Special Water Rates
Temporary Contractor Rates
Definition. Temporary contractor rates are the rates per acre/foot applicable to irrigation and M&I contractors that a) do not have long-term contracts or b) have long-term contracts but do not have a firm projectable contract water supply. Temporary contractor rates are computed for each water irrigation and M&I ratesetting cost component, and these components can be combined as appropriate to develop special water rates to fit any variety of temporary contract services situations.
Background. Such contractors pay for water on a temporary contractor basis and are excluded from the annual contractor accountings described earlier. Temporary water rate revenues are generally applied as an offset to annual O&M costs otherwise allocated to permanent long-term water contractors.
Application. Temporary water rates apply to short-term water contracts or to long-term contracts not having a firm water supply.
Method. Temporary rates are computed using the same general principles of the CVP ratesetting policies. They are primarily different in that 1) capital rates are set by component rather than by contractor, 2) interest costs are set as an individual component based on a year's estimated interest cost spread over projected water deliveries and 3) revenues are handled differently as explained in the preceding paragraph.
Process. Temporary contractor rates are based on data developed in the normal COS annual water rates, and accordingly lag correspondingly behind the preparation of the COS rates. However, they are normally completed by October 1 annually to be presented to interested parties at the same time as the COS rates.
Warren Act Rates
Definition. Warren Act rates are the rate per acre/foot to applicable contractors necessary to recover the cost of conveying and/or storing non-project water through project facilities.
Background. Warren Act rates refer to Section 1 of the Warren Act of February 1, 1911, which requires Reclamation to charge water contractors for the cost of conveying non-project water through project facilities. The Warren Act also provides authority to store non-project water within project facilities. Both non-project M&I and irrigation water can be stored or conveyed in project facilities. Unlike virtually all other CVP rates, Warren Act rate revenues are not creditable to project repayment and are returned directly to the U.S. Treasury.
Application. Warren Act rates apply to contracts to move or store non-project water through CVP project facilities.
Method. Warren Act Rates are calculated similarly to temporary contractor rates. O&M rates are calculated for each ratesetting component, as are capital component rates, and the Warren Act rate applicable to a particular contracting situation entails identifying the O&M and capital components applicable to the situation and combining the respective cost components for a total rate. Unlike temporary contractors, however, Warren Act contractors are not eligible to use project use power and accordingly, this cost component is excluded from the annual Warren Act rate components.
Process. Warren Act Rates are calculated concurrently in the development of annual irrigation and M&I water rates, and are scheduled to be published annually by October 15 of each year, along with all the rest of the rates included in the "Special Rates" Ratebook.
Temporary Irrigation "215" Rates and M&I "Spill" Water Rates
Definition. Section 215 water is defined under Section 215 of the Reclamation Reform Act of 1982 (RRA), as unstorable irrigation water to be released due to flood control criteria or un-managed flood flows. Section 215 water is exempt from the full cost provisions of the RRA. Section 215 Water Rates are the rates per acre/foot assessed on contractors who subsequently "take" Section 215 Water. M&I "spill" water has essentially the same characteristics as 215 water, but is referenced differently as the RRA provides only for unstorable irrigation. The following paragraphs just reference Section 215 water, but the comments apply to M&I "spill" water as well.
Application. Section 215 and M&I "spill" Water Rates apply to irrigation and M&I contractors who "take" such water in accordance with temporary 1-year contracts. Certain contractors also have an entitlement to take Section 215 water in lieu of Class 2 CVP water. In the latter instance, the water is treated as Class 2 water with Class 2 water rates, although not subject to RRA requirements.
Method. Section 215 and M&I "spill" Water Rates are calculated similarly to Warren Act rates. As Section 215 and "spill" water are defined as unstorable water, both storage O&M and storage capital are excluded from Section 215 and "Spill" Water Rates. Revenues earned from delivery of this water are treated as an offset against water marketing O&M costs.
Schedule. Section 215 rates are calculated concurrently with the development of annual irrigation and M&I water rates, and are scheduled to be published annually by October 15 of each year, along with all the rest of the rates included in the "Special Rates" Ratebook.
Reschedule Rates
Definition. The Reschedule Rate is the charge per acre/foot to applicable contractors necessary to recover the storage O&M and capital costs associated with rescheduling water deliveries from one water year to the next.
