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Foreword

The final Central Valley Project (CVP) water rates for contract year (CY) 2020 and the final CVP 

annual contractor accountings for fiscal year (FY) 2018 have been posted to the Bureau of 

Reclamation website. 

The final water rates and final annual contractor accountings for the years 2004 through 2020 can be 

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

If you have any questions or need additional information, please contact Jesus Reynoso at 

916-978-5362 or by e-mail at jreynoso@usbr.gov.

Ability to Pay Studies

The Tehama-Colusa Canal Contractor ability-to-pay study, which covers the period October 1, 2018 

through September 30, 2023, is in draft form and under review by Reclamation. The 2020 Water 

Rates have been updated to reflect the results of the draft ability-to-pay study for individual 

contractors as presented in Schedule A-1. Once the study is finalized, any changes to the TehamaColusa Canal contractor’s water rates and CVPIA Restoration Fund charges, and associated charges, 

will be communicated to affected contractors. 

In addition, certain Sacramento River settlement contractors have Ability-to-Pay relief that expired 

on March 30, 2019, and a new study has not been completed. In the interim, the water rates for 

these contractors are based on the results of the expired study as presented in Schedule A-1. Once a 

new ability-to-pay study is completed, any changes to the Sacramento River Settlement Water 

contractor’s water rates and CVPIA Restoration Fund charges, and associated charges, will be 

communicated to affected contractors.

CVP Cost Allocation Study

CVP Cost Allocation Study Cost has been included annually in the Water Marketing cost 

component. The following table includes the total amount of which a share is recovered through the 

Water Marketing O&M. For the final 2020 Water Rates, refer to Schedule A-9 for both Irrigation 

and M&I.
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Fiscal Year Estimated Cost Actual Cost

Difference 

(Over)/Under

2010 $750,886 $433,553 $317,333

2011 $700,000 $665,700 $34,300

2012 $700,000 $390,000 $310,000

2013 $740,091 $487,197 $252,894

2014 $2,120,635 $848,450 $1,272,185

2015 $1,797,383 $1,031,142 $766,241

2016 $1,416,525 $1,005,766 $410,759

2017 $1,000,000 $1,325,757 $(325,757)

2018 $1,000,000 $751,676 $248,323

2019 $1,000,000 TBD TBD

2020 $ 500,000 TBD TBD

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.

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 estimated deliveries to use a 7-year average for 2020. For irrigation, the interpretation is 

that water deliveries for the CVP in 2020 were to be considerably higher than the 7-year average. As 

a result, Reclamation decided to consider other alternatives for calculating irrigation O&M water 

rates. For 2020, Reclamation decided to use the following for estimating irrigation O&M water 

deliveries:
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• 35% of contract entitlement (CE) for the majority of water service contracts; 

• 75% of CE for Sacramento River Settlement contractors; and 

• The higher of the 7-year average or 35% of CE for direct pumping contractors

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 Mid-Pacific 

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 2020 for both 

Irrigation and M&I.

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

2019 $6,118,000 TBD TBD

2020 $8,432,204 TBD TBD
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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 TBD TBD

2020 $1,236,940 TBD TBD

Federal Investments 

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

September 30, 2018, identifiable to Irrigation and M&I.

Construction Cost Allocation by Function thru FY 2018 (excludes DMC Intertie)

Function Allocation Repayment Unpaid % Repaid

Water Service

Irrigation $1,193,523,124 $739,486,127* $454,037,000 61.96%

M&I $122,628,948 $119,628,922 $3,011,483 97.54%

Other Purposes

Commercial Power $967,189,859

Federal Taxpayer $842,335,084

State of California $337,862,897

Local Entities $261,400

$3,463,812,769

*Ability to pay relief is included as repayment in the amount of $63,104,454. 

