COMMENT SHEET 

CVP COST ALLOCATION MEETING OF OCTOBER 21, 2011 

Name: Jerry Toenyes 

Organization and Address: Northern California Power Agency, 651 Commerce 

Drive, Roseville, Ca 95678 

Phone: (916) 781-4297 

E-mail: Jerrv.Toenves@ncpa.com 

Comments: 

NCPA provides the following comments on the material presented at the October 

21, 2011 meeting: 

1. List of CVP Facilities: We support the list of facilities proposed for inclusion in 

the upcoming cost allocation. We also agree that facilities currently in 

construction-in-abeyance, authorized but not planned for construction, and the 

planning stage should be excluded from the analysis. 

2. Facility Authorized Purposes: We support Reclamation's decision to include 

the recreation function and the water quality objective as authorized project 

purposes for all CVP facilities in the cost allocation. 

3. Opportunities for Simplified Methodology: We believe the cost allocation 

process should be kept as simple as possible and using an appraisal level cost 

estimate is appropriate if it yields results that are very close to a more detailed 

cost estimate. We are very concerned, however, that the indexed costs 

presented at the meeting are significantly different than reality, as using appraisal 

level indexes appears to have under estimated the flood control single purpose 

alternative by as much as a factor of ten. For the separable cost - remaining 

benefits cost allocation method to provide proper results, the indexed costs must 

have a fairly high degree of accuracy. Therefore, better cost estimation tools, 

such as using re-pricing rather than indexing, are needed for the flood control 

single purpose alternative. 

4. Analysis Period: Reclamation proposed two different analysis periods for 

benefits - a 50 year benefit stream if benefits were greater than the single 

purpose alternative and a longer benefit period starting in 1980 if the 50-year 

benefit period did not produce benefits that exceeded the single purpose 

alternative. NCPA supports using the 50 year benefit stream from the current 

year going forward, because future project benefits will correspond to the future 

operation of the project. We do not support using a period that starts in 1980 or 

any other historical year because that skews the cost allocation to how the 
project was operated in the past, not how the project will be operated in the 

future. Historical costs have already been allocated based on the historical 

operation and benefits of the project. The reason for a new cost allocation is to 

update the cost allocation percentages to reflect the current and future benefits of 

the project. The last cost allocation updates completed in 1970 and 1975 used 

future benefits only to update the allocation percentages. 

If historical benefits are calculated starting in 1980, the historical financial data 

from 1980 forward would also need to be adjusted to reflect the revised cost 

allocation percentages. This would require significant accounting work. In 

addition, budget constraints could make it very difficult for Reclamation to 

implement the financial adjustments to water and power users if the customers 

paid more historical costs than required by the new cost allocation. 

5. Hydrology modeling - Shasta flood control example: The process described 

to size the single purpose alternative (SPA) for flood control seems rational, 

except for one significant assumption. The flood control SPA did not meet the 

various water release criteria necessary for downstream temperature, water 

quality, river flow, and other environmental requirements. If the SPA's for the 

other project purposes meet these requirements, the flood control SPA needs to 

be resized so that the SPA's are comparable. 

6. Flood Control Benefit Analysis: While the simplified flood control benefit 

analysis underestimates the benefits, a more detailed analysis may not be 

needed because the benefits greatly exceed the SPA. If a revised SPA yields 

results that are close to or above the flood control benefits, however, a more 

thorough evaluation of the flood control benefits will be needed. 

7. Final Cost Allocation: Preference power customers will have repaid all of the 

power capital costs of the initial CVP features by the time the cost allocation is 

complete. Thus, this allocation should be the final one for the initial CVP 

facilities. New project additions with repayment periods beyond 2030 may need 

a cost allocation adjustment in the future, but we recommend that the cost 

allocation percentages derived from this process also be considered a final cost 

allocation determination for those facilities. 

8. Power Benefit Analysis: Western, along with several other water and power 

organizations, hired HDR to evaluate the impacts of the Delta Reform Act on 

Northern California hydropower generation, including the CVP. Since Western is 

also developing a long term energy price forecast for the region, we strongly 

recommend Western take the lead role for the power benefit analysis, like the 

Corps of Engineers did for flood control. 

9. Frequency of Meetings: The time frame between the first and second public 

meetings was more than one year. We recommend more frequent meetings to 

update customers on the progress of the cost allocation and to receive input from 
customers on assumptions and logic to be used in the process. In addition, a 

public advisory committee should be created to provide frequent input into the 

cost allocation process.