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Show WATER SALES California California sells water developed and delivered under its large state water project. Water supply contracts have been made with 31 local water organizations, representing two- thirds of the state's population and one- fourth of its land area. These organizations have contracted to pay all project costs allocated to water supply- about 85 percent of the total cost. In 1975 it was estimated ( State of California, Department of Water Resources, 1975) that total project construction expenditures would eventually reach $ 4 billion and that an additional $ 3.9 billion would be required for distribution systems to convey water from project aqueducts to users; this latter amount to be paid exclusively by the local water contractors. Under the water supply contracts, $ 71.9 million of local funds were advanced to pay construction costs for delivery structures and excess capacity required locally. Some organizations at the lower end of the project delivery system began making payments several years in advance of water deliveries. The contracts require payments of 1) a Delta water charge and 2) a transportation charge. The Delta water charge is assessed for each acre- foot of water a contractor is entitled to receive. The charge is computed so as to return to the state during the term of the contract all costs ( together with interest) attributed to the reservoirs and other facilities used to store water and release it downstream to the Sacramento River Delta. Costs allocated to flood control, recreation, and fish and wildlife enhancement are not paid under the water supply contracts, but charges for power costs and credits for power revenues are included in the determination of the Delta water charge. The transportation charge is computed so as to return to the state during the term of the contract the costs of the aqueducts required to deliver the water from the Delta to the respective contractors. Construction costs and operating costs of each aqueduct reach are allocated each year among contractors whose deliveries are or will be conveyed through that reach. Municipal and industrial users repay each year's construction expenditures with interest in 50 equal annual installments. Agricultural users repay allocated construction costs by a uniform charge per acre- foot of water entitlement computed to return such costs with interest during the term of the contract. The publication entitled, Standard Provisions for Water Supply Contracts ( State of California Department of Water Resources, 1962) describes the principles used to define the two charges. Current rates are tabulated in Bulletin No. 132- 76 ( State of California, Department of Water Resources, 1976). The 31 contractors that purchase water from the State Water Project recover their costs through direct user charges, property taxes, or a combination of the two. The Metropolitan Water District of Southern California ( MWD), one of the major contractors, supplies water to agricultural, municipal, and industrial users. The water rates and financing structure of MWD, though not typical of smaller contractors, exemplifies local arrangements for repaying state water contract costs. The MWD delivers water to six counties in Southern California. The Colorado River and the state project bringing water from Northern California are its two sources of supply. Deliveries may be of raw, untreated water, or filtered water. The district obtains revenue from water sales, property taxes, annexation charges, and interest income. Water sales and property taxes account for most of the income. In addition to payments for state project water, the District must pay debt service on bond obligations and operating costs. The distribution of costs between taxpayers and water users is guided by provisions of Resolution 5821 which was adopted by MWD in 1960. All payments received by the Metropolitan Water District of Southern California for annexation charges shall be applied first to bond obligations to which they are or become pledged and next to reduce other indebtedness resulting from capital expenditures. At least one- half of all remaining capital charges plus all operation and maintenance costs of the Metropolitan Water District of Southern California shall be borne by sales of water at uniform rates to constituent members irrespective of the source of point of delivery of the water, except for equitable surcharges to reflect the cost of special services. The rate for water shall be at least as large as the total of all such costs in the three prior fiscal years plus the anticipated cost in the next three years divided by the total quantity delivered to constituent members in the three prior years and that quantity projected for the ensuing three years. The remainder of all capital charges may be met from tax levies on the basis of assessed values of property within the Metropolitan Water District of Southern California to the extent permitted by law; when the expectancy that this tax burden will diminish progressively as the use of water approaches the total of the Aqueducts' supplies. According to the resolution, after annexation charges and interest income have been subtracted, the remaining capital costs are divided with one- half or more being assigned to water users and the remaining one- half or less being assigned to taxpayers. The resolution also requires that all operating costs be repaid by water users. These include 1) fixed costs of operating the District systems and the District's obligation to the State Water Project and 2) variable costs, which are essentially power costs, incurred in delivering water through the Colorado River Aqueduct and the State Water Project. 5 |