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NOV-27-02 WED U3:49 PM FAX: ,47.0 PAGE 2 <br /> -27- 47,3 <br /> Scott & Forrest, <br /> Just wanted to provide some points for thought and discussion as you consider the <br /> storage/recharge project. I will outline first what I call the "face value facts"; that is to <br /> say, the direct and obvious benefits and costs of the proposed project. Following that, I <br /> will outline the nuances of the project that could make it relatively more attractive and <br /> will discuss why I do not consider them in the face value scenario. Bottom line: I don't <br /> see how the project can be justified under our presumed circumstances. If you find our <br /> estimates a significant departure from reality, please let me know. <br /> I will be home until 5 pm today(Wednesday)and will be back late Saturday night. Feel <br /> free to call me(970-495-1726)to discuss any aspects of these findings that you would <br /> like. <br /> Marshall <br /> Face Value <br /> The benefits of the project appear to be as follows (derived primarily from Leaf <br /> Engineering memo of August 28): <br /> 119 AF average annual storage releases (Jul-Sep) <br /> 240-440 AF average annual recharge (240 AF in 1st year, stabilizing at 440 AF in <br /> 10th year and beyond) <br /> The storage releases could be made available for use by shareholders on either the <br /> F1DC() or WM ditch(current bylaws apparently do not allow transfer out of the ditch). <br /> Ground water recharge accretions could be used to offset shareholder ground water <br /> depletions under CCWCD or GASP augmentation plans. It is not clear to me whether the <br /> ditch would be allowed to market this water under current bylaws. If they could, it <br /> appears that prevailing market prices would be$17-30/AF in the river. <br /> To provide an upper-bound estimate of benefits, I have valued the stored water at$50/AF <br /> because current bylaws restrict use to agricultural only and the new appropriation is so <br /> junior as to not be desirable from a market perspective. The recharge water will be <br /> valued at the higher observed price. <br /> 119 AF * $50/AF=$ 5,950 <br /> 440 AP * $30/AF=$13,200 <br /> $19,150 maximum benefit after 10 years <br /> (note that maximum benefits will begin at$13,150 <br /> in first year and increase until the 10th year), <br />