Foreword

The final Central Valley Project (CVP) water rates for contract year (CY) 2016 and the final 

CVP annual contractor accountings for fiscal year (FY) 2014 have been posted to the Bureau of 

Reclamation website. 

The final water rates and final annual contractor accountings for the years 2004 through 2016 

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

If you have any questions or need additional information, please contact Mr. Sabir Ahmad at 

916-978-5187, or by e-mail at sahmad@usbr.gov.

Site Security Costs

Projected costs for security guards and patrols for FY 2016 are included in the water rates. The 

estimated total projected costs for Irrigation and M&I are $3,488,793 and $513,975 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. Through February 29, 

2016, the assessment rate per acre foot will be $1.65. For the period March 2016 through 

February 2017 the TPUD rate will be $0.30. 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 a general expense calculated at 

18.5% of budgeted costs. For the 2016 final rates, the irrigation and M&I estimated general 

expenses were $1,549,749 and $308,396 respectively. 

Project Use Energy (PUE) Costs for FY 2014 Accountings

The PUE costs included in the FY 2014 annual CVP contractor accountings are based on the 

Schedule of Estimated PUE Costs (water rate schedule A-11) from the 2014 Rate Book. It 

includes a true-up of FY 2013 PUE costs and a FY 2013 true-up for Bella Vista (McConnell 

Foundation water). The breakdown of the FY 2014 PUE expenses are shown below:

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Estimated PUE Costs from 2014 Schedule A-11 $22,500,000

FY 2013 PUE True-up adjustment ($681,185)

Prior year PUE True-up adj. for Bella Vista $18,411 

Total Irrigation and M&I PUE Expenses in FY2014 $21,837,226

Increase in Project Use Energy (PUE) Costs 

Due to the expiration of Reclamation’s contract with PG&E on April 1, 2016, PUE costs are 

projected to increase by approximately $4 million dollars in fiscal year 2016. This projected 

increase is included in the 2016 water rates. In future years, costs are anticipated to increase by 

$8 to $10 million per year. 

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 worked collaboratively with 

stakeholders to develop a revised process for projecting future water deliveries that serve as the 

basis for estimating water rates. The new practice for projecting future water deliveries include: 

• Using a 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. 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. 

• 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 had no water deliveries in a 7 – year period, Reclamation will 

use 14% of the contractor’s contract entitlement. 

For more information regarding improved Ratesetting practices, please visit the Reclamation 

website at http://www.usbr.gov/mp/cvpwaterrates/wtr_ctr_notices/2015/ to review the decision 

paper that was posted in April 2015.

Note: The Irrigation Schedule A-14 will no longer be used.

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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 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 2016 for both irrigation and M&I.

Irrigation Extraordinary Operations and Maintenance Costs (XO&M)

Fiscal Year Estimated Cost Actual Cost Variance

2009 - 4,192,153.28 (4,192,153.28)

2010 - 3,451,716.48 (3,451,716.48)

2011 - 3,385,405.33 (3,385,405.33)

2012 2,016,701.00 3,466,279.42 (1,449,578.42)

2013 2,166,051.00 2,088,287.70 77,763.30

2014 2,208,368.00 3,336,697.07 (1,128,329.07)

2015 2,862,681.00 TBD 2,862,681.00

2016 3,515,700.00 TBD 3,515,700.00

TOTAL 12,769,501.00 19,920,539.28 (7,151,038.28)

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

Fiscal Year Estimated Cost Actual Cost Variance

2009 - 510,566.95 (510,566.95)

2010 - 495,409.10 (495,409.10)

2011 - 391,925.98 (391,925.98)

2012 253,151.00 518,315.51 (265,164.51)

2013 317,704.00 361,150.35 (43,446.35)

2014 327,031.00 623,989.97 (296,958.97)

2015 417,859.00 TBD 4176,859.00

2016 1,705,800.00 TBD 1,705,800.00

TOTAL 3,021,545.00 2,901,357.86 120,187,14

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Federal Investments

CVP Construction Repayment through September 30, 2014 is shown below.

Year

Actual IRR Construction 

Recovery

Projected Annual Average 

Construction Recovery

Variance 

(Over/Under)

2003 19,608,499 37,051,890 (17,443.391)

2004 23,341,327 37,404,088 (14,062,761)

2005 20,753,048 38,527,038 (17,773,990)

2006 28,322,351 39,211,192 (10,888,841)

2007 23,197,478 39,610,443 (16,412,965)

2008 11,754,668 41,578,408 (29,823,740)

2009 3,401,428 31,640,202 (28,238,774)

2010 13,878,181 33,202,989 (19,324,808)

2011 26,910,984 34,695,494 (7,784,510)

2012 19,767,532 35,113,081 (15,345,549)

2013 10,735,953 34,987,828 (24,251,874)

2014 1,280,730 36,864,266 (35,583,536)

Significant impacts from Draft Rates to Final Rates

Project Use Energy (PUE) Cost 

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 few select contractors. These 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. Westlands 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)

CVP Cost Allocation Study

Estimated expenditures of $1.27 million for the CVP Cost Allocation Study were added to the 

total Water Marketing O&M costs in Schedule A-9 for both Irrigation and M&I for the final 

2016 water rates.

Questions 

Please direct any questions regarding the CVP 2016 final water rates or the CVP 2014 annual 

contractor accountings to Mr. Sabir Ahmad at 916-978-5187, or by email at sahmad@usbr.gov .

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