0 $0 $0 $27,250 $0

Lindmore 

Irrigation 

District -

Distribution 

System

$4,991,841 $0 $0 $0 $0 $4,991,841 $0 $0 $0
116 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

LindsayStrathmore 

Irrigation 

District -

Distribution 

System

$2,248,038 $0 $0 $0 $0 $2,248,038 $0 $0 $0

Madera Canal $3,780,702 $0 $0 $0 $0 $0 $0 $3,780,702 $0

Madera 

Irrigation 

District -

Distribution 

System

$13,496,356 $0 $0 $0 $0 $13,496,356 $0 $0 $0

Permanent 

Operating 

Facilities -

Friant

$318,852 $0 $0 $0 $0 $0 $0 $318,852 $0

San Joaquin 

River 

Restoration 

Program

$452,788 $452,788 $0 $0 $0 $0 $0 $0 $0
CAS Facility List | 117

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

ShafterWasco 

Irrigation 

District -

Distribution 

System

$8,366,979 $0 $0 $0 $0 $8,366,979 $0 $0 $0

South San 

Joaquin 

Municipal 

Utility District 

- Distribution 

System

$9,227,718 $0 $0 $0 $0 $9,227,718 $0 $0 $0

Stone Corral 

Irrigation 

District -

Distribution 

System

$1,888,000 $0 $0 $0 $0 $1,888,000 $0 $0 $0

Tea Pot Dome 

Water District 

- Distribution 

System

$1,665,816 $0 $0 $0 $0 $1,665,816 $0 $0 $0
118 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Sacramento 

River Division

4-M Water 

District -

Turnout

$266,546 $0 $0 $0 $0 $0 $0 $266,546 $0

Colusa 

County Water 

District -

Distribution 

System

$17,077,314 $0 $0 $0 $0 $17,077,314 $0 $0 $0

Colusa 

County Water 

District - Relift 

Pumping 

Plant

$12,633,482 $0 $0 $0 $0 $0 $0 $12,633,482 $0

Colusa Service 

Area - Cortina 

- Relift 

Pumping 

Plant

$141,792 $0 $0 $0 $0 $0 $0 $141,792 $0
CAS Facility List | 119

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Colusa Service 

Area - Davis -

Relift 

Pumping 

Plant

$180,305 $0 $0 $0 $0 $0 $0 $180,305 $0

Colusa Service 

Area - Other -

Relift 

Pumping 

Plant

$1,949 $0 $0 $0 $0 $0 $0 $1,949 $0

Corning Canal $5,762,097 $0 $0 $10,805 $0 $0 $0 $5,751,292 $0

Corning Canal 

Pumping 

Plant

$2,529,063 $0 $0 $0 $0 $0 $0 $2,529,063 $0

Corning 

Water District 

- Relift 

Pumping 

Plant

$2,779,835 $0 $0 $0 $0 $0 $0 $2,779,835 $0

Corning 

Water District 

- Distribution 

System

$3,866,292 $0 $0 $0 $0 $3,866,292 $0 $0 $0
120 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Dunnigan 

Water District 

- Distribution 

System

$6,822,123 $0 $0 $0 $0 $6,822,123 $0 $0 $0

Dunnigan 

Water District 

- Relift 

Pumping 

Plant

$1,700,384 $0 $0 $0 $0 $0 $0 $1,700,384 $0

Glenn Valley 

Water District 

- Relift 

Pumping 

Plant

$1,048,845 $0 $0 $0 $0 $0 $0 $1,048,845 $0

Glide 

Irrigation 

District - Relift 

Pumping 

Plant

$1,077,496 $0 $0 $0 $0 $0 $0 $1,077,496 $0

Kanawha 

Water District 

- Relift

Pumping 

Plant

$2,753,824 $0 $0 $0 $0 $0 $0 $2,753,824 $0
CAS Facility List | 121

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

La Grande 

Water District 

- Turnout

$244,897 $0 $0 $0 $0 $0 $0 $244,897 $0

Orland-Artois 

Water District 

- Distribution 

System

$23,702,915 $0 $0 $0 $0 $23,702,915 $0 $0 $0

Orland-Artois 

Water District 

- Relift 

Pumping 

Plant

$7,496,789 $0 $0 $0 $0 $0 $0 $7,496,789 $0

Permanent 

Operating 

Facilities -

Arbuckle

$1,775,258 $0 $0 $0 $0 $0 $0 $1,775,258 $0

Permanent 

Operating 

Facilities -

Red Bluff

$59,410 $0 $0 $0 $0 $0 $0 $59,410 $0
122 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Permanent 

Operating 

Facilities -

Red Bluff 

Suboffice

$3,802,995 $0 $0 $0 $0 $0 $0 $3,802,995 $0

Permanent 

Operating 

Facilities -

Willows

$390,730 $0 $0 $0 $0 $0 $0 $390,730 $0

Permanent 

Operating 

Facilities -

Willows 

Suboffice

$966,294 $0 $0 $0 $0 $0 $0 $966,294 $0

Pilot Research 

Pumping 

Plant [PL 102-

575, Sec. 

