Water Supply and Demand Study 1/13/11

Anima+La Plata Water Marketing Supply and Demand Study Section 2
in the 2000 Amendments, it is estimated that Colorado's Fixed OM &R Costs at startup would be $9,760
per year, as shown in Table 2.4 "Minimum Allocation." Fixed OM &R will be assessed annually and must
be pa d in advance of the water year. The State should confirm these values with the Association prior to
becor iing a member of the Association.
Emergency Reserve Fund (A Component of Fixed OM &R Costs)
The c 31culation of Fixed OM &R Costs includes the establishment of an Emergency Reserve Fund and a
Reple cement Reserve Fund. Section 17 of the OM &R Contract calls for the Association to establish an
Emer 1,ency Reserve Fund with annual deposits by the Association of not less than $60,000 per year until
the E ergency Reserve Fund contains $700,000 (April 2009 dollars) during initial stages of Project
operE tion and $1,400,000 (April 2009 dollars) once the Project is under full operation. Since the
Emer ency Reserve Fund is part of the Association's Fixed OM &R costs, Colorado's contribution is
alrea y included in that cost. The size of the Emergency Reserve may be adjusted upon mutual
agreE ment between the Association and the United States. The Emergency Reserve Fund is to be used
to "cover costs incurred during periods of special stress caused by damaging droughts, storms,
earth juakes, floods or other emergencies causing interruption of water service." The Emergency
Rese ve Fund shall be available for use by the United States during any period in which any of the
Tram ferred Works are operated or maintained by the United States, which will be defined in the Transfer
of Fa ilities document to be prepared following Substantial Completion of the Project.
Repli icement Reserve Fund (A Component of Fixed OM &R Costs)
Fixed OM &R costs also include a Replacement Reserve Fund, as described in Section 7 of the OM &R
Conti act. Payments of $45,000 annually by the Association will be placed into the fund to ensure there
area Jequate funds available to replace A -LP Project facilities and equipment when necessary. There is
no id ntified ceiling for this fund in the OM &R Contract, IGA or IGA Exhibit A. It will be up to the
Asso iation, in consultation with Reclamation, to identify a cap amount.
Vari bie OM &R Costs
Varia le OM &R Costs are defined in Section 8.03 of IGA Exhibit A as "the costs of power including energy
cons mption and that share of power demand for pumping water not designated as Fixed OM &R costs."
The Variable OM &R Costs are the electrical costs for pumping water. There are several factors to
cons der in determining these pumping costs.
Ener Consumption is defined as the amount of energy used to run the A -LP Project pumps. It is
typic lly measured in kilowatt hours. Power Demand (aka Capacity) is defined as the demand for energy
and i split into three basic acquisition categories: Baseload, Intermediate and Peaking. Each Project
parti ipant shall be responsible for the annual payment of the Variable OM &R Costs associated with the
deliv ry of its A -LP Project water that are not covered by the Variable OM &R Fund described below.
Each Project participant shall be assessed its share of projected Variable OM &R Costs at least once a
year and shall pay such charges within a reasonable time period in advance each year. Project
parti ipants are required to advise the Association Management Committee of their anticipated annual,
mon hly and daily water demands in advance of actual use each year, with the understanding that there
can I ie changes to these orders from time to time.
Power for the Project is provided by the Colorado River Storage Project in accord with terms in the 1956
Colo ado River Storage Project Act. Power operations are managed by the Western Area Power
Adm istration (WAPA). WAPA sets the "Firm Electric Service Rate," which is reviewed annually and
cha ed if necessary. The rates currently in effect October 1, 2009 are as follows:
Demand or Capacity Charge: $5.18 /kilowatt of billing demand
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