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Colorado Springs Utilities Pilot Project Proposal <br />November 16, 2018 <br />Page 3 <br /> <br />B. Proposed Municipal Use <br />CS-U’s Municipal Water Use. CS-U is a municipal utility enterprise that provides, among <br />other things, municipal and industrial water service to customers within the City of Colorado Springs, <br />Colorado (“Colorado Springs”) and its water service area, and to other municipal and quasi-municipal <br />entities who provide water service within the vicinity of Colorado Springs. CS-U obtained a decree in <br />Case No. 05CW96, Water Division 2, authorizing CS-U to exchange water from Pueblo Reservoir to <br />Colorado Springs’ municipal water system for use, reuse, or successive use in Colorado Springs’ <br />existing and future water service area (the “05CW96 Exchange”). Pursuant to the CS-U Pilot Project, <br />Super Ditch will deliver water to Pueblo Reservoir under the exchange being decreed in Case No. <br />10CW4, Water Division 2 (“10CW4 Exchange”), a new exchange, or other legally available means, <br />for use by Colorado Springs under the 05CW96 Exchange. CS-U has contracted for up to 5,000 acre- <br />feet of water delivered by Super Ditch in three out of ten years. CS-U Contract at ¶ 3.2. <br />Delivery to CS-U. Leased water will be made available to CS-U through delivery via <br />exchange to Pueblo Reservoir. Super Ditch will deliver water to Pueblo Reservoir under the 10CW4 <br />Exchange or other legally available means. CS-U will then deliver the leased water to its municipal <br />water system under the 05CW96 Exchange or other legally available means. Pursuant to the decree in <br />10CW4, during times of limited exchange potential, stepped exchanges to intermediate storage <br />locations may be utilized to move water further upstream. Depletion credits may also be traded with <br />entities with water available at upstream locations to meet such entities’ downstream replacement <br />obligations. It is currently anticipated that these trades could involve entities such as Lower Ark, <br />CWPDA, AGUA, and/or other entities with water stored in Pueblo Reservoir to meet downstream <br />replacement obligations owed under augmentation plans, SWSPs, Rule 10 Plans, and/or Rule 14 Plans. <br />When feasible, depletion credits may also be exchanged back up to the Catlin or High Line headgates <br />and delivered into recharge locations and re-timed either for later use and/or exchange to upstream <br />locations. The CS-U Pilot Project will, when possible, use these and potentially other operational <br />mechanisms in order to ensure maximum utilization of available depletion credits and to test and <br />demonstrate alternative delivery mechanisms. <br /> An exchange concept for replacing delayed return flows may also be implemented as part of <br />the CS -U Pilot Project, subject to further analysis during the application process. During operation of <br />this pilot project, water to replace delayed return flows may ultimately be exchanged upstream to <br />Pueblo Reservoir along with the consumptive use water. The delayed return flow water would be <br />considered fully consumable and transferred to CS-U. CS-U could then make all of the required <br />delayed return flow releases to the Arkansas River from fully consumable sources it has available to it. <br />Conducting this operation as an exchange would maintain the fully consumable character of the water <br />being used to replace delayed return flows. <br />C. The Participating Ditch Companies, Farmers & Lands to be Fallowed <br />The potential participating farmers with historically irrigated lands available for fallow for the <br />initial 2020 operations of the CS-U Pilot Project consist of the shareholders of Catlin, Fort Lyon, and <br />High Line, identified in Table 1, attached (the “Participating Farmers”). These three canal companies <br />have indicated that enough of their shareholders have expressed an interest in rotationally or