several sources with increments phased to match 

 anticipated growth in water use. 



(c) If institutional obstacles to implementation are 

 noted, the plan should still be considered if the bar- 

 riers are substantially within the power of the affect- 

 ed water users to correct. Include a detailed de- 

 scription of the institutional obstacles, with a dis- 

 cussion of the basis for any conclusion that the ob- 

 stacles cannot be overcome. 



2.2.10 Evaluation procedure: Rank and display 

 the alternative plans based on least cost 

 analysis. 



(a) Rank all of the alternatives in order from the 

 highest cost alternative to the lowest. Calculate the 

 annualized costs of the alternatives on the basis of 

 the service (depreciable) life of the facility or the 

 period of analysis, whichever is less. 



(b) Calculate costs of the alternatives on the fol- 

 lowing basis: (1) Annualize all costs charged to the 

 alternative on the basis of the Federal discount 

 rate; (2) no costs for taxes or insurance should be 

 charged to the alternative; and (3) all other as- 

 sumptions and procedures used in calculating the 

 costs of the alternatives, including external disecon- 

 omies, should be parallel to those employed in cal- 

 culating the costs for the proposed Federal project. 



2.2.11 Evaluation procedure: Identify the most 

 likely alternative. 



Begin identification of the most likely alternative 

 with the least costly. If an alternative with a lesser 

 cost is passed over for a more expensive one, 

 present the justification for not selecting the lower 

 cost plan. 



2.2.12 Evaluation procedure: Compute M&l 

 water supply annualized benefits. 



(a) Annualized benefits of the Federal water 

 supply plan are equal to the annualized cost of the 

 most likely alternative. When applicable, the evalua- 

 tion should reflect differences in treatment, distribu- 

 tion, and other costs compared to the most likely 

 alternative. 



(b) The alternative cost of providing a water 

 supply for smaller communities (population of 

 10,000 or less) may be extremely expensive on a 

 per capita basis because these communities lack 

 the efficiencies of large-scale development. If such 

 communities are not able to afford an alternative 

 water supply comparable to the Federal water 

 supply plan as identified in the procedure described 

 above, that alternative should not be used as the 



basis for evaluating the benefits of the Federal 

 water supply plan. In this case, the benefit may be 

 considered equal to the cost of the separable M&l 

 facilities plus an appropriate share of the remaining 

 joint cost of the project. Provide documentation of 

 the without-project condition. 



2.2.13 Evaluation procedure: Problems in 

 application. 



(a) Two major problems exist in the application of 

 this procedure. The first is identification of the value 

 of conservation and other nonstructural measures. 

 Examples of evaluation of conservation strategies, 

 pricing methods, and drought management meas- 

 ures are available in technical publications. 



(b) A second major problem will arise over the 

 disaggregation of water use by sectors. Some com- 

 munities do not collect water use data by sectors. 

 Where the system is fully metered, such data can 

 be obtained by coding customer accounts and ac- 

 cumulating data on use for at least one year. Water 

 use by unmetered customers may be estimated by 

 extrapolating experience with similar metered sys- 

 tems, recognizing that unmetered customers face a 

 price of zero. Verify that data and/or forecasts ob- 

 tained from all sources are reliable and reasonable. 



2.2.14 Report and display procedures. 



Tables 2.2.14-1, 2, and 3 are suggested presen- 

 tations for reports that include municipal and indus- 

 trial water supplies. Tables 1 and 2 summarize by 

 time period (and season, if applicable) the project- 

 ed use by sector, projected supply by source, and 

 the difference between the two for average day 

 and maximum day, respectively. Table 3 shows the 

 costs of alternative plans and the quantity supplied 

 under each alternative by time period (and season, 

 if applicable). 



Table 2.2.14-1— M&l Water Supplies— Without 

 Project Condition— Average Day Use and Capacity 



24 



