Animas-La Plata Project Water Supply Demand Study

ANIMAS - LA PLATA WATER SUPPLY AND DEMAND STUDY
2. COST ANALYSIS
2.1 Capital Cost for A -LP Project Water
The repayment obligation of non - federal entities for a project constructed by the USBR is a detailed and
complex subject. The information presented below is correct for the circumstances of the State of Colorado
repaying the federal government for all, or a portion, of the 10,460 AF of annual yield from the A -LP Project
water to the best of Brown and Caldwell's ability as of the date of this report Qanuary 2010). However, the
interested reader is cautioned against extrapolating further conclusions beyond the narrow conditions of this
report without exploring these in full with knowledgeable personnel of the USBR.
2.2 SCHEDULE FOR PURCHASING STATE'S ALLOCATION
An inquiry was made to the USBR concerning if there was a deadline by which the State had to indicate it
would purchase all or a portion of the 10,460 AF allocation? The response was:
"Thc 2000 Settlement Amendments state that the repayment obligation of the non -Tribal
entities is subject to final cost allocation. This could be interpreted to mean that the State
has until final cost allocation to decide whether or not to participate in the A -LP Project;
however, in order to ensure that the final cost allocation is completed in a timely and
efficient manner, it is imperative that the State make a commitment regarding its
participation in the A -LP Project sooner rather than later."
2.3 CAPITAL COSTS
If the State of Colorado (State) decides to purchase A -LP Project water, the State will have to pay its share of
project capital costs. If the State were to purchase all 10,460 AF allotted to the State, this will amount to
$27,954,506 (in October 2009 dollars, see note 1, Appendix B).
The State could pay the capital costs in one lump sum payment or make annual payments over a 40 -year
period at the present interest rate of 8.135 percent which will result in an annual payment of $2,775,556 per
year (see note 2, Appendix B). The basis for the 40 -year repayment period and the 8.135 percent interest rate
is further explained in note 3, Appendix B.
In addition to this annual payment for the capital costs, the State will also be required to pay its share of IDC
from the day construction started as explained in the next section.
2.4 INTEREST DURING CONSTRUCTION (IDC)
If the State decides to purchase A -LP Project water, it will have to pay its share of the project IDC costs.
IDC is calculated at the 8.135 percent rate. If Colorado decides to make a lump sum payment for the capital
costs, the State will still owe its allocated share of accumulated IDC to date.
As of September 30, 2009, the IDC accumulated for Colorado was $6,719,900 (see note 4, Appendix B). The
State can avoid making additional IDC and interest payments by making a lump sum payment for the full
2 -1
PADala \GEN \CWCB\138372 - Animas -La Plata Demand Study \Deliverables\Reports\Flnal\ALP Cost Demand Study Final Reporl.docx