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<br />bill. Located in Napa and Solano Counties, the project
<br />irrigates nearly 100,000 acres and furnishes municipal
<br />and industrial water. Completed in 1957, Monticello
<br />Dam impounds Putah Creek, an intermittent stream,
<br />with a 576 square mile watershed. Lake Berryessa
<br />stores 1. 6M acre-feet. There is little natural storage
<br />due to the absence of snowpack or any appreciable
<br />ground water. The House proposed a transfer price
<br />calculated to include: (1) the remaining balance of the
<br />reimbursable capital costs of the project; (2) the book
<br />or 'residual' value of the depreciable water supply
<br />facilities; (3) a capital/operations and maintenance
<br />adjustment for any repayments In arrears, plus
<br />accrued interest; (4) all administrative costs Incurred
<br />by the U.S, to effectuate the agreement and transfer;
<br />and (5) a credit for dam safety and construction
<br />defects with the adjustment representing the estimated
<br />federal share of necessary safety of dams repairs.
<br />The proposal also set a minimum price 'floor" equal to
<br />two-thirds of the original reimbursable capital costs,
<br />The original reimbursable capital cost was $38M.
<br />
<br />Of note, the House committee report stated, 'The
<br />pricing methodology selected recognizes also that the
<br />unique nature of the local water rights permit for the
<br />Solano project necessarily precludes consideration of
<br />a market valuation for the facilities, since in this case,
<br />the Solano water users constitute the only feasible
<br />market.' Moreover, 'A key factor In the selection of a
<br />pricing formula based on the cost of construction was
<br />the fact that the public entities to whom the federal
<br />assets are to be transferred woulc;l be obligated to
<br />continue the existing public purposes of the Solano
<br />project. Further, it is apparent that transfer to local
<br />ownership will create a potential for enhancing public
<br />benefits, Including enhanced efficiencies and
<br />economies in water usage at the local level, the ability
<br />to per10rm needed maintenance on project facilities
<br />without adversely impacting congressional efforts to
<br />reduce federal spending, and the increased ability to
<br />administer water supplies and costs to support other
<br />beneficial land use objectives....' (H, Rpt. 102-114)
<br />
<br />The House rejected replacement cost as a basis for
<br />pricing the project as '...these public water supply
<br />facilities constructed over 30 years ago...constitute
<br />over 65% of the public water supplies of Solano
<br />County.' Further, 'Replacement cost valuation, in
<br />conjunction with the much higher prices Solano must
<br />already incur with development of additional public
<br />water supplies, would only make the [project] transfer
<br />
<br />.
<br />
<br />,
<br />
<br />uneconomic and thus would thwart other worthwhile
<br />goals to be achieved by this legislation [which died].'
<br />
<br />.
<br />
<br />WATER RESOURCES/ADMINISTRATlON UPDATE
<br />
<br />Western Water Policy
<br />
<br />Speaking on April 27 before the National Press
<br />Club, Interior Secretary Bruce Babbitt addressed the
<br />Administration's purpose for the use of market
<br />principles In natural resource allocation, They are
<br />straightforward: first, to raise revenue to meet budget
<br />targets; second, so everyone pays their fair share -
<br />Including 'miners, timber companies, ranchers and
<br />reclamation water users;' and third, to encourage
<br />conservation and the efficient allocation of limited
<br />resources. This emphasis has 'major implications for
<br />the development and use of water in the West.'
<br />
<br />Babbitt stated, 'For too long, the answer to every
<br />water issue in the West has been yet another
<br />Federally subsidized water project, repayable at below
<br />market interest rates, by proceeds from heavily
<br />discounted water charges. The search for more water
<br />from ever more distant sources with greater
<br />environmental destruction is a time honored Western
<br />tradition that must now give way to a simple reality:
<br />there Is plenty of water developed and available In the
<br />West if only we will allow market principles to replace
<br />heavy handed bureaucratic allocations, By pricing
<br />water at its true cost, and thereby encouraging its
<br />conservation and wise use, there will be plenty of
<br />water for everyone.'
<br />
<br />.
<br />
<br />Babbitt said that the Miller-Bradley Bill (H.R, 429)
<br />will be the vehicle for reform in the Central Valley of
<br />California, and added that the City of Las Vegas' water
<br />supply problems also illustrate the need for reform.
<br />'Rather than seeking Federal help to increase its draw
<br />from the Colorado River, which runs nearby, the City
<br />has developed a multi-billion dollar plan to drain
<br />remote Federal lands of their groundwater -- thereby
<br />Imperiling the remaining wetlands of the Great Basin.
<br />The City has also approached Congress to finance a
<br />billion dollar desatting plant to take water from the
<br />Virgin River, a remote, brackish tributary of the
<br />Colorado River. Why? Because Las Vegas...under
<br />existing law...cannot take more water from the
<br />Colorado River, which runs right by its own doorstep....
<br />and I pledge to find a market mechanism to help
<br />Las Vegas...into a new era of water management.'
<br />
<br />The WESTERN STATES WATER COUNCIL is an organization of representatives appointed by the Governors of .
<br />member states - Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, North Dakota,
<br />Oregon, South Dakota, Texas, Utah, Washington, and Wyoming, and associate member state Oklahoma
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