Southern Delivery System: Colorado Springs Utilities experiences sticker shock with Reclamation contract offer

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From The Pueblo Chieftain (Chris Woodka):

“We are shocked by the starting point you have provided,” said John Fredell, SDS project director. “We believe that we should be treated fairly, equitably and similarly to the existing contract for the Pueblo Board of Water Works.”

After spending most of the day politely listening to Fredell pick apart Reclamation’s proposed contract to tailor it to the needs of Colorado Springs and its SDS partners, Area Manager Michael Collins proposed a menu of prices that led to an abrupt silence. Collins proposed $50 per acre-foot for storage, $50 per acre-foot for conveyance at the North Outlet Works and $50 per acre-foot for an exchange. There was also a 3.08 percent annual increase built into the fee structure.

hat provoked incredulity from Colorado Springs water attorney David Robbins. “Fifty dollars an acre-foot for a facility we build and turn over to you?” Robbins asked…

Fredell then presented Colorado Springs’ proposal: $17.35 per acre-foot for storage and exchange, with no charge other than maintenance and operation fees for the North Outlet Works. The annual increase would be 1.79 percent. “We’ve heard the numbers,” Collins replied. “We’ll wait to respond until the next negotiating session.”

Later, Fredell returned, asking Reclamation to reconsider the Colorado Springs proposal. “Our residents pay 70 percent of the ad valorem of the Southeastern district,” Fredell said. “We have nothing more to give you until you consider our proposal.”[…]

Colorado Springs is seeking a long-term contract to store 20,000 acre-feet of water — about what it stores now — in an excess-capacity account in Lake Pueblo for 2011, with 800 acre-feet added annually until a total of 28,000 acre-feet is reached. Reclamation is considering a request by Colorado Springs for a 40-year contract, even though the environmental impact statement was conducted through 2046. Its partners want long-term contracts as well: Pueblo West, 10,000 acre-feet; Security, 2,500 acre-feet; Fountain, 1,500 acre-feet. All have used similar one-year excess capacity contracts in the past. Under Colorado Springs’ banner, one conveyance contract for the North Outlet Works is being sought, with the SDS agreement among all four partners used to assure payments are made. Fredell requested the annual charge for the new facility be waived since Colorado Springs is building the new structure and plans to deed it to Reclamation. Colorado Springs is the only SDS partner seeking a 10,000 acre-foot exchange — a paper trade — to Twin Lakes from Lake Pueblo, which would allow it to move water through the Homestake Pipeline as well and would benefit Reclamation by removing the transit loss of 10 percent that occurs as the water flows down the Arkansas River…

Colorado Springs wants to pay what the Pueblo Board of Water Works is paying for its 25-year storage contract, $17.35 per acre-foot. The rate of inflation of 1.79 percent was the same as Reclamation negotiated for a 40-year project with Aurora in 2007, Fredell said. Reclamation now leases excess-capacity space in Lake Pueblo for $24 per acre-foot to members of the Southeastern Colorado Water Conservancy District, which includes all of the SDS participants. The Aurora contract is now at about $50 per acre-foot, for both storage and exchange. However, Aurora is not in the Southeastern district and is charged more. The city east of Denver uses Reclamation’s Fryingpan-Arkansas Project to move water out of the Arkansas Valley.

More Southern Delivery System coverage here and here.

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