Lower Colorado River Basin 

“Development Fund”
Context

This presentation is in response to EPA questions to 

Reclamation related to the Lower Colorado River Basin 

Development Fund. This presentation together with 

Reclamation’s draft answers to EPA questions, is 

designed specifically to differentiate between the annual 

processing of revenues and dispositions and the later 

uses of those revenues pursuant to the Arizona Water 

Settlements Act. This presentation does not, and should 

not be considered to depict the complete working of 

Development Fund as a whole. 
Current Development Fund 

Structure

Checking

Account

Money 

Market

Account 

Development Fund

Analogies
Checking Account Side

• Collects Revenues from various Sources

• Pays monthly expenses for OM&R of NGS

• Tracked Monthly on a Source and Disposition 

Table.

• Any Net income/losses remaining at the end of 

the year are applied to CAWCD repayment 

obligation.
Checking Account Side 

Development Fund 

(Flow of Funds)

• Navajo Miscellaneous Revenue

• Navajo Surplus Sales

• Calpine

• Parker Davis/Hoover 4.5 Mills

• Transmission Line Loss Revenue

• CAWCD Applied Revenue

• SO2 Credit Sales

• EPA Credit

• Right of Use Misc – Available

• Non-Recurring Items

Revenue 

Sources

Checking Account 

Side of 

Development Fund

• Salt River Project – NGS 

operating costs

• Transmission Systems costs

• Navajo Oversight costs

Payments -

Dispositions
Monthly Source and Distribution
Revenue Sources

a. Navajo Misc Revenue

i. Includes revenues earned and collected by WAPA from 

activities unrelated to the primary operation of the Navajo 

Generating Station (NGS) and Transmission Systems.

b. Navajo Surplus Sales

i. Includes revenues from sales of surplus power not used by 

CAWCD to operate the CAP project. Surplus power is sold by 

WAPA and revenue is dependent on market prices.

c. Calpine

i. Revenue related to Calpine’s use of the Navajo Project 

transmission systems to transmit power across Arizona.

d. Parker Davis/Hoover 4.5 Mills

a. Arizona purchasers of power from the Boulder Canyon and 

Parker Davis Projects pay a 4.5 mill (1 mill = $.001) surcharge, 

for the purposes of aiding in the repayment of the CAP.
Revenue Sources - Continued...

e. Transmission Line Loss Revenue

i. Revenue received when NGS recharges a power company’s 

power lines after a load loss occurs.

f. CAWCD Applied Advances

i. Revenue collected from CAWCD monthly pursuant to 

Agreement #1-CU-30-P1212 established October 1, 2011. 

Reclamation bills CAWCD monthly for CAWCD’s share of the 

OM&R expenses associated with NGS.

g. SO2 Credit Sales

i. Reclamation agreed to make its share of the SO2 emission 

allowances allocated by the EPA available to SRP to cover the 

SO2 emissions related to the total generation from the United 

States entitlement in NGS.
Revenue Sources - Continued...

h. EPA Credits

i. SRP installed scrubbers to reduce emissions from NGS. Credits 

for actual emissions below the legal limit are sold.

i. Right of Use/Miscellaneous - Available

i. Revenue include, but are not limited to, revenues from the 

use, rental, sale, or exchange of CAP lands.

j. Non-Recurring Items

i. This line item is used to capture any sources of funds that are 

unusual or infrequent in nature.

k. Interest from Investment

i. P.L. 108-451 gave Reclamation the authority to invest the cash 

available in the Development Fund. The interest revenue 

generated from these investments is not available towards 

CAWCD’s repayment obligation, and is used to meet the 

requirements of the Arizona Water Settlements Act.
Payments - Dispositions

a. Salt River Project – NGS

i. Capital Equipment

ii. Insurance

iii. Operations & Maintenance (O&M)

iv. Materials & Supplies

v. Fuel

vi. Coal

vii. Indenture of Lease

viii. Litigation
Payments – Dispositions Continued...

b. Transmission Systems Costs

i. Arizona Public Service – Southern O&M

• Costs incurred to maintain the transmission system responsible for delivery of 

power to Southern Arizona

ii. Arizona Public Service – Southern Capital

• Capital costs incurred to maintain the transmission system responsible for 

delivery of power to Southern Arizona.

