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MEMORANDUM - Ruedi Reservoir <br />Page 2 <br />Negotiations for the interim (15 year ?) contract among the Service, Reclamation and CWCB <br />have been delayed for two significant reasons: <br />O Concern over the impact to fishing on the Fryingpan River caused by the delivery of <br />31,650 AF of fish water plus the Round I and II water sales deliveries. Delivery of <br />the fish water plus contract water may result in Fryingpan River flows approaching <br />400 cfs. <br />® Reclamation is insisting that repayment for the 21,650 AF of surplus water must be <br />addressed as a part of the interim contract negotiations. The capital cost of this <br />21,650 AF is approximately $12 million. <br />The River District has put a proposal on the table to utilize Wolford Mountain Reservoir <br />releases in a Wolford/Ruedi exchange that has the potential to alleviate to a significant extent the <br />concerns over the delivery impacts to the Fryingpan River, while also providing for modified permit <br />authorization for Wolford Mountain Reservoir as enlarged. We are currently discussing the proposal <br />with the Service and Reclamation. <br />The more significant issue is the question of repayment. There are several options for <br />addressing the repayment issue: <br />O No action or put off the repayment issue until the completion of the interim contract <br />period. This option is unacceptable to the CWCB and Reclamation because during <br />the interim contract period the repayment costs associated with Ruedi continue to <br />accrue with interest. Additionally, uncollected O &M costs will continue to accrue, <br />again with interest. The authorizing legislation requires repayment by the year 2019 <br />at the end of the 15 -year interim contract, the period for repayment will be reduced <br />to six or seven years. A A 5�p /A4 / � <br />® The Recovery Program pays the $mill' n associated with the repayment of the <br />21,650 AF. There are two problems with this approach. First, a repayment contract <br />would give the Recovery Program a more "vested" interest in the water, so this could <br />amount to a permanent allocation of the 21,650 AF for fish purposes. Second, under <br />Reclamation law, water used for fish, wildlife, and recreation purposes is considered <br />non - reimbursable. Both Reclamation and the Service have indicated that a Recovery <br />Program repayment contract is not a legally viable option. <br />