3406(b)(10)] 

$20,858,214 $0 $0 $0 $19,809,945 $0 $0 $1,048,269 $0

Proberta 

Water District 

- Relift

Pumping 

Plant

$172,158 $0 $0 $0 $0 $0 $0 $172,158 $0
CAS Facility List | 123

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Red Bluff 

Diversion 

Dam

$10,718,478 $1,759,344 $0 $0 $0 $0 $0 $8,959,134 $1,631,189

Red Bluff 

Pumping 

Plant

$178,174,932 $0 $0 $0 $178,174,932 $0 $0 $0 $0

TehamaColusa Canal$205,461,879 $39,298,924 $0 $3,500 $0 $0 $54,450,000 $111,709,455 $26,510,321

Westside 

Water District 

- Relift 

Pumping 

Plant

$7,002,377 $0 $0 $0 $0 $0 $0 $7,002,377 $0

San Felipe 

Division

Archeological 

Studies

$104,509 $0 $0 $104,509 $0 $0 $0 $0 $0

Coyote 

Pumping 

Plant

$18,167,013 $0 $0 $1,816,701 $0 $16,350,312 $0 $0 $0
124 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Coyote 

Pumping 

Plant - 115 kv 

line

$2,146,829 $0 $0 $214,683 $0 $1,932,146 $0 $0 $0

Fish &

Wildlife 

Facility - San 

Felipe

$334,939 $0 $0 $33,494 $0 $301,445 $0 $0 $0

Hollister 

Canal and 

Conduit

$28,830,368 $0 $0 $2,883,037 $0 $25,947,331 $0 $0 $0

Pacheco 

Conduit

$33,024,632 $0 $0 $3,302,463 $0 $29,722,169 $0 $0 $0

Pacheco 

Pumping 

Plant

$33,400,837 $0 $0 $3,340,084 $0 $30,060,753 $0 $0 $0

Pacheco 

Substation

$266,383 $0 $0 $26,638 $0 $239,745 $0 $0 $0

Pacheco 

Tunnel

$83,664,404 $0 $0 $8,366,440 $0 $75,297,964 $0 $0 $0
CAS Facility List | 125

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Permanent 

Operating 

Facilities - San 

Felipe

$260,247 $0 $0 $26,025 $0 $234,222 $0 $0 $0

San Benito 

County 

Recreation 

Facilities

$257,568 $0 $0 $128,784 $0 $0 $0 $128,784 $0

San Justo 

Dam &

Reservoir

$48,102,786 $0 $0 $4,810,279 $0 $43,292,507 $0 $0 $0

Santa Clara 

Tunnel &

Conduit

$75,398,296 $0 $0 $7,539,830 $0 $67,858,467 $0 $0 $0

Security 

Improvements 

- San Felipe

$247,305 $0 $0 $247,305 $0 $0 $0 $0 $0
126 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

San Joaquin 

Division

San Luis Unit -

Land 

Retirement 

[PL 102-575, 

Sec. 

3408(h)(1)]

$2,365,332 $0 $0 $0 $2,365,332 $0 $0 $0 $0

SJBAP Open 

Lateral & 

Newman 

Canal [PL 102-

575, Sec. 

3406(d)]

$5,263,176 $0 $0 $0 $5,263,176 $0 $0 $0 $0

SJBAP-Bear 

Creek [PL 

102-575, Sec. 

3406(d)]

$13,083,844 $0 $0 $0 $13,083,844 $0 $0 $0 $0

SJBAP-IL4 [PL 

102-575, Sec. 

