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Foreword

The final Central Valley Project (CVP) water rates for contract year (CY) 2023 and the final 

CVP annual contractor accountings for fiscal year (FY) 2021 have been posted to the Bureau of 

Reclamation website. 

The final water rates and final annual contractor accountings for the years 2004 through 2023

can be found at https://www.usbr.gov/mp/cvpwaterrates/ratebooks/index.html. 

If you have any questions or need additional information, please contact Kristin Johnson at 

916-978-5507 or by e-mail at kjohnson@usbr.gov.

Ability to Pay Studies

Many CVP water contractors are utilizing provisions of WIIN 4006 to convert their water service 

contracts to repayment contracts and prepay their outstanding construction obligations. When 

the contracts are signed, the contractor makes an agreement to execute the contract with the 

understanding that the construction will be paid under a 9d contract and as such there will not be 

applicable rates for construction and there would be no associated ATP relief for the intended 

repayment.

CVP Cost Recovery Improvement

Based on the results of a 2013 audit conducted by the Office of the Inspector General, a 

recommendation was made for Reclamation to improve the current rate setting practices to better 

recover CVP construction costs on an annual basis. Reclamation continues to work 

collaboratively with stakeholders to develop a revised process for projecting future water 

deliveries that serve as the basis for estimating water rates. 

The process to estimate deliveries for setting O&M water rates has been improved from the 

original process included for the 2016 Water Rates. The new process provides more flexibility in 

the determination of the deliveries for setting O&M water rates. A decision document is to be 

updated and included in the water contractor notices section of the Reclamation website at 

http://www.usbr.gov/mp/cvpwaterrates/wtr_ctr_notices/. Provided is the improved process:

O&M

1. Consider using the 7-year average of historical water deliveries as the basis for projecting 

future deliveries for calculating the Irrigation and M&I operation and maintenance 

(O&M) component of the water rate. 

a. Depending on whether or not reservoir levels are below normal, the 7-year 

average of water deliveries could be further reduced based on specific criteria.

2. Consult with Central Valley Operations Office to see if this average is appropriate for the 

calculation of the water rates.
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3. If CVO recommends considering an alternative to the 7-year average due to their 

estimate being considerably different, consider using an alternative approach.

In consultation with our Central Valley Operations Office, the interpretation is that it is 

appropriate for M&I and irrigation estimated deliveries to use a 7-year average for 2023. 

Construction 

Using a 7-year average of historical water deliveries as the basis for projecting future deliveries 

for calculating the Irrigation and M&I construction component of the water rate. There is no 

further reduction to deliveries based on lower than normal reservoir levels. 

Exception: If a contractor has taken water 3 times or less in a 7 – year period, Reclamation 

will use the higher of the 7-year average or 14% of the contractor’s contract entitlement. 

Extraordinary Operation and Maintenance (XO&M) Cost 

CVP XO&M costs are included in the current year CVP water rates along with annual O&M 

costs. While Public Law 111-11 (enacted March 30, 2009) provides Reclamation the authority to 

offer extended repayment of XO&M costs through the use of repayment contracts; the California 

Great Basin Region is still in the process of drafting a basis of negotiation to seek approval from 

the Commissioner to allow for the extended repayment of XO&M cost through the use of 

existing water service contracts. Reclamation and stakeholders are working collaboratively to 

develop a process for the extended repayment of XO&M costs through the water rate process. 

The following tables show the estimated and actual XO&M costs for the period 2009 through 

2023 for both Irrigation and M&I. These are cost that specifically have been identified to be 

recovered as O&M. 

There will be a further review of our Financial Statement to determine if there is a repayment 

adjustment for Plant in Service cost that have historically been included as capitalized cost and 

recovered as part of the Plant but need to be considered for cost recovery as O&M. As this 

process proceeds, it will be discussed with the Financial Affairs Committee and further informed 

to water users through the Financial Management Division California Great Basin, Bureau of 

Reclamation WEB site.

