Water Supply and Demand Study 1/13/11

Executive Summary
The State of Colorado is considering options for utilizing its allocation of 10,460 acre -feet (AF) of water in
the Animas -La Plata Project (A -LP Project). The A -LP Project authorizing legislation allocates project water
to just seven entities, only four of which are in Colorado; the Southern Ute Tribe, the Ute Mountain Ute
Tribe, the Animas -La Plata Water Conservancy District and the State of Colorado. The authorizing
legislation for the A -LP Project also only allows project water to be used for municipal and industrial
(M &I) purposes. The State of Colorado in purchasing its allocation of A -LP Project water would provide
water suppliers water for purchase, not just lease, to meet their future water demands and to protect
against droughts and shortages due to climate variability. The State of Colorado would also have a,
supply of water it could use to meet Colorado River Compact compliance obligations. The A -LP Project
provides a significant recreational benefit to the area and project water could also help address certain
environmental issues.
To date the La Plata Archuleta Water District has indicated definite interest in acquiring up to 1,560 AF
of A -LP Project water. In addition, the purchase of a minimum of 1,560 AF of the State's allocation of
A -LP Project water will provide the State of Colorado with a vote in the Animas La Plata Operations and
Maintenance Association (Association), the operating entity for the project. Without a Colorado vote on
the Associations Management Committee Colorado interests would be under represented. This would
not be in Colorado's best interests for a project located in Colorado and operating under a Colorado
water right.
The current capital cost (October 2010) for Colorado's A -LP Project water supply of 10,460 AF is
$27,914,902 and the Interest During Construction (IDC) is $8,437,263 for a total of $36,352,165 or
approximately $3,475 per acre -foot. It is important to note that this estimate may change during
contract negotiations with the Bureau of Reclamation for the purchase of the State's allocation. The
estimated cost of A -LP Project water may currently be a little higher than average for the area, but as
water resources become limited and costs for new supplies increase the price of A -LP project water
should become very competitive and would be a bargain if used for compact compliance purposes. Fixed
OM &R Costs (March 2009) for the 10,460 AF are estimated to be $64,050 per year initially and
increase to $71,400 per year when the project becomes fully operational. The Association, the project
operator, in cooperation with the U.S. Bureau of Reclamation will update these estimates as project
operating experience is gained.
Moving the A -LP Project water outside of La Plata and Archuleta Counties to areas with greater M &I
demand is expected to be cost prohibitive because of the significant conveyance pumping costs and
capital costs associated with moving a relatively small volume of water. Moving the A -LP Project water by
exchange to areas with greater M &I demand could prove difficult because the exchange reaches will be
through another state, or states, and without the full cooperation of water administration officials in
those other states, the Colorado State Engineer would have no administrative control over the exchange.
Similarly, the feasibility of using the State's A -LP Project water to eliminate calls on junior reservoirs is
minimal because of the limited opportunity to exchange water to those reservoirs.
There are several legal and water right issues affecting use of the State's A -LP Project water allocation.
A -LP Project operations and the use of project water must conform to provisions in the Upper Colorado
River Compact, Animas -La Plata Project Compact, the federal authorizing legislation and provisions in
the Record of Decision on the Final Supplemental Environmental Impact Statement for the Project.
Operations must also consider limitations on the water rights held by the Southwestern Water
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FINAL ALP Report_1_13_11_1-L.dou