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The payment rate for municipal water will be reviewed and adjusted annually in accordance with <br /> the Debt Servicing Methodology used for the Colorado River Storage Project. An adjustable <br /> charge for operation and maintenance (O&M) expenses, currently at a rate of$1 per acre-foot, <br /> will be added annually to the municipal rate. The 2007 Colorado River Storage Project municipal <br /> water rate has been set at $74.72 per acre-foot plus $1.00 per acre-foot for O&M expenses. <br /> (b) The first annual payment in the amount of$378.60 for 5.0 acre-feet of water shall be <br /> made by the Contractor upon execution of the contract. <br /> (c) For each annual payment thereafter, the United States will bill the Contractor and the <br /> Contractor agrees to pay for 5.0 acre-feet at the current rate charged for such water. Payments <br /> shall be made annually by February 1. <br /> (d) All payments from the Contractor to the United States under this contract shall be by <br /> the medium requested by the United States on or before the date payment is due. The required <br /> method of payment may include checks, wire transfers, or other types of payment specified by <br /> the United States. <br /> (e) Payment received by the United States for the sale of water under this contract shall be <br /> credited pursuant to Section 5 of the Colorado River Storage Project Act. <br /> 4. CHARGES FOR DELINQUENT PAYMENTS <br /> .(a) The Contractor shall be subject to interest, administrative, and penalty charges on <br /> delinquent payments. If a payment is not received by the due date, the Contractor shall pay an <br /> interest charge on the delinquent payment for each day the payment is delinquent beyond the due <br /> date. If a payment becomes 60 days delinquent, in addition to the interest charge, the Contractor <br /> shall pay an administrative charge to cover additional costs of billing and processing the <br /> delinquent payment. If a payment is delinquent 90 days or more, in addition to the interest and <br /> administrative charges, the Contractor shall pay a penalty charge for each day the payment is <br /> delinquent beyond the due date, based on the remaining balance of the payment due at the rate of <br /> 6 percent per year. The Contractor shall also pay any fees incurred for debt collection services <br /> associated with a delinquent payment. <br /> (b) The interest charge rate shall be the greater of either the rate prescribed quarterly in <br /> the Federal Register by the Department of the Treasury for application to overdue payments or <br /> the interest rate of 0.5 percent per month. The interest charge rate will be determined as of the <br /> due date and remain fixed for the duration of the delinquent period. <br /> (c) When a partial payment on a delinquent account is received, the amount received shall <br /> be applied first to the penalty charges, second to the administrative charges, third to the accrued <br /> interest, and finally to the overdue payment. <br /> 3 <br />