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<br />APPENDIX II <br /> <br />APPENDIX II <br /> <br />Option 2 - postage stamp <br /> <br />Under this option, one rate is calculated and applied to all <br />customers. The rate is computed by determining the capital and <br />OM&R costs that are to be recovered and dividing by the projected <br />acre-feet of water delivered. In this manner, each acre-foot of <br />irrigation water carries the same cost burden, and each customer <br />is charged the same rate per acre-foot of water. <br /> <br />option 3 - double postage stamp <br /> <br />The double postage stamp divides the costs to be recovered <br />into two categories. The first category includes water-marketing <br />and storage costs. The second includes all other CVP water <br />service costs. If a customer uses only storage facilities, its <br />water rate will consist of the first category only. If a <br />customer uses any other water service, then its rate will consist <br />of both categories. <br /> <br />Option 4 - modified postage stamp <br />without individual contractor deficits <br /> <br />., <br />:1 <br /> <br />This option mixes the component and postage stamp <br />approaches. Some cost categories or components that correspond <br />to the water services provided would be applied to all customers <br />as in the postage stamp option, while other cost categories would <br />be applied to particular customers as in the component option. <br />All customers' past payments are pooled and divided by projected <br />water deliveries, so that each customer receives a share of the <br />total repayment credit or deficit. According to a Bureau <br />regional official, this method was developed mainly in response <br />to water users' comments on the April 1984 irrigation <br />rate-setting proposal. <br /> <br />Option 5 - modified postage <br />stamp with deficits <br /> <br />This is the same as option 4 except that it assigns <br />individual deficits and credits to each customer. <br /> <br />;, <br /> <br />} <br /> <br />, <br />~ <br /> <br />Impact on repayment <br /> <br />~ <br /> <br />Whichever option is chosen for rate-setting, it will have <br />little impact on rates or project revenues until current <br />contracts expire and are renegotiated, beginning in the 1990's. <br />Revenue flow projections for four of the five options were <br />included as part of the draft proposal forwarded to the <br />Commissioner. The projections assumed existing rates would not <br />be increased until current contracts expire or can be adjusted. <br />They also assumed that OM&R expenses would increase by 4 percent <br />per year. <br /> <br />23 <br />