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APPENDIX II APPENDIX II To recover $1.378 billion in costs allocated to irrigation ($1.229 billion) and M&I water supply ($149 million), the Bureau has entered into 298 contracts with water customers. Twenty are "repayment contracts" for repayment of costs associated with distribution facilities built expressly for individual customers. Customers generally pay for distribution facilities through annual installments. The rest are "water service contracts" for repayment of costs associated with general water service facilities. Customers pay for water service facilities through water rates per acre-foot of water contracted for or delivered. As of September 30, 1983, about $274 million of the total $1.378 billion allocated to irrigation and M&I had been spent on distribution facilities. The rest, $1.104 billion, was spent on water service facilities, $960 million was allocated to irrigation and $144 million was allocated to M&I. The Bureau has estimated that $113 million will be beyond the irrigation customers' ability to pay for existing water service facilities. This cost, and the $82 million allocated to deferred use, are scheduled to be repaid by commercial power customers. Customers with repayment contracts are generally responsible for funding and performing the operation, maintenance, and replacement of the distribution facilities built for them. The Bureau is generally responsible for OM&R of Cvp's major water service facilities. The Congress annually appropriates federal funds for OM&R which are to be repaid through CVP customers' water rates. These OM&R expenses are currently running at about $25 million per year. As of September 30, 1984, irrigation and municipal and industrial water customers had repaid a net of $75.4 million of the $1.378 billion cost of CVP facilities that were placed in service between 1941 and 1983. By September 30, 1984, the Bureau had recovered $54.2 million toward repayment of distribution facilities covered by repayment contracts and $46.9 million toward repayment of irrigation water service facilities. Through september 30, 1984, M&I water service had accumulated a deficit of $25.7 million. Although M&I water ser<lice revenues have been sufficient to cover annual OM&R expenses, they have been insufficient to cover annual interest repayment requirements. Also, it should be noted that between 1982 and 1984, irrigation OM&R expenses exceeded water ser<lice revenues by $6.6 million. This repayment record is expected to continue for several years. It is primarily due to water service contracts that have long-term, fixed rates or limited adjustment potential and do not start expiring until the 1990's. 18