Capturing the Eagle River’s last drops for those dry, hot summers ahead — The Mountain Town News

March 27, 2015

eagleparkreservoirviamountaintownnews

From The Mountain Town News (Allen Best):

Expansion of Eagle Park Reservoir and other storage options studied

The summer of 2002 was so hot and dry in Vail that when a rainstorm finally arrived in August, people violated the idiom about common sense and stood and then danced outside in the pouring rain.

In the offices of the local water provider, Eagle River Water & Sanitation District, Linn Brooks remembers worries that Gore Creek—the primary source of Vail’s water, via wells that draw from the creek’s alluvial aquifer—might disappear altogether. Droughts from the 20th century had never been as severe.

September rains in 2002 eased immediate concerns. But 13 years later, water district still seeks to steel itself from a return of drought that severe—or worse.

Twice, upstream reservoirs have been expanded modestly and wells were drilled downstream at Edwards at a cost of several million dollars.

Now comes discussion of a much more ambitious expansion of Eagle Park Reservoir, one of several ideas for increased storage of the final waters of the upper Eagle Valley.

Eagle Park Reservoir is along the East Fork of the Eagle River, near Frémont Pass, about 20 miles south of Vail. It was built in the 1960s to hold tailings from the nearby Climax molybdenum mine. Then, in the mid-1990s, it was cleaned up and converted to water storage beginning in 1998.

Expanded minimally in 2009 at a cost of $250,000, it can now store a maximum of 3,300 acre-feet of water. The idea now being reviewed would expand storage to between 6,000 and 9,000 acre-feet.

Brooks, now the general manager for the water and sanitation district, says the project would address future population growth in Vail and the Eagle Valley, provide water to meet minimum streamflow water rights and, somewhat more nebulously, deliver water to mitigate water quality problems and benefit the river ecosystem.

But the essential driver, says Brooks, is the potential for intensified drought. Before the drought of 2002, the worst year on record was 1977 and local water planners tried to plan for three years of consecutive drought of that magnitude.

Now, they’re trying to plan for three consecutive years as bad as 2002.

“I would say we are still reacting to 2002,” says Brooks.

But stacked up behind the fresh and concrete evidence of 2002 is the worrisome potential for even more intensified drought such as occurred around 800 to 1300 AD.

Tree rings in the Colorado River Basin—including some from trees near Eagle—provide evidence of those droughts. A recent study calculated that such droughts have a 66 percent chance of occurring in the 21st century.

naturalflowbouldercreeknearorodelltreeringsviamountaintownnews

On top of this comes the effect of accumulating greenhouse gas emissions. Climate models have drawn no clear conclusions about effects of precipitation in places like Vail, they are clear in warning of hotter, longer summers and, when it occurs, more intense drought.

Of course, river flows have always been variable on the Eagle and other river basins of the Southwest. Since the record-shattering drought of 2002, points out Brooks, Vail has also had a once-in-100 years runoff. Precipitation in the high Rockies, she points out, has “extreme variability.”

Memorandum of understanding

The Eagle River has three significant reservoirs at its headwaters:

• Black Lakes, located at Vail Pass, at the headwaters of Black Gore Creek, which can hold 750 acre-feet.

• Homestake Reservoir holds 14,000 acre-feet, but only 1,000 acre-feet can be used for Western Slope purposes. The rest is diverted for use by Aurora and Colorado Springs.

• Eagle Park Reservoir is the newest. In the early 1990s, water attorney Glenn Porzak, of Porzak, Browning Bushong, initiated discussions with Climax about converting assets of the mine to accommodate the growing needs of his clients in Vail for water storage. He represents Vail Resorts, and Eagle River Water and Sanitation District as well as the parallel Upper Eagle River Water Authority.

The consortium was expanded to include Eagle County, the Glenwood Springs-based Colorado River Water Conservation District, and owner of the mine, which is now FreeportMorgan. Climax paid to clean up the reservoir at a cost of $12 million.

But Aurora and Colorado Springs also own substantial water rights in the basin. In the 1960s, they joined to build Homestake Reservoir. In the 1980s, they proposed to further expand the water collection system within the Holy Cross Wilderness Area. The project was called Homestake II.

