Final Draft ALP Marketing Supply and Demand Study

Animas -La Plata Water Marketing Supply and Demand Study Section 2
Capital Repayment Alternative 4. Purchase 3,120 AF of A -LP Water and Establish Fixed OM &R Escrow
Fund
This alternative assumes purchasing a portion of the State Water with the $12 million allocated to the
CWCB, but reserves a portion of the total funds for payment of Fixed and Variable OM &R costs. For this
alternative, approximately 3,120 AF would be purchased at a capital cost of $10.8 million. The
remaining $1.2 million would be used to establish an escrow account to pay for the annual Fixed OM &R
cost and perhaps some Variable OM &R costs. The precise amount required to establish an appropriate
escrow account is uncertain, but the 1.2 million appears to be adequate. As shown in Table 2.5,
$10,000 to $11,000 annually would be required to pay the Fixed OM &R costs for 1,560 AF. This
assumes the LPAWD would pay for the other half (1,560 AF). However, if the A -LP Water District does
not purchase its 1,560 AF for several years, the $800,000 escrow account would still be adequate to
cover all fixed OM &R costs for the 3,120 AF. An $800,000 escrow account earning 3 percent would
generate $24,000 annually; with approximately half being available to pay any Variable OM &R costs not
covered by the Variable OM &R Fund.
This alternative allows the State to have sufficient project water available for the La Plata Archuleta
Water District, which has expressed interest in purchasing up to 1,560 AF of supply. This alternative
also requires the State to decide how it will share its one vote on the Association Management
Committee with the LPAWD.
Capital Repayment Alternative 5. The Purchase of 1,560 AF
In order to have a seat on the Associations Management Committee, a supply allocation of 1,560 AF is
required. In this alternative, CWCB would purchase 1,560 AF of State water. The capital cost for this
alternative is approximately $5.4 million. The State would then decide whether to sell this allocation to
prospective water providers and either allow the purchaser to take the seat on the Associations
Management Committee or retain that seat. The selected alternative would be included in both the
repayment contract with Reclamation and any assignment agreement between the State and local water
providers acquiring State Water.
Variations to Capital Repayment Alternatives 1 -5 - Drought Supply Resource
This involves the situation where the State has purchased all or a portion of the State's allocation of A-
LP Water. A condition for using this water would be to have the user of the State's water pay a fee for
the ability to use this water in the case of drought (drought insurance). This would be a negotiated rate
that the water provider would pay to the State annually. The fee could be used to pay annual OM &R
costs or help repay a portion of the capital costs if appropriate. This option is a possibility in all of the
above mentioned alternatives.
The drought supply option concept could also be used to establish a Compact water bank. If the water
were to be used, a large payment would be required to cover all 0 &M and much of the capital cost.
Capital Repayment Alternative 6. State Allows All State Water to Revert to the Tribes
In this alternative, all the State's allocation of water would be allowed to revert to the Tribes. This means
that Colorado would have no financial obligations and no seat on the Associations Management
Committee. The State Water becomes part of the Tribes allocation to use as they see fit.
Alternatives for Payment of Fixed OM &R Costs
Fixed OM &R costs include all OM &R costs for the ALP Project except for pumping costs associated
directly with an entity's allocation. The State's Fixed OM &R cost estimates range from $71,400 per year,
if all 10,460 acre feet are purchased, to $10,880, if only the minimum of 1,560 acre feet is purchased
(Patrick Page personal communication to Randy Seaholm, July 19, 2010, Appendix B.) There may be
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