Reclamation Ends Decades Of Financial Uncertainty For Water And Power Users Of The Central Valley Project

The Bureau of Reclamation today released the Central Valley Project Final Cost Allocation Study, which determines how to distribute costs of the multipurpose CVP facilities to project beneficiaries.

Extending 400 miles through central California, the CVP is a multiuse water resources project that brings reliable water and power to farms and communities of the Central Valley and portions of the Bay Area. Like other Reclamation projects, the infrastructure investment made by Congress to build the CVP is to be repaid by the project beneficiaries. The CVP creates benefits for water supply, flood control, navigation, power, fish and wildlife, recreation, and water quality needs.

The CVP’s current and interim cost allocation was completed in 1970, with a minor update in 1975. Reclamation was directed by Congress to complete this Final Cost Allocation Study in 1986. This final cost allocation study will replace the 1975 interim allocation to reflect additional project construction, as well as regulatory, operational, legal and ecological changes that have taken place over the last half century.

“This CVP Final Cost Allocation Study marks a huge accomplishment, many years in the making, bringing financial certainty to water and power pricing,” said Reclamation Commissioner Brenda Burman. “The Central Valley Project provides water to irrigate approximately one-third of the agricultural land in California. In economic terms, the total value of water supplies, hydropower production, flood control and water quality benefits generated from the CVP is nearly $2B annually. I’m proud of Reclamation’s incredible work to ensure the project continues to provide reliable water to California farms and communities.”

The Cost Allocation Study will be reflected in rates for 2021 so that irrigation contractors, municipal and industrial contractors, and commercial power contractors have time to plan construction repayment costs due in 2030.

“For decades, farmers and communities have faced uncertainty about future costs of water and power. Completion of this important study will provide CVP contractors with certainty in their financial planning,” said California-Great-Basin Regional Director Ernest Conant. “Years of diligent effort and collaboration with our partner agencies, organizations and stakeholders helped determine a cost allocation that depicts the current project benefits.”

Reclamation began the process to develop a new cost allocation for the CVP in 2010, working with stakeholders and incorporating public comments to ensure it reflects the best available information through a fully transparent process.

Reclamation worked closely with other federal agencies to complete the study, including the Western Area Power Administration, the U.S. Army Corps of Engineers, and the U.S. Fish & Wildlife Service. Along the way, Reclamation hosted approximately 30 public meetings to solicit input and present information regarding cost allocation methodology and initial results and findings.

Information on the study and how to obtain the report can be found on the project website at: https://www.usbr.gov/mp/cvp/cvp-cost-allocation.html.

About Reclamation
Reclamation is the largest wholesale water supplier in the United States, and the nation's second largest producer of hydroelectric power. Its facilities also provide substantial flood control, recreation, and fish and wildlife benefits. For more information, visit https://www.usbr.gov.