Irrigation Extraordinary Operations and Maintenance Costs (XO&M)

Fiscal Year Estimated Cost Actual Cost Variance

2009 - $4,192,153 $(4,192,153)

2010 - $3,451,716 $(3,451,716)

2011 - $3,385,405 $(3,385,405)

2012 $2,016,701 $3,466,279 $(1,449,578)

2013 $2,166,051 $2,088,288 $77,763

2014 $2,208,368 $3,336,697 $(1,128,329)

2015 $2,862,681 $2,610,238 $252,443

2016 $3,515,700 $4,857,366 $(1,341,666)

2017 $5,516,875 $1,238,095 $4,278,780

2018 $6,236,549 $196,538 $6,040,011
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Fiscal Year Estimated Cost Actual Cost Variance

2019 $6,118,000 $7,745,741 $(1,627,741)

2020 $8,432,204 $4,480,928 $(3,951,276)

2021 $8,216,208 $980,723 $(7,235,485)

2022 $4,991,955 TBD TBD

2023 $0 TBD TBD

*XM costs will be covered per approved basis of negotiation.

M&I Extraordinary Operations and Maintenance Costs (XO&M)

Fiscal Year Estimated Cost Actual Cost Variance 

2009 - $510,567 $(510,567)

2010 - $495,409 $(495,409)

2011 - $391,926 $(391,926)

2012 $253,151 $518,316 $(265,165)

2013 $317,704 $361,150 $(43,446)

2014 $327,031 $623,990 $(296,959)

2015 $417,859 $418,594 $(735)

2016 $1,705,800 $923,456 $782,344

2017 $2,136,706 $169,622 $1,967,085

2018 $890,154 $85,023 $805,131

2019 $795,720 $4,084,412 $(3,288,692)

2020 $1,236,940 $802,235 $(434,705)

2021 $4,370,769 $376,272 $(3,994,497)

2022 $1,075,512 TBD TBD

2023 $0 TBD TBD

*XM costs will be covered per approved basis of negotiation.

Federal Investments 

Provided is the CVP Construction Allocation by Function and the Repayment through 

September 30, 2021, identifiable to Irrigation and M&I. These costs take into account the 

implementation of the Final Cost Allocation Study.
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Construction Cost Allocation by Function thru FY 2021 (excludes DMC Intertie)

Function Allocation Repayment Unpaid % Repaid

Water Service

Irrigation $1,126,042,215 $1,122,644,774* $3,397,441 99.70%

M&I $148,932,647 $140,056,688 $8,875,959 94.04%

Other Purposes

Commercial Power $894,979,325

Federal Taxpayer $1,168,847,115

State of California $256,007,238

Local Entities $261,400

$3,595,069,940

*Ability to pay relief and WIIN payments/discounts are included as repayment.

Based on the new method to determine the estimated deliveries (see Cost Recovery Improvement 

section), Reclamation anticipates improved construction repayment starting with the 2016 Water 

Year. In order for improved recovery, the estimated deliveries for setting O&M and construction 

rates have to be lower than or equal to the actual deliveries. Included is a summary of the Fiscal 

Year 2016 deliveries forward for irrigation and the summary of irrigation construction repayment 

by year.

Year

Actual IRR Deliveries in 

Acre-Feet

Projected Irrigation 

Deliveries in Acre-Feet

Difference 

(Over)/Under

O&M

2016 1,087,556 1,549,749 (462,193)

2017 2,295,294 2,574,135 (278,841)

2018 2,543,787 1,920,756 623,031

2019 2,861,259 1,713,135 1,148,124

2020 1,770,758 1,928,932 (158,174)

2021 746,887 1,616,424 (869,537)

2022 TBD 1,652,165

Construction

2016 1,087,556 1,949,621 (862,065)

2017 2,295,294 1,545,547 749,747

2018 2,543,787 1,607,776 936,011

2019 2,861,259 1,552,257 1,309,002

2020 1,770,758 1,529,480 241,278

2021 746,887 1,616,424 (869,537)

2022 TBD 1,652,165
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Folsom-South Canal 

The Folsom-South Canal costs have been reclassified from construction in abeyance to Plant-inService. For repayment purposes, the Operation and Maintenance costs and the Construction 

costs are being reviewed by the Bureau of Reclamation. For 2021 M&I O&M and the 2022 M&I 

Construction and O&M Water Rates, the Folsom-South Canal costs were identified 16.4% as 

recoverable.