iii. Nevada Power - Western

• Costs incurred to maintain the transmission systems that send power to 

California.

iv. Liberty Phase Shifter

• Costs incurred to operate and maintain a phase shifter in Liberty, Arizona 

which is a component of the Navajo Project power transmission system.

v. McCullough Switching Station – SRP/CAWCD

• The McCullough switching station contains two main switchyards. The costs 

are for the O&M of the switchyards used by SRP and CAWCD.

vi. WAPA – CAP Transmission

• Costs for work performed by WAPA on the CAP Transmission system.
Payments – Dispositions 

Continued...

c. Navajo Oversight

i. WAPA Oversight – Four Party Agreement

• WAPA’s costs associated with the oversight work on the original 

Four Party Agreement on the NGS that expired September 30, 

2011.

ii. WAPA Navajo Surplus Sales/Trans Purchases P1212

• WAPA’s costs associated with oversight work on the new 

agreement #1-CU-30-P1212 for Reclamation’s share of power 

from NGS.

iii. USBR

• Reclamation’s share of oversight/administration costs associated 

with NGS
CAWCD Repayment Credit 

Calculation 

Revenue Sources Payments 

Dispositions

Net 

Remaining 

(Repayment 

Credit/Debit)
CAWCD’s Repayment Obligation

• The CAP Project was placed into Repayment 

Status in 1994. Current repayment scheduled 

for completion in 2046.

• CAWCD’s total repayment obligation is a follows:

– Principal - $1,646,462,500

– Interest - $ 971,347,529

– Total - $2,617,810,029
Repayment Table - Fixed
Bill for Collection

• Reclamation invoices CAWCD each year for its 

repayment amount.

• The Repayment Bill is calculated by subtracting (or 

adding) the net applicable credits from the Check Book 

Side of the annual source and disposition.

• For 2011

– Repayment Obligation $55,311,163

– Net remaining revenues ($28,351,189)

– 2011 Bill for Collection $26,959,974

• The entire repayment obligation amount is then moved 

into the Money Market side within the Development 

Fund and is then available to meet the obligations in P.L 

108-451 (AWSA).
Invoice to CAWCD
Money Market Side 

Development Fund

• Arizona Water Settlement Act - P.L 108-451

– Authorized the Development Fund to be used for 

specific purposes rather than returned to Treasury for 

repayment of CAP.

– Two priority cascade structures were established.

• Cascade One - Use of full Repayment Stream

• Cascade Two – If revenues in excess of Repayment 

Stream 
Money Market Side – Development Fund 

Cascade One Priority Structure:

1. Fixed OM&R for Tribes

2. GRIC - SCIP Rehabilitation and OM&R fund

3. Without regard to priority, payment of the following:

• New Mexico Unit (To be paid first)

• GRIC - PMIP Construction (CAP project)

• Tohono O’odham Nation SAWRSA authorized items

• SCIDD Lining (non-Indian SCIP Rehabilitation)

• San Carlos CAP-IDD (CAP/Settlement)

• Future Indian Settlements Sub-Account

• Federal Implementing Costs

4. CAP Indian Systems – Non Settlement Tribes
Money Market Side 

Development Fund

Cascade Two Priority Structure:

1. Fixed operation, maintenance and replacement (OM&R) 

charges associated with the delivery of CAP water to Indian 

tribes.

2. Final year’s payment on CAP repayment obligation

3. U.S Treasury General Fund to reimburse fixed OM&R costs 

for CAP Indian deliveries and Indian water rights previously 

paid from the Development Fund.

4. U.S Treasury General Fund to 9(d) debt made nonreimbursable under Settlement Act.

5. U.S. Treasury General Fund.
AWSA Funding Expectations

Table 29.1.1 

Note: This is Table 29.1.1 from the Arizona Water Settlement Act (Public Law 108-451), 

which was used to document the parties’ funding expectations at that time. Payments 

for these activities will be made in accordance with the Act and may or may not be as 

depicted on this Table. Only anticipated Cascade One priorities are shown.