Ratesetting Process
Irrigation Ratesetting Document
CVP Cost Allocation Procedures
The cost allocation of the CVP plant-in-service investment is reviewed and updated annually to reflect: any additions to, or retirements from, the plant-in-service investment account; the adjustment to the historic data base to reflect another year's actual CVP water and power deliveries; and any changes in the water and power deliveries projected to be made during the remainder or the 50-year repayment period (based on the in-service date of the last major facility). A general description of the plant-in-service investment cost allocation process is detailed below.
Plant-in-service investment costs are first allocated among the authorized CVP purposes (e.g., flood control, navigation, water supply and power). Costs allocated to the water supply purpose are then suballocated among various functions, one of which is irrigation, based on each function's proportionate share of the total of the past, present and future CVP water deliveries. Similarly, CVP hydroelectric power generation and transmission costs are suballocated between commercial sales and CVP project use functions based on each function's share of the total past, present and future CVP power uses. Costs allocated to the CVP project use power function are then further suballocated among various CVP water supply functions (including irrigation) based on each function's share of the total of past, present and future CVP project use power uses.
Actual annual operating expenses are allocated at the close of each fiscal year. At year end, operation, maintenance and replacement costs incurred by the CVP during the previous 12 months are allocated among the authorized project purposes and then suballocated within the water supply and power functions. However, instead of allocating annual operating costs on the basis of past, present and future data as described above, the allocation is based on each function's share of the CVP water and power deliveries made during that year.
The plant-in-service and operation expense allocations are used to determine the water supply and project use power costs allocated to the irrigation and municipal and industrial functions and detail the costs to be recovered from these two functions through the water service rates.