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3. RATE AND METHOD OF PAYMENT FOR WATER <br />(a) The Contractor agrees to pay annually to the United States for the quantity of water <br />for which it has contracted, whether or not the water is actually released from Blue Mesa <br />Reservoir. The payment rate for municipal water will be reviewed and adjusted annually in <br />accordance with the Debt Servicing Methodology used for the Colorado River Storage Project. <br />An adjustable charge for operation and maintenance (O&M) expenses, currently at a rate of $1 <br />per acre-foot, will be added annually to the municipal rate. The 2008 Colorado River Storage <br />Project municipal water rate has been set at $82.20 per acre-foot plus $1.00 per acre-foot for <br />O&M expenses. <br />(b) The first annual payment in the amount of $ 249.60 for 3 acre-foot of water <br />shall be 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 3 acre-foot 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 <br />be 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 />3