3406(d)]

$2,674,866 $0 $0 $0 $2,674,866 $0 $0 $0 $0

San Luis Unit
CAS Facility List | 127

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Arroyo 

Pasajero

$373,273 $0 $0 $205,300 $0 $0 $0 $167,973 $0

City of Huron 

- Distribution 

System

$76,012 $0 $0 $0 $0 $76,012 $0 $0 $0

Coalinga 

Canal

$8,670,356 $0 $0 $0 $0 $0 $0 $8,670,356 $0

Dos Amigos 

Pumping 

Plant

$31,878,063 $0 $0 $17,485,606 $0 $0 $0 $14,392,457 $0

Dos Amigos 

Switchyard

$594,700 $0 $0 $323,883 $0 $0 $0 $270,817 $0

Fish &

Wildlife 

Facility - San 

Luis

$48,900 $0 $0 $26,895 $0 $0 $0 $22,005 $22,005

Lemoore NAS 

- Distribution 

System

$1,139,037 $0 $0 $0 $0 $1,139,037 $0 $0 $0
128 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Little Panoche 

Creek 

Detention 

Dam &

Reservoir

$3,789,791 $0 $0 $2,075,795 $0 $0 $0 $1,713,997 $0

Little Panoche 

Creek 

Detention 

Dam &

Reservoir 

(Safety of 

Dams)

$14,524 $0 $6,536 $7,988 $0 $0 $0 $0 $0

Los Banos 

Creek 

Detention 

Dam &

Reservoir

$5,144,073 $0 $0 $1,419,032 $0 $0 $0 $3,725,041 $0

Los Banos 

Creek 

Detention 

Dam &

Reservoir 

(Safety of 

Dams)

$23,964 $0 $10,784 $13,180 $0 $0 $0 $0 $0
CAS Facility List | 129

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Los Banos 

Creek 

Detention 

Dam &

Reservoir -

Recreation 

Facilities

$17,074 $0 $0 $9,391 $0 $0 $0 $7,683 $0

Los Banos 

Substation -

70 kv Breaker

$428,450 $0 $0 $0 $0 $0 $0 $428,450 $0

O'Neill Dam, 

Forebay &

Wasteway

$8,424,155 $0 $0 $4,620,058 $0 $0 $0 $3,804,097 $0

O'Neill Dam, 

Forebay &

Wasteway 

(Safety of 

Dams)

$12,018,091 $0 $5,408,141 $6,609,950 $0 $0 $0 $0 $0

O'Neill Dam, 

Forebay &

Wasteway -

Recreation 

Facilities

$3,632,540 $0 $0 $1,997,897 $0 $0 $0 $1,634,643 $0
130 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

O'Neill 

Pumping 

Plant

$11,345,364 $0 $0 $0 $0 $0 $0 $11,345,364 $0

O'Neill 

Pumping 

Plant Intake 

Channel

$1,591,809 $0 $0 $0 $0 $0 $0 $1,591,809 $0

O'Neill 

Pumping 

Plant 

Switchyard

$212,474 $0 $0 $0 $0 $0 $0 $212,474 $0

Permanent 

Operating 

Facilities - San 

Luis

$230,708 $0 $0 $0 $0 $0 $0 $230,708 $0

Permanent 

Operating 

Facilities -

State-Federal

$8,717,720 $0 $0 $4,794,746 $0 $0 $0 $3,922,974 $0

Pleasant 

Valley 

Pumping 

Plant

$9,638,101 $0 $0 $0 $0 $0 $0 $9,638,101 $0
CAS Facility List | 131

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

San Luis Canal $199,421,183 $0 $0 $109,305,678 $0 $0 $0 $90,115,505 $0

San Luis Canal 

- Recreation 

Facilities

$561 $0 $0 $308 $0 $0 $0 $252 $0

San Luis Canal 

Turnouts

$18,232,186 $0 $0 $0 $0 $0 $0 $18,232,186 $0

San Luis Drain $59,188,403 $0 $0 $6,806,851 $0 $0 $0 $52,381,552 $0

San Luis Relift 

Pumping 

Plant

(Pleasant 

Valley Water 

District)

$1,362,467 $0 $0 $0 $0 $0 $0 $1,362,467 $0

San Luis Relift 

Pumping 

Plant

(Westlands 

Water District)

$36,874,636 $0 $0 $0 $0 $0 $0 $36,874,636 $0

San Luis Dam 

& Reservoir

$109,409,653 $0 $0 $61,425,431 $0 $0 $0 $47,984,222 $0
132 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

San Luis Dam 

& Reservoir -

Recreation 

Facilities

$3,469,879 $0 $0 $1,908,433 $0 $0 $0 $1,561,446 $0

San Luis 

Switchyard

$1,056,316 $0 $0 $574,993 $0 $0 $0 $481,323 $0

Security 

Improvements 

- San Luis

$1,380,761 $0 $0 $1,380,761 $0 $0 $0 $0 $0

W. R. Gianelli 

PumpGenerating 

Plant

$67,274,969 $0 $0 $36,889,008 $0 $0 $0 $30,385,961 $0

Westlands 

Water District 

- Distribution 

System

$179,157,197 $0 $0 $0 $0 $179,157,197 $0 $0 $0

Shasta Division

Carrier 

Current 

Equipment -

Shasta

$133,697 $0 $0 $0 $0 $0 $0 $133,697 $0
CAS Facility List | 133

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Keswick Dam 

[PL 102-575, 

Sec. 

