Water Supply and Demand Study 1/13/11

Animal La Plata Water Marketing Supply and Demand Study Section 2
Association Variable OM &R Cost Fund Amount is $3,000,000 and generates the
$90,000 in Reclamation's OM &R estimate required to pump 5,000 AF annually.
2 $1.2 Million is amount left if State purchases 3,120 AF with its current $12.0
million authorization.
ixed OM &R Alternative 2. State Assigns All or a Portion of the Responsibility for Paying the
ixed OM &R
hould another entity purchase the State Water, this entity would pay their share of the Fixed
M &R costs directly to the Association.
second variation would be to allow a third party willing to pay the Fixed OM &R costs in exchange
for other considerations. For example, a third party could agree to pay the Fixed OM &R costs
hich would give them membership in the Association. Another example could be the formation
o a new organization, which for illustrative purposes only, we have elected to call the "Colorado
ver Compact Compliance Organization."
S milar to the Capital Repayment Alternative 5, the State may allow water providers to pay a
p rtion, or all, of OM &R costs in exchange for the ability to use the State's Water to augment their
si ipplies as needed or in years of drought. This would require negotiations that are outside the
s ope of this study.
Variab a OM &R Costs
Variabl OM &R costs are the costs required to pump water into Lake Nighthorse from the Animas River
by an ei itity using A -LP Project water. The Association is currently establishing a $3,000,000 Variable
OM &R I lund to pay these costs. If the fund is adequately financed, there will be no Variable OM &R cost
to pay. f the fund is not adequate, the State could consider the following options to makeup any short
falls.
1. Esta blish an escrow account similar to that proposed for Fixed OM &R cost. The manner (time and
rate in which a water provider takes its water will determine the variable costs. Given the many un-
cert tinties associated with Variable OM &R Costs this may not be the best utilization of limited funds
bec use funding may not be required every year and the Variable OM &R Fund may cover those
2. Assi n Variable OM &R costs to the entity utilizing that portion of the State's allocation.
3. Obta n an annual appropriation from the State Legislature as necessary.
If the en ire pool is utilized for compact compliance purposes, pumping will only be required in those
years wt an the pool is actually used for compact compliance purposes.
The Stat 's responsibility for Variable OM &R costs is limited solely to paying for the pumping costs
associat d with pumping the State's allocation to Lake Nighthorse. To reiterate, payment of Variable
OM &R c sts may not be necessary in every year. Also, please remember pumping to replace
evaporat on and seepage losses is a Fixed OM &R cost, not a Variable OM &R cost.
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FINAL ALP Reptrt_1_13_11_LL.Docx
4.0
$2,400,000
$96,000
$1,200,000
$48,000
$1,150,000
$46,000
$1,000,000
$40,000
$800,000
$32,000
Association Variable OM &R Cost Fund Amount is $3,000,000 and generates the
$90,000 in Reclamation's OM &R estimate required to pump 5,000 AF annually.
2 $1.2 Million is amount left if State purchases 3,120 AF with its current $12.0
million authorization.
ixed OM &R Alternative 2. State Assigns All or a Portion of the Responsibility for Paying the
ixed OM &R
hould another entity purchase the State Water, this entity would pay their share of the Fixed
M &R costs directly to the Association.
second variation would be to allow a third party willing to pay the Fixed OM &R costs in exchange
for other considerations. For example, a third party could agree to pay the Fixed OM &R costs
hich would give them membership in the Association. Another example could be the formation
o a new organization, which for illustrative purposes only, we have elected to call the "Colorado
ver Compact Compliance Organization."
S milar to the Capital Repayment Alternative 5, the State may allow water providers to pay a
p rtion, or all, of OM &R costs in exchange for the ability to use the State's Water to augment their
si ipplies as needed or in years of drought. This would require negotiations that are outside the
s ope of this study.
Variab a OM &R Costs
Variabl OM &R costs are the costs required to pump water into Lake Nighthorse from the Animas River
by an ei itity using A -LP Project water. The Association is currently establishing a $3,000,000 Variable
OM &R I lund to pay these costs. If the fund is adequately financed, there will be no Variable OM &R cost
to pay. f the fund is not adequate, the State could consider the following options to makeup any short
falls.
1. Esta blish an escrow account similar to that proposed for Fixed OM &R cost. The manner (time and
rate in which a water provider takes its water will determine the variable costs. Given the many un-
cert tinties associated with Variable OM &R Costs this may not be the best utilization of limited funds
bec use funding may not be required every year and the Variable OM &R Fund may cover those
2. Assi n Variable OM &R costs to the entity utilizing that portion of the State's allocation.
3. Obta n an annual appropriation from the State Legislature as necessary.
If the en ire pool is utilized for compact compliance purposes, pumping will only be required in those
years wt an the pool is actually used for compact compliance purposes.
The Stat 's responsibility for Variable OM &R costs is limited solely to paying for the pumping costs
associat d with pumping the State's allocation to Lake Nighthorse. To reiterate, payment of Variable
OM &R c sts may not be necessary in every year. Also, please remember pumping to replace
evaporat on and seepage losses is a Fixed OM &R cost, not a Variable OM &R cost.
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FINAL ALP Reptrt_1_13_11_LL.Docx