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<br />~l <br /> <br />stabilizing at 5 percent in year 17 of the agreement. <br /> <br />In addition, if the Authority experiences water shortages as defined in the agreement, the <br /> <br />Authority will pay lID a "shortage performance premium." <br /> <br />The agreement provides for a "price redetermination" process through which the price may <br /> <br />adjust to reflect the market value ofIID water. The redetermination process would start no <br /> <br />sooner than 10 years after the start of deliveries, provided that an active California water market <br /> <br />develops. <br /> <br />lID would begin transferring the water to the Authority after a series of contingencies are <br /> <br />satisfied. The Authority must arrange a cost-effective and reliable conveyance method for the <br /> <br />water. lID must meet specified targets for participation by its farmers. Both agencies must be <br /> <br />able to reasonably mitigate environmental impacts of the transfer. <br /> <br />The final terms of the contract were developed through a negotiations process that <br /> <br />addressed matters raised during a public review period of the agreement's draft terms, which were <br /> <br />released in July 1996. Both agencies are planning public briefings and hearings on the final terms <br /> <br />during the next two months, <br /> <br />California is entitled to 4.4 million acre-feet of Colorado River water a year. It regularly <br /> <br />exceeds that amount by about 20 percent, with almost all the extra water going to MWD. This is <br /> <br />a concern to other states that rely on Colorado River water. Secretary of the Interior Bruce <br /> <br />Babbitt has asked California to develop a plan to live within its water entitlement. In response, <br /> <br />the Colorado River Board of California, working with State Department of Water Resources <br /> <br />Director David Kennedy, is developing the California 4.4 Plan, and the lID water transfer is one <br /> <br />of the plan's cornerstones. <br /> <br />- more- <br /> <br />vO<;l <br />