3406(b)(11)] 5

$13,429,968 $0 $0 $0 $2,581,549 $0 $0 $10,848,418 $0

Keswick 

Powerplant

$22,025,521 $0 $0 $0 $0 $0 $0 $22,025,521 $0

Keswick-Carr

Microwave 

System

$3,445 $0 $0 $0 $0 $0 $0 $3,445 $0

Permanent 

Operating 

Facilities -

Shasta

$924,586 $0 $0 $0 $0 $0 $0 $924,586 $0

Radio Rain 

Gauges

$643,302 $0 $0 $0 $0 $0 $0 $643,302 $0

Radio Stream 

Gauges

$11,145 $0 $0 $0 $0 $0 $0 $11,145 $0

Security 

Improvements 

- Shasta

$8,448,434 $0 $0 $8,448,434 $0 $0 $0 $0 $0
134 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Service Line 

to PCI 

Warehouse -

Shasta

$2,251 $0 $0 $0 $0 $0 $0 $2,251 $0

Shasta -

Toyon 13.8 KV 

Line

$40,404 $0 $0 $0 $0 $0 $0 $40,404 $0

Shasta - Tracy 

230-kv Lines -

General

$48,191 $0 $0 $0 $0 $0 $0 $48,191 $0

Shasta 230-kv 

Switchyard 

(Shasta 

Division)

$9,364,583 $0 $0 $0 $0 $0 $0 $9,364,583 $0

Shasta Dam &

Reservoir [PL 

102-575, Sec. 

3406(b)(6)] 6

$210,811,334 $0 $0 $0 $86,738,188 $0 $0 $124,073,145 $0

Shasta 

Powerplant

$81,833,782 $0 $0 $0 $0 $0 $0 $81,833,782 $0

Toyon 

Pipeline

$189,751 $0 $0 $0 $0 $0 $189,751 $0
CAS Facility List | 135

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Stanislaus 

(East Side) 

Division

New Melones 

Dam &

Reservoir

$320,010,647 $0 $0 $17,400,000 $0 $0 $0 $302,610,647 $0

New Melones 

Powerplant

$64,211,307 $0 $0 $0 $0 $0 $0 $64,211,307 $0

New Melones 

RSRCS - Roof 

Adm/Vhl St

$378,917 $0 $0 $0 $0 $0 $0 $378,917 $0

Trinity River 

Division

Bella Vista 

Water District 

- Distribution 

System

$3,332,757 $0 $0 $0 $0 $3,332,757 $0 $0 $0

Buckhorn 

Dam PL [PL 

102-575, Sec. 

3406(b)(23)]

$36,993,699 $36,875,799 $0 $0 $117,900 $0 $0 $0 $0
136 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Clear Creek 

Conveyance 

System

$4,740,196 $0 $0 $0 $0 $0 $0 $4,740,196 $0

Clear Creek 

Powerplant 

12-kv Standby

$16,065 $0 $0 $0 $0 $0 $0 $16,065 $0

Clear Creek 

Switchyard

$430,572 $0 $0 $0 $0 $0 $0 $430,572 $0

Clear Creek 

Tunnel

$49,952,739 $0 $0 $0 $0 $0 $0 $49,952,739 $0

Cow Creek 

Conveyance 

System

$2,700,306 $0 $0 $0 $0 $0 $0 $2,700,306 $0

CVP Radio 

Network -

Trinity 

Division

$54,642 $0 $0 $0 $0 $0 $0 $54,642 $0

Folsom 

Switchyard 

(Trinity River 

Division)

$25,500 $0 $0 $0 $0 $0 $0 $25,500 $0
CAS Facility List | 137

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Judge Francis 

Carr 

Powerhouse

$42,238,196 $0 $0 $0 $0 $0 $0 $42,238,196 $0

Lewiston 

Diversion 

Dam

$3,818,709 $0 $0 $0 $0 $0 $0 $3,818,709 $0

Lewiston Fish 

Hatchery

$3,315,736 $3,315,736 $0 $0 $0 $0 $0 $0 $0

Lewiston 

Powerplant

$440,687 $0 $0 $0 $0 $0 $0 $440,687 $0

Lewiston 

Temperature 

Curtain

$955,214 $955,214 $0 $0 $0 $0 $0 $0 $0

Permanent 

Operating 

Facilities -

Trinity

$355,261 $0 $0 $0 $0 $0 $0 $355,261 $0

Restoration -

Lewiston Fish 

Hatchery

$1,258,074 $1,258,074 $0 $0 $0 $0 $0 $0 $0
138 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Shasta 230-kv 

