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 2004 

preliminary water rates and the fiscal year 2002 draft contractor accountings. 

The fiscal year 2002 contractor accountings are provided in final form. Please note 

that Reclamation has a site on the Internet where the 2004 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. Catherine Crawford at 

916-978-5350. 

 

Chief Financial Officers 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 for a minimum of 20% of the contract 

maximum deliveries to be considered in the rate calculation to reasonably recover 

the costs annually through 2007. 

Provision for Replacement (PFR) Adjustment

Reclamation completed a reconciliation process of the irrigation PFR interest 

adjustment amounts included in the fiscal year 2002 accounting. Should 

discrepancies be found due to this process, the applicable contractors will be 

notified individually of any changes. 

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, which by agreement between the parties, has been carried over to the 

2004 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 rates. 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 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. 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 in and to the Sly Park Unit to the El Dorado Irrigation District. Public 

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

interest in and to the Foresthill Divide Subunit (including Sugar Pine Dam and 

Reservoir) to the Foresthill Public Utility District. Due to the timing of the 

completion of the transfers, the removal of these specific facility costs and their 

associated financial impacts will be adjusted in the fiscal year 2003 accountings 

and the 2005 water rates. 

II. City of Roseville Pumping Plant Facilities 

Per Public Law 106-566, Section 301, Reclamation shall credit the City of 

Roseville for the purchase and funding for the installation of additional pumping 

plant facilities in accordance with a letter of agreement with Reclamation. 

Although the credit should have taken effect last year, the City requested that the 

credit be withheld until this year. Adjustment has been made to the 2004 water 

rates. 
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III. 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 annually (indexed annually) and pays 

the amount to the Trinity Public Utility District. The assessed amount for 2004 has 

been included in the rates. 

Project Use Energy

For the 2004 ratesetting year, the historical true-up that was included in the period 

1998 through 2002 was overstated in 1998, 2001 and 2002. Adjustments were 

made during the rate review period to reflect actual costs. As a result, the 2004 

PUE costs for irrigation and M&I were reduced $1,313,933 and $248,836, 

respectively. 

 

San Luis Drain

The Irrigation estimated Operation and Maintenance costs for the San Luis Drain 

in the amount of $339,000 have been removed from the 2004 water rates. This 

activity funds the 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. 

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. The 2004 total budgeted costs for CVP are not being adjusted 

for ratesetting, as these expenditures are still planned. However, for 2004 

irrigation and M&I estimated general expense has been revised to $601,000 

(18.5% times $3,250,000) resulting in a reduction of $1,253,449 for irrigation and 

M&I contractors. 
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Land & Water Management costs associated with the San Luis Unit included nonreimbursable costs totaling $344,000 for Water Conservation Activities – grants 

and Conservation Plans. These costs have been removed from water marketing 

based on irrigation and M&I’s respective cost allocation percentage factors. As a 

result, the 2004 water rates reflect a reduction in water marketing for irrigation and 

M&I by $172,585 and $23,702, respectively. 

Storage O&M

The temperature control device study costs associated with the East Side Division 

of the Central Valley Project are applicable to the New Melones Dam and 

Reservoir on the Stanislaus River. Since these are study costs and there are no 

devices in service at this time, they are considered non-reimbursable. However if 

and when construction begins these costs will be included in the construction costs 

and part of these costs could end up as being reimbursable. The 2004 irrigation 

water rates have been adjusted to reflect a reduction in storage by $34,470. 

Reclamation appreciates the interest and involvement received from all water 

entities in the process of reviewing and finalizing the 2004 CVP water rates. 

Reclamation plans on making a coordinated effort with these water entities to 

assure the costs and delivery data is representative of what is expected to be 

allocated and charged to contractors in future years. 

Questions on the 2004 CVP water rates should be addressed to Ms. Bonnie Hood 

at 916-978-5371 (TDD-916-978-5608).