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<br />. <br /><<::r <br />..~ <br />- GOVERNOR'S CENTRAL ARIZONA PROJECT ADVISORY COMMITTEE <br />C~ <br /> <br />1",. <br /> <br />~ <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />. <br /> <br />'. <br /> <br />. <br /> <br />ACTION RECOMMENDATIONS <br /> <br />Financial Issues <br /> <br />. <br /> <br />CAWCD and the Bureau of Reclamation should carefully review their operations, <br />searching for all opportunities for cost reduction. <br /> <br />. <br /> <br />CAWCD should assess its power assets in light of the most current water use <br />projections, and should optimize its power marketing opportunities to maximize <br />interim revenues to assist in lowering water costs which directly effect the demand <br />for CAP water. <br /> <br />. <br /> <br />CAWCD should consider adopting a policy of target pricing to increase incentives <br />for CAP use, ensure fair pricing for those who buy water, and to develop <br />appropriate expectations concerning future water prices. A policy of target pricing <br />should be developed for both M&I and agricultural subcontractors. Ultimately, the <br />goal of a water pricing policy should be to achieve full recovery of operation, <br />maintenance and replacement costs. <br /> <br />In order to fund projected deficits caused by target pricing, CAWCD should obtain <br />additional financial authority to issue bonds in its enabling statute. <br /> <br />CAWCD should adopt a policy that prices water to agricultural users at or below <br />current groundwater costs to the extent that it benefits all CAP users. This <br />recommendation is based on studies that conclude that savings under the Master <br />Repayment Contract would exceed the cost of agricultural deliveries even though <br />the water is priced below the cost to deliver it. This recommendation assumes that <br />agricultural use would continue annually for the 50 year period or, in the alternative, <br />the cost allocation process would not impose retroactive interest liability if <br />agricultural use declines in later years. <br /> <br />. <br /> <br />FINAL REPORT AND RECOMMENDA TIONS <br /> <br />27 <br />