Switchyard 

(Trinity River 

Division)

$290,001 $0 $0 $0 $0 $0 $0 $290,001 $0

Spring Creek 

Debris Dam &

Reservoir

$3,710,490 $0 $0 $0 $0 $0 $0 $3,710,490 $0

Spring Creek 

Powerplant

$14,472,195 $0 $0 $0 $0 $0 $0 $14,472,195 $0

Spring Creek 

Powerplant 

13.8-kv 

Standby

$28,098 $0 $0 $0 $0 $0 $0 $28,098 $0

Spring Creek 

Switchyard

$554,367 $0 $0 $0 $0 $0 $0 $554,367 $0

Spring Creek 

Tunnel

$15,155,527 $0 $0 $0 $0 $0 $0 $15,155,527 $0

Tracy 

Switchyard

$1,017,640 $0 $0 $0 $0 $0 $0 $1,017,640 $0

Trinity Dam &

Reservoir

$92,703,186 $0 $0 $0 $0 $0 $0 $92,703,186 $0
CAS Facility List | 139

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Trinity 

Powerplant

$11,987,121 $0 $0 $0 $0 $0 $0 $11,987,121 $0

Trinity River 

Basin Action 

Program

$8,073,092 $8,073,092 $0 $0 $0 $0 $0 $0 $0

Trinity River 

Restoration 

Project 

$313,445 $0 $0 $0 $0 $0 $0 $313,445 $313,445

Trinity 

Switchyard

$384,174 $0 $0 $0 $0 $0 $0 $384,174 $0

Whiskeytown 

Dam &

Reservoir

$17,733,127 $0 $0 $0 $0 $0 $0 $17,733,127 $0

Whiskeytown 

Temperature 

Curtain

$2,601,457 $2,601,457 $0 $0 $0 $0 $0 $0 $0

Wintu 

Pumping 

Plant

$1,159,763 $0 $0 $0 $0 $0 $0 $1,159,763 $0
140 | Central Valley Project Final Cost Allocation Study

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Leased to State 

of California

Los Banos 

Waterfowl

$40,767 $40,767 $0 $0 $0 $0 $0 $0 $0

Mendota 

Waterfowl

$86,147 $86,147 $0 $0 $0 $0 $0 $0 $0

Merced 

National 

Wildlife

$185,225 $185,225 $0 $0 $0 $0 $0 $0 $0

San Luis 

Waste Way

$88,236 $88,236 $0 $0 $0 $0 $0 $0 $0

Western 

Facilities

Pacheco 

Pumping 

Plant 

Substation

$1,337,677 $0 $0 $133,768 $0 $1,203,910 $0 $0 $0

Coyote 

Pumping 

Plant 

Substation

$1,824,360 $0 $0 $182,436 $0 $1,641,924 $0 $0 $0
CAS Facility List | 141

Facility

Plant-inService 

(Total)

Fish & 

Wildlife 

Activities 

(DAC)

Safety of 

Dams 

(DAC)

Other 

(DAC)

CVPIA 

(CNA)

Repayment 

Contracts 

(CNA)

Authorized 

Deferred 

Use (CNA)

Net Costs 

(SCRB)

Mitigation 

Cost4

Tracy 

Substation 69 

kv to DeltaMendota 

Canal 

$2,464,394 $0 $0 $0 $0 $0 $0 $2,464,394 $0

Western -

Other

$342,476,124 $0 $0 $0 $0 $8,568,500 $0 $333,907,624 $0

Grand Total $3,693,719,669 $102,344,970 $31,810,865 $335,957,141 $340,872,120 $597,617,151 $56,875,000 $2,228,242,422 $28,495,676

1. The Cost Allocation Study represents the final cost allocation for CVP facilities subject to the 2030 repayment requirement. It also includes water 

service contracts, repayment contracts, and CVPIA facilities that have post-2030 repayment obligations. Costs for these facilities would be 

incorporated in the updated allocation resulting from the final CVP Cost Allocation Study but would continue to have separate repayment terms.

2. Excludes interest during construction (IDC).

3. Excludes Folsom safety-of-dams costs not in repayment ($120,755,310).

4. Mitigation costs are included as part of the net costs allocated in SCRB.

5. Includes Keswick Fish Trap – CVPIA ($2,581,549).

6. Includes Shasta Temperature Control Device - CVPIA ($86,738,188).
142 | Central Valley Project Final Cost Allocation Study

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Key Terms | 143

Key Terms

• Amortization: Pay off gradually over time by periodic payments of principal and interest.

