Foreword

Background: This Foreword provides a summary of significant changes from 

prior years in amounts and/or procedures, including new legislative requirements 

and impacts; as well as, input received from contractors, associated water 

authorities, and the Central Valley Project Water Association on the 2005 

preliminary water rates and the fiscal year 2003 draft contractor accountings. 

The fiscal year 2003 contractor accountings are provided in final form. Please note 

that Reclamation has a site on the Internet where the 2005 water rate schedules are 

posted for reference. This site can be accessed at 

www.usbr.gov/mp/cvpwaterrates. If there are any problems in accessing the site or 

viewing the schedules, please contact Ms. Cathy Crawford at 916-978-5350. 

 

Chief Financial Officers (CFO) Audit Adjustment 

The CFO adjustment rate component calculation is revised beginning with the 

2004 rates for contractors that chose option 2 which distributes the expenses over a 

5-year period. The objective is to allow Reclamation to reasonably recover the 

costs annually (2003 through 2007). 

Provision for Replacement (PFR) Principal & Interest Adjustment

In the FY 2001 Irrigation accounting, the PFR conveyance pumping cost 

adjustment for the Tracy Pumping Plant was allocated without consideration of the 

Delta-Mendota Exchange contractor water deliveries. The adjustment has been 

included in the FY 2003 accounting by reallocating the costs between the FriantKern Canal/Madera Canal contractors and irrigation contractors receiving services 

through the Tracy Pumping Plant. 

Reclamation completed a reconciliation process of the Irrigation PFR interest 

adjustments that were included in the fiscal year 2002 accounting. Discrepancies 

were identified and correcting adjustments have been included in the FY 2003 

accounting. 

East Bay Municipal Utility District Projected Deliveries

Reclamation, with considerations of the dry year provisions of the amendatory 

contract, interprets the contract maximum entitlement for EBMUD to be the 3-year 

average of 165,000 a/f, or 55,000 a/f per year. Please note that this was an interim

solution that has been carried over to the 2005 water rates. Reclamation will be 

collaborating with the contractors in developing a long-term solution. 
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Central Valley Project Improvement Act (CVPIA) 

The Central Valley Project Improvement Act (CVPIA), enacted in 1992, 

established a Restoration Fund (Fund) into which contractors make annual 

payments through water charges. In 2003 Reclamation adopted Business Practice 

Guidelines for the CVPIA Program Accounting and Cost Recovery that spell out 

the method Reclamation will use to credit/offset contractor payments into the Fund 

against their share of reimbursable CVPIA costs. Using the guidelines, 

Reclamation reconciled contractor accounts through fiscal year 2002 to determine 

if any reimbursable CVPIA costs should have been included in contractor water 

rates. The reconciliation identified no CVPIA costs that should have been 

recovered through contractor water rates for that period. CVPIA expenditures will 

be reviewed each year to determine if any amounts should be included in 

contractor water rates. 

Impact of Legislation

I. Title Transfer of Sly Park Dam and Reservoir and Sugar Pine Dam and 

Reservoir 

Public Law 106-377, Section 212, directed Reclamation to transfer all right, title 

and interest of the Sly Park Unit to the El Dorado Irrigation District (ID). Public 

Law 106-566, Section 501, directed Reclamation to transfer all right, title and 

interest of the Foresthill Divide Subunit of the Auburn-Folsom South Unit 

(including Sugar Pine Dam and Reservoir) to the Foresthill Public Utility District 

(PUD). The title transfers for these facilities were completed in 2003. As a result 

of these transfers, Reclamation recalculated the M&I contractor net results of 

operations by year through the fiscal year 2002 and made a retroactive adjustment 

to the contractors’ capital repayment and deficit balances as of 

September 30, 2002. Capital costs associated with these facilities have been 

removed from the 2005 Irrigation and M&I water rates and El Dorado ID (Sly Park 

D&R Service Area) and Foresthill PUD are no longer included in the ratesetting 

process. 
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II. Trinity Public Utilities Assessment 

Public Law 106-377, Section 203 directs the Bureau to collect from water service 

contractors the assessed amount of $162,000 (indexed) annually and remit the 

amount to the Trinity Public Utility District. In previous years this indexed 

amount has been included in the water rates. Collection of the annual assessed 

amount is still under review. 

Project Use Energy (PUE)

From 1997 to 2003, Contra Costa WD’s PUE Operation and Maintenance (O&M) 

costs were overstated. Their meters, used for allocation of these costs, included 

commercial energy. In the final 2005 rates, adjustments were made to exclude the 

2005 meter readings for commercial energy. The estimated 2005 PUE was 

properly reallocated. Prior-year adjustments will be included in the fiscal year 

2004 accounting and the 2006 water rates. 

The total estimated PUE O&M costs increased 75% from $10,770,000 in FY 2004 

to 18,900,000 in FY 2005. This increase was due to the expiration of the 2948A 

Pacific Gas & Electric contract. In addition, there was an 8% increase in the total 

amount of energy used in the FY 2005 PUE estimate when compared to the FY 

2004 estimate. 

Projected Deliveries

Reclamation will base water rate year deliveries at no less than 50 percent of the 

contract maximum when the last 5-year historical average is less than zero due to 

adjustments. This process will be effective beginning with the 2005 Water Rates. 

 

San Luis Drain

The Irrigation estimated O&M costs for the San Luis Drain in the amount of 

$1,379,000 have been removed from the 2005 water rates. This cost is a result of a 

shortfall for O&M costs which the San Luis & Delta-Mendota Authority is unable 

to collect from applicable water contractors in the San Luis Unit due to their fixed 

rate contract provision. 
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Water Marketing

In coordination with the CVPWA, a work team was established to determine 

whether or not projected Water Marketing costs reasonably represented what was 

expected for actual costs. It was concluded that overall the base costs seemed 

reasonable, but that the general expense costs needed to be reviewed. 

As a result of the analysis performed by Reclamation, it was determined that the 

irrigation and M&I estimated general expense would be based on 18.5 percent of 

the budgeted costs. For 2005, the Irrigation and M&I estimated general expense is 

$604,000 (18.5% times $3,267,000). 

Security Costs

2005 Security costs are not included in the 2005 water rates. However, they may 

be included in the fiscal year 2005 accounting if they are considered reimbursable 

by the forthcoming Conference Report review. 

 

Assignments of Historical Capital Costs and Revenue

For the FY 2005 water rates, historical water is identified separate for assignments 

of water when the assignor has fewer or more services than the assignee. The 

assigned water is based on the assignor’s services. Historical capital costs and 

revenue have been adjusted and assigned to the assignee. 

Rounding for Water Rates

In prior-year rate books, component water rates differed by a few cents when 

compared to the total water rates. This was due to rounding. This has been 

adjusted for Irrigation and M&I water rates so that component rates add up to the 

total water rates. 

Questions on the 2005 CVP water rates should be addressed to Ms. Maureen 

Reynoso at 916-978-5374 or Ms. Masako Altman at 916-978-5365 (TDD-916-

978-5608).