Ratesetting is the process of calculating water service rates that recover the federal investment in constructing, operating and maintaining the Central Valley Project (CVP).
The basic authority for recovering the federal investment in constructing, operating and maintaining authorized water resource projects is the Reclamation Project Act of 1939 (the Act). Water service contracts are authorized under Sections 9c(2) and 9e of the Act respectively for M&I and irrigation water. Water service contracts are used in instances such as the CVP where the project includes multiple individual multipurpose facilities benefiting different project functions and many different contractors. For such projects, costs are allocated to, and recovered from, appropriate beneficiaries based the amount of water received (i.e., water service). The basic unit of measurement for water deliveries and, consequently for cost recovery, is acre-feet of water.