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.
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Year

Actual IRR Deliveries 

in Acre-Feet

Projected Irrigation 

Deliveries in AcreFeetDifference 

(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 TBD 1,713,135 TBD

2020 TBD 1,928,932 TBD

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 TBD

2019 TBD 1,552,257 TBD

2020 TBD 1,529,480 TBD

Year

Actual IRR 

Construction 

Recovery

Projected Annual 

Average 

Construction 

Recovery

Difference 

(Over)/Under

2003 $17,053,906 $37,051,890 $(19,997,984)

2004 $21,751,380 $37,404,088 $(15,652,708)

2005 $18,070,693 $38,527,038 $(20,456,345)

2006 $24,305,293 $39,211,192 $(14,905,899)

2007 $19,598,561 $39,610,443 $(20,011,882)

2008 $14,194,121 $41,578,408 $(27,384,287)

2009 $4,251,593 $31,640,202 $(27,388,609)

2010 $14,877,772 $33,202,989 $(18,325,217)

2011 $25,444,957 $34,695,494 $(9,250,537)

2012 $19,365,287 $35,113,081 $(15,747,794)

2013 $13,781,066 $34,987,828 $(21,206,762)

2014 $4,229,536 $36,864,266 $(32,634,730)

2015 $2,631,789 $37,174,567 $(34,542,781)

2016 $5,695,535 $39,328,648 $(33,633,113)

2017 $60,544,218 $42,253,883 $18,290,335

2018 $94,243,950 $46,218,850 $48,025,100
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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 2018 M&I O&M and the 2020 M&I 

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

recoverable. 

Full Cost (FC) Water Rates 

The practice for calculating estimated deliveries for setting FC water rates has been improved for 

2017 and forward years in order to be consistent with how deliveries are estimated for Cost of 

Service (COS) water rates. Previous calculations of FC water rates used estimated deliveries at 

contract entitlement without adjustment. For 2017 and forward, historical (1981 to present) and 

projected deliveries that are used to pro-rate construction cost by contractor for COS water rates 

will also be used for calculating FC water rates. Reclamation will still amortize construction costs 

over a 50-year period and use the weighted interest rates as required by the Reclamation Reform 

Act. The annualized construction amount by contractor will then be developed into a FC water rate. 

To develop the FC construction rate, Reclamation will use the improved practice for estimating 

deliveries established in 2016 which uses a 7-year average. This brings the FC water rates up to date 

in its calculation and in line with the Reclamation Reform Act legislation while also incorporating 

consistent practices in the calculation of both FC and COS water rates. 

Note that the components for the COS water rates and the FC water rates are the same, with the 

only exception being that interest is added to CVP construction for the FC water rates.

COS Water Rate Components FC Water Rate Components 

Annual O&M Annual O&M

O&M Deficit O&M Deficit

Interest on O&M Deficit Interest on O&M Deficit

Construction Construction

Interest on Construction

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 for FY 2020 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, A-2A, 

and A-1 of the water rate books to identify the offset.
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Project Use Energy (PUE) Costs for FY 2018 Accountings 

The PUE costs included in the FY 2018 annual CVP contractor accountings process are based on 

estimated costs. This year’s contractor accountings also includes a true-up of FY 2017 PUE costs. 

The breakdown of the PUE expenses are shown below: 

Estimated PUE Costs for FY 2018 $34,102,620.73 

FY 2017 PUE True-up Adjustment $8,016.24 

Total Irrigation and M&I PUE Expenses in FY 2018 $34,110,636.97

Increase in Project Use Energy (PUE) Costs 

Due to the expiration of Reclamation’s contract with PG&E on April 1, 2016, PUE costs have increased. In fiscal 

year 2020, there will be costs projected to be approximately $13.6 million and are included in the 2020 water rates 

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.

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) 
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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 2020 are included in the water rates. The 

estimated total projected costs for Irrigation and M&I are $4,202,455 and $578,914 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 2020 

through February 2021 the TPUD rate will be $0.12 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. 

Trinity Public Utility District Assessment True-up 

The Trinity Public Utility District assessment of over or underpayments (item c.) on the Annual 

Statement of Accounts letter dated November 21, 2019 should be from October 1, 2013 through 

September 30, 2018 (FY 2014 – FY 2018). 

Water Marketing 

Water marketing costs included in the CVP water rates include general expense. For 2020, the 

budgeted costs were $684,000 and those allocated to Irrigation and M&I were estimated at $358,204 

and $24,284, 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 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. Note that the Rates that were in effect as of January 1st 

are included in the water rate website. A separate schedule will be developed and updated for the 

contractors that convert after January 1st, 2020 This Schedule will be posted as an update each 

quarter (i.e., April 1st, July 1st, and October 1st) with the first month the new rates are applicable. 

This schedule will be posted on this site and identified as rates for WIIN Act contract conversions.
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Questions 

Please direct any questions regarding the CVP 2020 final water rates or the CVP 2018 annual 

contractor accountings to Jesus Reynoso at 916-978-5362 or by email at jreynoso@usbr.gov.