• Ancillary services: Energy products used to help maintain grid stability and reliability. These 

services are ordinarily thought of as being transmission-related and not power-related products 

for the purposes of ratesetting and repayment.

• Appraisal level: A level of accuracy and effort associated with an engineering cost estimating 

technique to estimate the cost of constructing facilities. The estimate is generally acceptable to 

determine the overall magnitude of costs but would not be used to estimate costs for entering 

into contracts. Per Reclamation Directives and Standards FAC 09-01, appraisal level cost 

estimates are used in appraisal reports or the like to determine whether more detailed 

investigations of a potential project are justified. These estimates may be prepared from cost 

graphs, simple sketches, or rough general designs which use the available site-specific design 

data.

• Authorized purpose: A project purpose authorized by an act of Congress.

• Base year: The starting point year used to measure relative changes in an economic variable such 

as a general price index.

• Biological opinion (BO): An opinion issued by a Federal agency whether a proposed action may 

endanger listed species or destroy critical habitat.

• Capitalization: Converting a schedule of periodic values into a single (annualized) value by 

dividing the payments by a factor which is dependent on the interest rate selected.

• Capitalized value: The single value developed through the capitalization process.

• Climate change: A change in the state of the climate identified by using statistical tests, by 

changes in the mean and/or other statistical properties, measured over an extended period, 

typically decades or longer.

• Construction costs: Costs of constructing physical project features including contract (direct) 

costs, land and land rights, relocation of existing property, clearing and restoring lands, service 

facilities, designs, investigations, project management, and other general project-specific 

expenses.

• Construction in abeyance: Reclamation construction costs associated with temporarily 

suspended construction activities that Congress has not de-authorized.
144 | Central Valley Project Final Cost Allocation Study

• Cost allocation: The process of distributing the costs of a multipurpose project among its 

authorized purposes in order to determine actual reimbursable and non-reimbursable costs and 

the basis for assignment of costs to beneficiaries for repayment.

• Cost sharing: The value of non-Federal partners’ monetary or in-kind contributions and that 

portion of the costs of a federally assisted project or program that is not borne by the Federal 

Government.

• CVP yield: Water from the Central Valley Project that is available for use.

• Deferred costs: Costs already incurred but not yet assigned to an authorized project beneficiary 

for repayment because of operation of law or policy.

• Diminishable facility: A multipurpose facility that can be diminished in size (resized) for a singlepurpose use.

• Direct assigned costs: Costs that have been directly assigned for repayment (or designated as 

non-reimbursable) based on legislation, policy, and/or agreement and thus not subject to the 

cost allocation process.

• Economic benefits: The value of project accomplishments measured in monetary terms, which 

is measured by the amount that most people are willing to pay to use a given quantity of a good 

or service or the smallest amount that most people are willing to accept to forego the use of a 

given quantity of a good or service.

• Economic life: The period during which an asset is expected to yield a return.

• Financially integrated: The CVP is financially integrated in that repayment is applied to the total 

cost of the project and not individual project features.

• Gross Domestic Product (GDP): The total output of goods and services produced within a 

given country in a particular time period.

• Hydropower: Electric power generated whenever water impounded by a dam is routed through 

the penstocks and then spun through turbines. It can also be generated in run of the river 

situations when it flows through in-stream facilities.

• Implicit price deflator (also referred to GDP deflator): A measure of price inflation/deflation 

with respect to a specific base year calculated as the ratio of nominal GDP relative to real GDP.

• Incremental costs: Costs added to a plan to accommodate the addition of a purpose or objective, 

or for increasing the scale of service to one or more purposes.

• Incremental Level 4 water: The additional increment of water above Level 2 required for optimal 

wetland habitat management.
Key Terms | 145

• Joint cost: Costs which serve more than one, and often several purposes or objectives measured 

as the difference between the total cost of the project and the separable costs across all project 

purposes.

• Joint cost factors (also referred to as remaining justifiable expenditure factors): The percentage 

of remaining joint costs distributed among each project purpose.

• Justifiable expenditure: The maximum amount of costs to be allocated to a project purpose and 

is the lesser of benefits attributable to a purpose and the cost of a hypothetical single-purpose 

alternative project generating the same level of benefits.

• Land fallowing: Leaving farmland unplanted for a season.

• Least cost alternative: An alternative project that will generate the same level of benefits at the 

lowest cost possible.

• Level 2 refuge water: The historical average refuge water deliveries specified in the 1989 Report.

It is the baseline water deliveries required for wildlife habitat management.

