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<br />APPENDIX II <br /> <br />APPENDIX II <br /> <br />The Bureau released the resulting proposed policy as two <br />separate documents. The irrigation policy proposal was issued <br />for public comment in April 1984 and the M&I policy proposal in <br />October 1984. The Bureau revised the irrigation proposal in <br />response to comments and, in May 1985, submitted five <br />rate-setting options for the Commissioner's review. Revision of <br />the M&I policy proposal began in late May, and it is scheduled to <br />be submitted for the Commissioner's review in December 1985. <br /> <br />IRRIGATION RATE-SETTING OPTIONS <br /> <br />Although the April 1984 policy proposal identified three <br />rate-setting options, five options were eventually submitted to <br />the Commissioner. Bureau regional officials feel these options <br />are the most viable for repayment of CVP water service facilities <br />within the established 50-year repayment period ending in 2030. <br />Each option bases rates on the cost of service. If, at contract <br />renegotiation time, a customer should assert inability to meet <br />the rate set under.the new policy, the customer's ability to pay <br />would be determined. The water rate for that customer would then <br />be established at the cost of service or the customer's ability <br />to pay, whichever is less, but would at least cover OM&R costs. <br />The simplest option--called a postage stamp option--would apply <br />one rate to all customers. The most complex options would result <br />in different rates for each customer. Under the proposed policy, <br />water rates would be reanalyzed every year, and all renegotiated <br />or new water service contracts would provide for annual rate <br />adjustments to keep pace with changes in cost. <br /> <br />Option 1 - component method with <br />individual contractor deficits <br /> <br />This was the region's preferred option in the April 1984 <br />proposal. Under the component option, the repayment obligation <br />is made up of six cost components or categories: water <br />marketing, storage, conveyance, conveyance pumping, drainage, <br />and direct pumping. plant-in-service capital costs and past OM&R <br />expenses for components applicable to each water service customer <br />are totaled to determine the customer's repayment obligation up <br />to that time. Each customer's past payments are then totaled and <br />compared with its repayment obligation. If a customer's payments <br />are greater than past OM&R expenses, the customer receives a <br />credit toward repayment. If a customer's payments are less than <br />past OM&R expenses, the customer is in a deficit repayment <br />position. Bach customer's remaining unpaid capital balance is <br />then divided by its expected water deliveries through 2030 to <br />derive its capital portion of the water ser<lice rate. The OM&R <br />portion of each customer's water service rate is computed for <br />applicable components by estimating next year's expense and <br />dividing the total by each contractor's expected water deliveries' <br />for that year. <br /> <br />. . <br /> <br />22 <br />