We admit: Some CAP finance-related terms can sound like their own language.
Call it “Finances voCAPulary” if you’d like.
Regardless, we want to help clarify some terms that seem to be hot topics among members of the Arizona water community.
Since CAP welcomes open dialogue with stakeholders regarding fiscally-related concerns and questions, and hosts frequent public meetings, we’ve created this list of definitions for terms you’ll likely be hearing about during the next few months and beyond.
Here’s the list.
- Ag Consideration. The Fixed Operations, Maintenance & Replacement (OM&R) portion of the CAWCD water delivery rate that must be paid for by Central Arizona Water Conservation District (CAWCD) for Ag Settlement Pool participants as part of the Arizona Water Settlements Act.
- Basin Development Fund. Established by the Colorado River Basin Project Act and maintained by the U.S. Department of the Treasury, this fund is used to track contributions that provide a credit to the annual repayment obligation
- “Big R.” A CAWCD rate component for major repairs and capital replacements that smooths costs over time.
- Capital Charges vs. Capital Projects. A capital charge is a charge assessed to Municipal and Industrial (M&I) subcontractors to assist with CAWCD’s annual repayment obligation to the federal government for the reimbursable construction costs of the CAP. A capital project meets a minimum threshold that: (a) increases the useful life of the asset by three years or more; (b) constitutes replacement of the majority of the asset; and/or (c) enhances or upgrades the asset.
- Extraordinary Maintenance Project vs. Extraordinary Cost Reserve. An extraordinary maintenance project is repair or maintenance to an existing facility that has a cost of $2 million or more and maintains the original condition or level of utility. The Extraordinary Cost Reserve was created by the CAWCD Board. The Board directs the purposes for which the extraordinary cost reserve may be used, for example shortage mitigation or unusual maintenance and capital projects.
- Non-Indian Agricultural 9(d) Debt. A debt owed to the federal government by agricultural subcontractors pursuant to section 9(d) of the Reclamation Project Act of 1939. As a result of the Arizona Water Settlements Act, long-term entitlements to CAP non-Indian Agricultural (NIA) water were relinquished by CAP NIA subcontractors. In exchange for the relinquishment, CAP incurred the 9(d) debt liability from the irrigation districts. Those rights will be reallocated to M&I users and the District will collect charges from the M&I users to repay CAP’s costs in facilitating the relinquishment of the 9(d) debt.
- (Rate) Reconciliation. An annual analysis performed to determine the actual cost to deliver CAP water on a per acre-foot basis (reconciled rate) compared to the water rate set by the Board in advance of delivery, in accordance with the contracts and subcontracts with long-term customers and the Master Repayment with the federal government.
We hope this helps you develop your understanding of CAP financial terms (or “voCAPulary”) as we continue to collaborate with partners and stakeholders to help preserve and protect the reliability of the Colorado River system.