Final Draft ALP Marketing Supply and Demand Study

Animas -La Plata Water Marketing Supply and Demand Study
4.0
$2,400,000
$96,000 J
$1,200,000
$48,000
- - -
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$1,150,000
$46,000
$1,000,000
I
$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.
Z $1.2 Million is amount left if State purchases 3,120 AF with its current $12.0
million authorization.
Section 2
Fixed OM &R Alternative 2. State Assigns All or a Portion of the Responsibility for Paying the
Fixed OM &R
Should another entity purchase the State Water, this entity would pay their share of the Fixed
OM &R costs directly to the Association.
A 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
which would give them membership in the Association. Another example could be the formation
of a new organization, which for illustrative purposes only, we have elected to call the "Colorado
River Compact Compliance Organization."
Similar to the Capital Repayment Alternative 5, the State may allow water providers to pay a
portion, or all, of OM &R costs in exchange for the ability to use the State's Water to augment their
supplies as needed or in years of drought. This would require negotiations that are outside the
scope of this study.
Variable OM &R Costs
Variable OM &R costs are the costs required to pump water into Lake Nighthorse from the Animas River
by an entity using A -LP Project water. The Association is currently establishing a $3,000,000 Variable
OM &R Fund to pay these costs. If the fund is adequately financed, there will be no Variable OM &R cost
to pay. If the fund is not adequate, the State could consider the following options to make up any short
falls.
1. Establish 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-
certainties associated with Variable OM &R Costs this may not be the best utilization of limited funds
because funding may not be required every year and the Variable OM &R Fund may cover those
costs.
2. Assign Variable OM &R costs to the entity utilizing that portion of the State's allocation.
3. Obtain an annual appropriation from the State Legislature as necessary.
If the entire pool is utilized for compact compliance purposes, pumping will only be required in those
years when the pool is actually used for compact compliance purposes.
The State's responsibility for Variable OM &R costs is limited solely to paying for the pumping costs
associated with pumping the State's allocation to Lake Nighthorse. To reiterate, payment of Variable
OM &R costs may not be necessary in every year. Also, please remember pumping to replace
evaporation and seepage losses is a Fixed OM &R cost, not a Variable OM &R cost.
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FINAL ALP Repo rt_1_13_11_1-L. Dorx