• LIDAR: A surveying device that emits pulsed laser light to measure distance, Light Detection 

and Ranging.

• Long-term generation (LTGEN): A Reclamation-developed model for estimating power 

capacity on a monthly time step.

• Major cost driver: The material that causes a large change in a facility’s cost.

• Market price: The price users or consumers may expect to pay to a third-party provider for an 

asset, product, or service.

• Mitigation: Projects, programs, or activities intended to offset or lessen adverse impacts to fish 

and wildlife resources (and other natural resources) caused by the construction and operation of 

a project.

• Multipurpose project: A project designed to serve more than one purpose. For example, a dam 

that supplies water for agricultural and domestic uses, provides flood control, and generates 

power.

• Non-diminishable facility: A multipurpose facility that cannot be reduced in size when 

estimating the single-purpose cost.

• Opportunity cost: The value of highest valued alternative use of that resource.

• Optimization model: A method for finding the most cost-effective or highest achievable 

performance under given constraints by maximizing desired factors and minimizing undesired 

one.
146 | Central Valley Project Final Cost Allocation Study

• Period 1 (first period): Conditions as represented in the 1975 CVP cost allocation update (under 

the two-period allocation/repayment approach).

• Period 2 (second period): Conditions under current and projected CVP operations and benefits 

(under the two-period allocation/repayment approach).

• Period of analysis: The period of analysis should be the shorter of (1) the period of time over 

which the plan, project, or activity being analyzed can reasonably be expected to have beneficial 

or adverse effects, or (2) a period of time not to exceed 100 years. In the context of the CAS, it 

represents a prospective 100-year timeframe.

• Plant-in-service: Facilities that have been completed and provide benefits to the project.

• PLEXOS: Energy market modeling software that estimates power benefits on an hourly basis.

• Preference power: The principle that public not-for-profit entities have the “first right” to 

purchase energy and capacity generated at Federal facilities. Generally such not-for-profit entities 

have preference to purchase Federal power at Federal water resource projects.

• Preference power customers: The not-for-profit entities that under Reclamation law and policy 

have preference and priority to power generated at Federal water resource projects. “First 

preference power customers” are a subset of preference power customers who are entitled to 

preference power because under Reclamation law they are defined as being within a county of 

origin (Trinity, Calaveras, and Tuolumne).

• Preference power generation: Generation produced from project facilities that is available to be 

marketed to the preference power customers.

• Present value: Incorporates the concept of the time value of money and measures in today’s 

dollars what the value of receiving a specific amount at some future date assuming a specified 

interest rate.

• Profit: Revenue generated by selling a product minus all costs of production; also referred to as 

net revenue.

• Project beneficiaries: The persons or groups who are legislatively authorized to receive benefits 

from the project.

• Project-use energy (PUE): Power and energy used for project operations, e.g., main conveyance 

pumping, designated drainage pumping, and other designated miscellaneous electric loads 

directly associated with the operation of the project.

• Prospective analysis: An analysis that focuses on projected future (prospective) conditions and 

outcomes.
Key Terms | 147

• Ratesetting: The process of determining annual CVP water rates for irrigation and M&I 

purposes provided for in water service contracts.

• Replacement, additions, and extraordinary maintenance (RAX): Major nonrecurring operations 

or maintenance on a project facility to ensure the continued safe, dependable, and reliable 

delivery of authorized project benefits.

• Reasonable and prudent alternatives (RPA): Alternative methods of project implementation, 

offered in a biological opinion reaching a jeopardy or adverse modification conclusion that 

would avoid the likelihood of jeopardy to the species or adverse modification of critical habitat.

• Remaining joint costs: The costs of joint use facilities that remain after all separable cost have 

been deducted from total project costs.

• Remaining justifiable expenditure: The justifiable expenditure for a purpose minus the separable 

costs for that purpose.

• Resource adequacy: Concept used by the California Independent System Operator to ensure that 

sufficient capacity exists to ensure reliable operation of the grid.

• Safety of Dams (SOD): A Reclamation program to either retrofit or modify dams to reduce or 

eliminate potential hazards associated with seismic and/or hydrologic risk of failure. It is not a 

project purpose.

• Separable costs: The costs that result by taking the difference between the cost of the 

multipurpose project and the cost of the same project with the purpose omitted. A series of cost 

estimates should be prepared representing the multipurpose project without each purpose. A 

purpose’s separable costs would not only include its specific costs, but also the costs of 

multipurpose facilities which were needed for the addition of that purpose.

• Separable costs-remaining benefits (SCRB): A method of cost allocation where each purpose in a 

multipurpose project is assigned the separable costs of including that purpose plus a portion of 

the remaining joint costs.

