MP-3400 

FIN-3.00 MAY 202013 

Central Valley Project Water Contractors 

Subject: Treatment of Incremental Transfers to Plant in Service for Safety of Dams (SOD) 

Modification Costs at Folsom Unit, Central Valley Project (CVP), California 

Dear Water Contractor: 

As reflected in our fiscal year 2009 and 2011 financial statements, the cumulative incremental 

transfers to plant in service in the amounts of$21,525,383.04 and $109,750 410.56 respectively, 

were made for the Folsom Dam SOD costs incurred. These transfers were inadvertently 

included in the CVP rate books in Schedule A-5 for the construction storage component for "All 

Other Contractors . 

As stated in our January 18,2008 letter (enclosed), the Folsom SOD construction costs will be 

reflected in the CVP water rates in the year after the modification is deemed substantially 

complete. For the years in which the SOD construction costs were inadvertently included in the 

allocation for establishing water rates, an adjustment will be made to interest charges incurred 

for municipal and industrial (M&I) contractors for the portion of the unpaid cost that was related 

to the SOD construction allocation. 

The exclusion of the SOD construction allocation and the corresponding adjustment to interest 

on unpajd capital for M&I contractors will be included in the 2014 water rate calculations. An 

explanation for the reduction of the construction allocation will be described in the forward of 

the 2014 CVP Rate-books and also footnoted on the appropriate rate-setting schedules. 

Please contact Ms. Autumn Wolfe at 916-978-5391 or awolfe@usbr.gov for additional 

information. 

Sincerely, 

/lsi I 'B re;f\da/B ryGt+'\t 

Brenda Bryant 

Regional Financial Manager 

Enclosure 
United States Departn1ent. of the Interior 

BUREAU OF RECLAMATION 

Micf-/lllcific Htgiomtl Office 

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StlCrmnt:nlu. c.:1t I iful'll ill Y51!2~· / 119K 

JAN 1 r. 2000 

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WTR-4.00 

4-E Water District 

clo Mr. KeIU1eth M. Hopkins 

Attorney 

Meckfessel & Hopkins 

109 North Marshall A venue 

Willows, CA 95988 

Subject: Notification That Cost of Safety of Dams (SOD) Modifioation at Folsom Dam. Folsom 

Unit, Central Valley Project (CVP), California. Will be Included in CVP Irrigation, 

Municipal and Industrial (M&I), and Hydropower Rates 

Dear Mr. Hopkins: 

This letter serves as official notification of matters conveyed herein. 

A SOD modification that was the subject of a notification letter dated September 3, 2004, is' 

cUITently underway at Folsom Dam. As previously approved by the Commissioner of the 

Bureau of Reclamation, the reimbursable portion of this modification's total cost is to be 

recovered pursuant to the existing CVP Irrigation Ratesetting Policy approved in 1988 and either 

the Interim CVP M&I Ratesetting Policy approved in ·1995 or to the fmal CVP M&I Ratesetting 

Policy, whichever is in effect at the relevant time. 

In accordance with the Reclamation SOD Act of 19.78, as amended, and Reclamation Policy, 

1 5 percent of the modification' s total cost is reimbursable, and is to be allocated equitably among 

reimbursable project purposes (Le., irrigation. M&l, and hydropower) and to be repaid within 

SO years of the modification's substantial completion. I Those contractors whose rates include a 

storage component and who benefit from these reimbursable project purposes are responsible for 

repaying the reimbursable costs of SOD modifications at Folsom Dam. Under the CVP 

ratesetting policies cited above, this includes virtually all CVP contractors. 

The cost of the modification is currently estimated to be S520 million. The reimbursable 

15 percent of this estimate is $78 million. This amount is allocated among the reimbursable 

purposes of Folsom Dam consistent with CVP cost allocation. . 

Based on the current (interim) cost allocation. amounts would be allocated 61 percent to 

irrigation, 9 percent to M&J purposes, and 30 percent to power. However, when the facility is 

complete, the actual costs will be allocated according to an updated cost allocation in accordance 

with Public Law 99-546. 

, Section 4 of Public Law 95-S78, as amended (43 U.S.C. § 508)~ Commissioner's Memorandum ofDeeember 17, 

1996, "S~fety of Dams Repayment Policy." 
These figures are estinmtesj calculated for planning purposes. The final total cost, and therefore 

the final reimbursable cost, may be higher or lower upon the modification's completion. 

Your water rates will begin to reflect these costs as part of the shortage capital component, in 

the year after the modification is substantially complete, which is expected to be the year 2022. \Vhen construction is complete and all costs known, Reclamation wiU furnish you with a full 

accounting of the total cost and the amount of the reimbursable portion to he allocated to each 

reimbursable project purpose. 

If you have any questions regarding this notification, please contact Mr. Rick Woodley, Regional 

Resources Manager, at 9] 6-978-5200. 

Sincerely, 

Michael R. Finnegan 

Actina Regional Director