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<br />FERC Application-Pueblo Dam - The District and our Water Activity <br />Enterprise have filed a motion to intervene with FERC (Federal Energy <br />Regulatory Commission) in protest of the application of Universal Electric. We <br />have also filed a notice of intent to file a competing application (see attached), in <br />conjunction with Colorado Springs Utilities, and an application (see attached) <br />will go out today (January 13th). The USSR has also filed a motion to intervene <br />with FERC (see attached USSR letter to FER C). I'm also preparing a letter to the <br />USSR (see attached draft) explaining our joint-venture investigation effort with <br />Colorado Springs and requesting a meeting with the Reclamation's Regional <br />Office staff. Colorado Springs has committed their resources to investigate the <br />possibility of hydropower development at Pueblo Dam. I'll keep you updated, <br />Update: Colorado Springs Utilities (CSU) is now telling us that they may not do <br />the promised investigation work on hydropower development at Pueblo Dam, <br />and that their preference may be to partner with other electric utilities (Western <br />States Power Assoc. or Loveland-Area Customers Association) in any <br />development venture of hydropower at Pueblo Dam. I view this as a significant <br />departure from our agreement to investigate hydropower development in a <br />Dislricl/CSU partnership. I'm concerned that CSU may now pursue development <br />opportunities without the District that would not guarantee that revenues from the <br />lease of power at Pueblo Dam would assist in the repayment of the Project and <br />the annual O&M costs. CSU has assured me that they want to also protect the <br />Project interests in any hydropower development. I'm prepared to send a letter or <br />make a verbal request to Reclamation requesting a meeting with them so that we <br />can gain an understanding of the District's options in this matter. <br /> <br />O&M Privatization Investigation-District staff will meet with Don Glaser, <br />Water Consult, and David Egger, B&V, February 4th to begin our work on <br />developing an outline of the procedures, regulations, maintenance and <br />operational considerations, and financing issues that would be involved in having <br />the District take over the O&M of the Fry-Ark Project. This is not a full feasibility <br />study, only an identification of all the issues so that a scope of work can be <br />developed for a future feasibility study. We hope to have the identification of <br />issues complete before August 2000. <br /> <br />If-and-When Contract Rates- The USSR has held firm on their proposed rate <br />increase for If & When contract storage. However, they did agree to re-evaluate <br />the rates at the end of the year and promised to engage the District and <br />contractees in the review process. In meetings with Reclamation and the <br />contractees (Pueblo, Colorado Springs, Aurora) we learned that their proposed <br />rates do not factor in the administrative costs associated with executing and <br />providing accounting for If & When contracts, I have stated that If & When <br />contract rates should include cost-recovery of any administrative and O&M costs <br />associated with the contracts, The rate for in-District users does not include an <br />O&M or an administrative cost component. Out-of-District rates do include an <br />O&M cost factor, but not an administrative cost factor, Reclamation agreed to <br />track their costs for a year and consider that information in the next rate setting <br /> <br />4 <br />