• Separable joint costs: The portion of multipurpose facility costs attributed to a single purpose.

• Single-purpose alternative (SPA): The cost of the most economical (least cost) alternative which 

would likely be built as a single-purpose Federal project, and that would provide equivalent 

benefits for a single purpose as the multipurpose project provides.

• Single-purpose facility: Costs of the most economical alternative which would likely be built as a 

Federal project to provide equivalent benefits for a single purpose.

• Specific costs: Costs of individual physical facilities and other costs that serve only a single 

purpose.
148 | Central Valley Project Final Cost Allocation Study

• Sub-allocation: Separating an authorized project purpose or function into smaller constituent 

components (e.g., sub-purposes) for the purposes of a cost allocation.

• Sub-purpose: Individual component that comprises a project purpose.

• Thermal power: Power sourced from heat energy, historically steam, but can also include natural 

gas or nuclear-fueled generators.

• Time value of money: The concept that money available at the present time is worth more than 

the same amount in the future due to its potential earning capacity.

• Two cost allocation and two-period repayment approach: A modified cost allocation/repayment 

approach used in the CVP CAS to recognize both the historical and prospective benefits of the 

project.

• Water rights: The right to use water from a river, stream, body of water, or source of 

groundwater.

• Water year type: The hydrologic classification of individual water years; for the CAS, five water 

year types were used: wet, above average, below average, dry, and critical.

• Weighted average: An average resulting from multiplying each component by a factor reflecting 

its importance.

• Wildlife refuge: A Federal area administered for the protection of fish and wildlife as well as 

wildlife management areas administered by the State of California and the Grasslands Resource 

Conservation District.
References | 149

References

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Central Valley Project Improvement Act (CVPIA) Refuge Water Supply Program. 2009. 

Independent Review Panel Report. Undelivered Water: Fulfilling the CVPIA Promise to 

Central Valley Refuges. November 3, 2009.

Council on Environmental Quality (CEQ). 2013. Principles and Requirements for Federal 

Investments in Water Resources (PR&G). March 2013.

GAO. See U.S. General Accounting Office.

Engineering News-Record (ENR). Various Years. Construction Economics. 

https://www.enr.com/economics. Accessed October 2017.

Reclamation. See U.S. Department of the Interior, Bureau of Reclamation.

U.S. Department of Interior. 2000. Record of Decision, Trinity River Mainstem Fishery Restoration 

Final Environmental Impact Statement/Environmental Impact Report. Decision by the U.S. 

Department of Interior, December 2000.

U.S. Department of the Interior, Bureau of Reclamation. 1989. Report on Refuge Water Supply 

Investigations, Central Valley Hydrologic Basin, California. Mid-Pacific Region. March 1989.

_____. 1970. Central Valley Project California, Reallocation of CVP Costs. Mid-Pacific Region.

_____. 1975. Changes Caused by the Reallocation of the Central Valley Project Costs. Short Form 

Reallocation. Mid Pacific Region. March 8, 1976.

_____. 1988. Ratesetting Process, Irrigation Ratesetting Document, Central Valley Project, 

California. 1988.

_____. 1993. Proposed Interim Ratesetting Policy Municipal and Industrial Water, Central Valley 

Project, California. Sacramento, California. December 1993.

_____. 1995. Reclamation Manual, Directives and Standards (D&S), Final Cost Allocations (PECP01). Updated June 16, 2015.

_____. 2001. Central Valley Project Cost Allocation Study. Mid-Pacific Region. May 2001.

_____. 2007. Reclamation Manual, Directives and Standards (D&S), Cost Estimating (FAC 09-01). 

Updated July 20, 2016.
150 | Central Valley Project Final Cost Allocation Study

_____. 2008. Reclamation Manual, Directives and Standards (D&S), Allocation of Operation, 

Maintenance, and Replacement Costs (PEC-P07). Updated July 24, 2015.

_____. 2013a. Project Financial Statement, Central Valley Project, California-Consolidated. MidPacific Region. September 2013.

_____. 2013b. Reclamation Manual, Directives and Standards (D&S), Project Cost Allocations (PEC 

01-02). Updated September 10, 2015.

_____. Various Years. O&M Cost Index. https://www.usbr.gov/assetmanagement/cost.html. 

Accessed October 2017.

U.S. General Accounting Office (GAO). 1992. Bureau of Reclamation Central Valley Project Cost 

Allocation Overdue and New Method Needed. Washington, D.C. March 31, 1992.

U.S. Water Resources Council (WRC). 1983. Economic and Environmental Principles and 

Guidelines for Water and Related Land Resources Implementation Studies. March 10, 1983.