Laserfiche WebLink
<br />000674 <br /> <br />An exact "formula" for pricing converted water cannot be provided because oCthe differing <br />situatioDS of many conversions. However, in establishing a rate, Reclamation will develop <br />sufficient information to determine the explicit relatio~p between its proposed rate, the market <br />rate (if such a rate can be determined), and various cost-based rates. A discussion concerning the <br />rationale for selecting a particular rate will become part of the Reclamation's official records <br />Concerning the transaction. It should be noted that it is not Reclamation's intent to seek to <br />extract all of 1he potential gains associated with a given conversion. <br /> <br />Over the long term, Reclamation's goal should be to use market infonnation to assist in <br />establishing water prices. To do this, Reclamation is initiating the preparation of wholesale water <br />d~and studies and the compilation of ~ wholesale rates for muDicipalities for each of1be <br />particular marlrets it Services. In the interim, in situBtions where there is DO estabJisbed price, . <br />Reclamation will determine a price using the procedures descnDed above. <br /> <br />~epaym~t ud ~positioD of revenues - This.ponca- is applicable to permA'leDt.and temponuy <br />conversions ot~. RevenUes win be treated in accordance with applicable Reclamation law <br />and policy.. <br /> <br />. . <br />Any capital obligation that is to bear interest will be at the current rate as detennined by using the <br />formula set forth in the Water Supply Act of 1958 or as required by other- applicable law. This <br />policy applies to the recovery of capital costs. O&M costS are to be treated separately. <br /> <br />Documeatatioa - All pricing decisions for conversions are required to have a documentary <br />record describing how the mte was developed and provide information on the rates that would. <br />have resulted .if alternative methods were ~ e.g. market-based. or coSt-basecl. to compute the <br />rate. At a minimum,. for each proposed conversion, Reclamation wiD examine the water marlcet in <br />the area aod.docmnent and analyze the extent to which marl:et transacti~ provide guidance for <br />priciDg conversions. The Commissioner will report to the Assi$tant Secretary -: Water and Science <br />on the individual q~ty and prices of the conversions that ~ during the year. <br /> <br />Payout - As was noted earlier, the Secretary has ample authority to contract and set prices for <br />supplying water for M&I purposes. The fact that a project contrcldor pays out its share ofthe <br />costs attn"butabJe to the irrigation function does DOt affect this authority. <br /> <br />If a water user entity bas fully repaid its reimbursable cost obligation to1he United States, an <br />existing M&I market water rate for the mea would stiD be used to establish a base M&I rate for <br />the conversion contract. If no rate exists, then the current cost approach can be used. 1bis <br />amollDt would then serve as the basis for estimating an interim base M&I water rate. The amount <br />repaid by the entity does not enter into the calculation of the rate. Also, the contract would carry <br />a S.year contract review provision which would provide that ifa market rate was 10 be establisbed <br />during the existing contract time frame, then it would be used as the base M&I rate in subsequent <br />contract amendments or renewals. <br /> <br />3 <br />