Final Draft ALP Marketing Supply and Demand Study

Animas -La Plata Water Marketing Supply and Demand Study
Section 2
require additional funds to cover their variable OM &R costs at some point in the future as the Project
approaches full operation unless further accommodations are made to cover or share those costs.
Addressing this issue needs to be a key consideration during the development of future Association
policies and operating principles.
Payment Default
If an Association member's payments are in default, as described in Section 4.2 of the IGA, the
Association will withhold delivery of the member's project water until the default is cured by payment of
all amounts past due and any out -of- pocket expenses incurred by the Association.
2.4 Repayment Alternatives
Given the funding required to purchase A -LP Project water, Brown and Caldwell developed alternatives
for repaying Reclamation for the State's portion of A -LP Project water and for paying annual OM &R costs.
This section describes those alternatives.
Capital Cost Repayment Alternatives
Costs for the A -LP Project were presented in "Animas -La Plata Water Supply and Demand Study," (Brown
and Caldwell, February 24, 2010). To the extent possible these costs have been updated as described
in Section 2.2 and used in the repayment alternatives discussed in this section.
• Capital Costs: The latest available estimate of Colorado's share of the capital costs is $27,914,902
(personal communication, Patrick Page, October 7, 2010).
• IDC: IDC on capital costs is updated quarterly and will continue to accrue until the State enters into a
repayment contract or otherwise provides the required funding. The State could enter into a
repayment contract with Reclamation immediately; however, because the State did not enter into a
repayment contract with Reclamation providing for upfront cost sharing in the project, IDC on
construction costs continues to accrue.
• To date (October 2010), Colorado's share of the IDC is $8,437,263 (personal communication, Patrick
Page, U.S. Bureau of Reclamation, October 7, 2010). Entering into a repayment contract now as
opposed to the time of "final cost allocation" may stop the clock on IDC charges but such would have
to be negotiated during development of the repayment contract. If the State is committed to
purchasing all or a portion of Project water it is in the State's best interest to stop the further
accumulation of IDC.
• For planning purposes in this report, the total repayment to the federal government for Colorado's
10,460 acre -feet is estimated to be $36.4 million, which is composed of $27.9 million in capital
costs, plus approximately $8.5 million in IDC costs. This estimate is based on presently available cost
data and needs to be updated as new capital cost and IDC data become available from Reclamation.
The next update of capital costs and IDC will occur on December 31, 2010.
Colorado House Bill (H.B.) 10 -1250 authorized the expenditure of up to $36 million from the Perpetual
Base Account of the Severance Tax Trust Fund towards the purchase of the State's 10,460 acre -feet of
A -LP Project water. The Bill authorized three separate $12 million installments from the Perpetual Base
Account Fund and appropriated the first $12 million installment. Therefore, if the State should choose
to enter into a repayment contract with Reclamation, this $12 million could be transferred to the Federal
Government as a down payment towards the purchase of all or a portion of the State's allocation.
The first $12 million installment appropriated in HB 10 -1250 will become available June 30, 2011. The
remaining $24 million will require future legislative appropriation, which could become available as
follows:
. 1St installment $12 million (appropriated) -available June 30, 2011;
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FINAL ALP Report1_13_11_LL. Doox