Friant Surcharge and Associated Water Rate Offset 

Public Law 111-11, Title X, provides a provision for Friant Division water contractors to receive 

a temporary reprieve in their Friant Surcharge if the Secretary of the Interior does not need those 

funds for the ongoing federal costs of the San Joaquin River Restoration Settlement Act Program 

(Program). The Public Law identifies that this could occur in Fiscal Year (FY) 2020. However, 

Reclamation has determined that the surcharge should not be reduced as it is necessary for the 

Program. Since Reclamation will include the surcharge at a rate of $7.00 per acre-foot, and not 

reduce the rate (up to a $3.00 reduction), Reclamation will offset Water Marketing for the Friant 

Division contractors to the extent allowed by the Federal law. Please refer to Schedules A-8, A2A, and A-1 of the water rate books to identify the offset.

Project Use Energy (PUE) O&M Cost in the Water Rates 

At the Financial Affairs Committee (FAC) Meeting on November 20, 2015, the Bureau of 

Reclamation proposed removing Project Use Energy (PUE) charges from the Central Valley 

Project (CVP) water rates due to Reclamation’s inability to continue to record the PUE charges 

as revenue. The PUE charges that are collected through the CVP water rates is revenue that 

belongs to Western Area Power Administration. In the current Ratesetting process, PUE is 

included in the water rates along with CVP O&M costs, and when payment is remitted (CVP 

water rate x acre feet) the entire amount is recorded as revenue. 

Water contractors requested that Reclamation continue to collect PUE charges through the 

Ratesetting process. To prevent recording the PUE charges as revenue in the future, a proposal 

was made that the PUE charges be paid separately by a select few contractors. These select few 

contractors (identified below) graciously accepted Reclamation’s proposal and agreed to pay 

direct pumping PUE and storage PUE costs in advance, on behalf of all CVP contractors, as part 

of their CVP water rates. The impact to these contractors is only in how they will remit their 

water payments in the future. Their water payments will separately identify direct pumping PUE 

and “other” PUE as components of their cost of service rate. The “other” PUE component is 

specifically to identify the amount of PUE charges that are being paid on behalf of other 

contractors, and in which a like credit will be given to offset the O&M component of their water 

rate. Overall, contractors’ cost of service water rates will remain the same. This proposed future 

process for PUE will allow Reclamation to easily identify PUE revenue and deposit it to a 

separate account for payment to Western Area Power Administration.
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The select few contractors are:

1. Westland’s Water District (Irrigation, M&I) 

2. Santa Clara Water District (Irrigation, M&I) 

3. San Benito Water District (Irrigation, M&I) 

4. Colusa County Water District (Irrigation, M&I) 

5. Kanawha Water District (Irrigation, M&I) 

6. Orland Artois Water District (Irrigation) 

7. San Luis Water District (Irrigation, M&I) 

8. Contra Costa WD (M&I) 

Other contractors will still pay their share of Project Use Energy for Storage and Direct Pumping 

as offset revenue, rates developed for this purpose, to cover the credit in O&M the 8 contractors 

will receive for paying on their behalf.

Site Security Costs 

Projected costs for security guards and patrols for FY 2022 are included in the water rates. The 

estimated total projected costs for Irrigation and M&I are $2,947,464 and $577,998 respectively.

Trinity Public Utility District (TPUD) Assessment 

In accordance with Public Law 106-377, Section 203, Reclamation is required to collect annually 

$162,000 (indexed) for payment to the Trinity Public Utility District. For the period March 2023

through February 2024 the TPUD rate will be $0.15 per Acre-Foot. This assessment along with 

the CVP Restoration Fund charges and Friant surcharges are due within 30 days after the 

delivery of water. 

Water Marketing 

Water marketing costs included in the CVP water rates include general expense. For 2023, the 

budgeted costs were $482,079 and those allocated to Irrigation and M&I were estimated at 

$420,615 and $61,464, respectively.

WIIN Act Repayment Contracts 

Public Law 114-322, Section 4011 directs that upon request of the contractor, certain water 

service contract(s) shall be converted to repayment contract(s). As part of this process, the 

requesting contractor(s) will enter into an amended or integrated form of contract which includes 

among other things repayment of construction balances that are properly assignable to the 

contractor and in effect at the time of contract conversion. Once the contract is converted, the 
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water rates will be updated under the amended contract for the month following the execution 

date to exclude the construction component of the water rate. 

Questions 

Please direct any questions regarding the CVP 2023 final water rates or the CVP 2021 annual 

contractor accountings to Kristin Johnson at 916-978-5507 or by email at kjohnson@usbr.gov.