Application. Reschedule Rates are generally limited to irrigation water contractors when water conditions permit rescheduling, providing that contractors are eligible and elect to reschedule water deliveries to the next water year.
Method. Reschedule Rates are calculated similarly to other temporary contractor water rates. O&M and capital cost rates are computed for the storage components applicable to rescheduled water. A policy determination has been made that only storage O&M and storage capital rate components are applicable to rescheduled water. Rescheduled water charges are treated as an offset against water marketing O&M costs.
Process. Reschedule rates are calculated concurrently with annual irrigation and M&I water rates, and are scheduled for publication annually by October 15 of each year, along with all the rest of the rates included in the "Special Rates" Ratebook.
M&I Full Cost Rates
Definition. M&I full cost rates are the equivalent of M&I COS rates with the exception that M&I full cost rates include interest on capital at the interest rates specified in the RRA, whereas COS capital interest is based on CVP project interest rates.
Application. M&I full cost rates are calculated for the tiered rate pricing provisions of the Central Valley Project Improvement Act (CVPIA). In summary, these provisions require three tiers of water rates for 100 percent of the contract water supply. Tier 1 is applicable to the first 80 percent of the contract water supply, Tier 2 is applicable to the next 10 percent, and Tier 3 is applicable to the last 10 percent. Tier 1 is priced at the COS rate, Tier 3 is priced at the full cost rate, and Tier 2 is priced at the numerical average of the Tier 1 & 3 rates. Both the M&I COS and full cost water rates include interest on capital, but both use different interest rates as indicated in the Definition above.
Method. M&I full cost rates are calculated similarly to M&I COS rates, with the exception they are factored to include the higher interest rates on capital required by the RRA.
Process. M&I full cost rates are calculated concurrently with annual irrigation and M&I water rates, and are scheduled for publication annually by October 15 each year, along with all the rest of the rates included in the "Special Rates" Ratebook.
Exchange Contractors M&I and Irrigation O&M, Cost of Service and Full Cost Rates
Definition. These rates are those applicable to Reclamation's cost per acre-foot for delivering each subject type of water (M&I or Irrigation O&M, COS or Full Cost) to exchange contractors. The relationship of the irrigation full cost rate to the irrigation cost of the service rate is the same as for normal irrigation rates described earlier; namely the irrigation full cost rates include interest on capital, while no interest is included in the COS irrigation rate. The relationship between M&I COS and full cost rates is simply that the M&I full cost rates include capital interest computed at the RRA interest rate, whereas the M&I COS rates include capital interest computed at the CVP project rate.
Background. The rates apply exclusively to CVP exchange contractors. Exchange contractors are a small group of contractors who "exchanged" their historical water rights on the upper San Joaquin River for water supply from Delta Mendota and San Luis Canals. This was necessary because the upper San Joaquin River was inundated by Millerton Reservoir when Friant Dam was constructed.
In return for giving up their historical San Joaquin River water rights to Friant unit water contractors, the Friant-Madera Class 1 water users exchanged their entitlement to Delta Mendota Canal water to the exchange contractors. This water was to be provided at no cost to the exchange contractors, similar to its San Joaquin River water rights. However, there was an additional cost to providing Delta Mendota Canal and San Luis Canal water to the exchange contractors, in that it needed to be pumped through the Tracy Pumping Plant. The Friant and Madera Class 1 water contractors assumed responsibility for these pumping costs through their long-term water service contracts.
Application. While the exchange contractors are entitled to free water, the CVPIA provided them with authority to transfer their project water supplies. When exchange water supplies are exchanged with long-term CVP water contractors, such paying contractors are not to derive the benefit from the free water entitlements of the exchange contractors. Accordingly the exchange contractor rates are calculated not for the exchange contractors to pay, but rather to set the price that paying CVP water contractors must pay for transferred-in exchange contractor water. Transferring in contractors receive revenue credit for amounts paid for such water.
Process. Exchange contractor's rates are calculated on an M&I and irrigation rate component basis concurrent with the process for calculating long-term contractor rates. Exchange Contractor rates are scheduled for publication along with all other special water rates by October 15 annually.
