Restoration Fund Charges
- Expenditures, Credits and Offsets Report, FY 1993 to FY 2011
- Expenditures, Credits and Offsets Report, FY 1993 to FY 2010
- Cumulative Revenue/Appropriations and Outlays, FY 1993 - FY 2007
- Expenditures, Credits, and Offsets, FY 1993 - FY 2008
Restoration Fund Background
Definition. Restoration Fund charges are the range of annual surcharges and assessments on Central Valley Project (CVP) water deliveries for purposes of environmental mitigation as required by the Central Valley Project Improvement Act (CVPIA).
Relationship to Water Ratesetting (Water Rates). CVP irrigation and municipal and industrial (M&I) water contractors pay for water deliveries on an acre/foot basis according to water rates specified in their respective contracts. The process for developing annual water rates is referred to as water ratesetting. In addition to annual water rates, CVPIA further requires CVP water contractors to pay specific charges to mitigate the impact of the CVP on the environment. Revenues from these charges are deposited in the Restoration Fund in the U.S. Treasury and are subsequently appropriated by Congress to fund mitigation activities. Restoration Fund charges are assessed in accordance with various provisions of CVPIA and are not calculated as part of the CVP ratesetting process.
Restoration Payments. Restoration payments apply to project irrigation and M&I water sold and delivered to CVP water contractors including (1) additional project water, (2) project water provided pursuant to a water rights settlement contract, (3) flood water used for M&I purposes, and (4) Section 215 water, if any. CVPIA specifies that "restoration payments shall not be assessed on base water, exchange water, other project water made available without charge to the recipient as provided by applicable Reclamation law, or Warren Act contract deliveries."
Restoration payments are $6 and $12 per acre-foot (October 1992 price levels) for delivered CVP irrigation and M&I water respectively. These payments are indexed annually as required by CVPIA.
Friant Surcharges. Friant surcharges apply to all CVP water contractors who receive project water from the Friant Division of the CVP pursuant to a water service, a water rights settlement or a repayment contract. Surcharges are assessed on each acre-foot of delivered project water, including:
- Class 1 and Class 2 water
- Flood water used for M&I purposes
- Section 215 water
- Additional project water
- Project water provided pursuant to a water rights settlement contract and/or
- Project water delivered to a transferee(s) pursuant to an approved transfer(s).
According to CVPIA "the Friant surcharges shall continue until such time as flows of sufficient quantity, quality and timing are provided at or below Gravelly Ford to meet the anadromous fishery."
Surcharge amounts are $4, $5 and $7 for CVP irrigation and M&I water delivered respectively for the following time periods:
- October 31, 1992 - September 30, 1997
- October 1, 1997 September 30, 1999
- October 1, 1999 and thereafter
M&I Surcharges. M&I surcharges apply to all project water used for M&I purposes and (1) sold by the United States pursuant to a new water service, water rights settlement or repayment contract to an entity which was not a water contractor prior to October 31, 1992, or (2) transferred by an existing water contractor or exchange contractor to an entity which was not a water contractor prior to October 31, 1992.
The M&I surcharge is $25 per acre-foot (October 1992 price levels) of delivered CVP M&I water. The M&I surcharge is adjusted annually by Reclamation to reflect fluctuations in costs as projected by the Office of Management and Budget for use in developing Reclamation’s annual budgets.
Pre-Renewal Charges. CVPIA requires that "Beginning on October 1,1997, all water contractors having an existing water service, repayment or water rights settlement contract which was in effect on October 30, 1992, excepting those water contractors specifically exempted as described below, shall be assessed annually a pre-renewal mitigation and restoration payment for each acre-foot of delivered project water. The pre-renewal charge shall not be assessed if one of the following conditions is met:
- The water contractor’s existing water service, repayment or water right settlement contract was renewed between January 1, 1988 and October 30, 1992, or:
- If the Programmatic Environmental Impact Statement (PEIS) required by the CVPIA is not completed by October 1, 1997, and prior to that date the water contractor enters into a binding agreement with the United States to renew the existing water service, repayment or water rights settlement contract immediately upon completion of the PEIS and all other documentation as may be required by the National Environmental Policy Act."
All CVP water contractors subject to these requirements have entered binding agreements as required under paragraph b. above. Accordingly, these contractors are exempted from these charges. Had it been applied, the Pre-renewal charge would have been equal to 1 ½ times the Restoration Payments applicable to the water contractor for delivered CVP irrigation and/or M&I water. This is the so-called "hammer clause".
Tiered Water Rates. As applicable, CVP irrigation and M&I water contracts require payment of tiered water rates for contractual water entitlements including:
- Tier 1 - Tier 1 is the Cost of Service (COS) water rate developed through the water ratesetting process. The Tier 1 rate applies to the first 80% of the delivered contractual water entitlement.
- Tier 2 - The Tier 2 rate is the numerical average of the Tier 1 rate and the Tier 3 rate. The Tier 2 rate applies to the next 10% of the delivered contractual water entitlement.
- Tier 3 - This rate is the full cost rate developed through the water ratesetting process. Tier 3 applies to the last 10% of the delivered contractual water entitlement.
Transferred Water Rates. Transferred water rates apply to all project water, including Class 1 and Class 2 water and project water provided pursuant to a water right settlement contract, that is transferred pursuant to the transfer provisions of the CVPIA. Transfer water rates apply when water is transferred from a CVP water contractor to an entity (transferee) which was not a water contractor on October 30, 1992, and is used by the transferee as either irrigation or M&I water. The charges for these transfers are as follow:
- Irrigation water shall be paid for by the water contractor at the full cost rate applicable to the water contractor.
- M&I water shall be paid for by the water contractor at the M&I water rate applicable to the water contractor as determined by Reclamation consistent with the then current project M&I ratesetting policy and applicable Reclamation Law.
All exchange water which is transferred pursuant to the transfer provision of the CVPIA from an exchange contractor to an entity (transferee) which was not a water contractor on October 30, 1993 and is used by the transferee as:
- Irrigation water shall be paid for by the exchange contractor at the full cost rate which would be applicable to the exchange contractor if required to pay for project water consistent with the then current project irrigation ratesetting policy and applicable Reclamation law.
- M&I water shall be paid for by the exchange contractor at the M&I rate which would be applicable to the exchange contractor if required to pay for project water consistent with the then project M&I ratesetting policy and applicable Reclamation law.
Additional requirements applicable to transferred water rates are documented in Part E of the Revised Interim Guidelines: Restoration Fund Payments and Charges, October 1993.
CVPIA Program Activities. Information on CVP program activities can be found on The Ecosystem Restoration Activities (TERA) website.
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Last update: February 15, 2013