Eagle County thwarted that ambition. Its 1987 denial survived court challenges and statehouse attempts to yank the legal rug from under the local government.

The River District convened discussions that recognized that the water rights of the Front Range cities must be recognized—but, in developing the water, the Western Slope must benefit, too. The Eagle River memorandum of understanding inked in 1998 identifies 30,000 acre-feet of water in the Eagle River Basin to be developed in thirds: for Aurora, Colorado Springs, and the Western Slope.

Even if Eagle Park gets expanded, it’s unlikely to be the only project, says John Currier, chief engineer for the Colorado River Water Conservation District.

“It’s very likely that you can’t develop the water in the Eagle River MOU in one single project. I think it’s more accurate to say it’s one project with multiple components.”

gorecreekvailgolfcourse2002mountaintownnews

Another long-discussed idea is a small reservoir in the Homestake Valley near the Blodgett Campground. Still another is a holding facility, called a forebay, in the same valley, along Whitney Creek, that would hold water pumped back from Camp Hale. From this impound water could be further pumped up the valley to Homestake Reservoir. Yet a third idea is a small reservoir on Red Sandstone Creek, north of Vail.

Benefits of Eagle Park, says Currier, are that it already exists, it’s on private property, eliminating need for the high level of environmental review that other projects on public land would require, and the property has already been disturbed.

The latter is a persuasive argument to Ken Neubecker, a representative of American Rivers, a conservation group.

“Without looking at the details, I would think favorably of it. Eagle Park Reservoir was an old tailings pile to begin with. It wasn’t like ripping up an undammed valley like Blodgett Reservoir would. Adding onto it would be the best use of facilities we already have.”

Expanding Eagle Park, however, will likely be expensive. No cost estimates have been delivered, but Brooks says it’s something “we cannot do on our own. We would have to have partners in a project like that.”

Porzak says Aurora could benefit by storing water from the Columbine Ditch, a water diversion across Tennessee Pass, in the reservoir.

Energy use also is problematic. The reservoir has almost no upstream. Water would have to be pumped 150 vertical feet from the East Fork of the Eagle River, says Porzak.

A small reservoir at Whitney Creek would also require pumping water, says Currier. But for diversions to the Front Range, going farther down the Eagle River is even more challenging.

Scenario planning

Exactly what would best benefit the Vail Valley is still unclear. Brooks has turned to a tool called scenario planning that is used by Denver, Seattle and many other water planners. It tries to calculate a whole range of variables, including population growth and climate change. Expanded storage is only one of the responses. “Basically, conservation and optimization should be applied first,” says Brooks.
Expanded storage, however, will ultimately be necessary for a variety of purposes. “I don’t think we will ever be able to conserve our way out of needing an expanded Eagle Park Reservoir,” she says.

While needs of population growth can be met relatively easily, Brooks sees need to provide broader but somewhat more nebulous environmental and aesthetic benefits.

“It’s always been a little harder for our boards to wrap their heads around paying for the aesthetics in the streams,” she says. “They’ve certainly gone there in the past, paying literally millions to ensure the stream flows for health.”

Making that case is becoming easier. Water quality impacts from urbanization and other development impacts have become documented, and state water quality standards have tightened. As nutrients get washed into the waterways from stormwater, the capacity of the river gets whittled away, Brooks explains.

There seems to be no rush by anybody to build anything quickly. But there is a sense that the decisions made need to be very good. Unless the climate changes to produce more snow and rain, the upper basin will be without additional water to develop. Downstream, there could be more, but not at the headwaters.

“If it’s not the last drop, it’s darned close to the last drop in the Eagle, because you’re just physically constrained by what you can develop,” says the River District’s Currier.

Going farther downstream, as has been discussed with such “big straw” projects as the Yampa River pumpback or Flaming Gore pumpback, remains possible, adds Currier, but “at that point your energy costs are hugely significant.”

More Eagle River watershed coverage here.

Eagle River Basin

Eagle River Basin


Water dominates [Four States Ag Expo] talks — The Cortez Journal

March 22, 2015

Montezuma Valley

Montezuma Valley


From The Cortez Journal (Tobie Baker):

Addressing less than 10 people at the Four States Ag Expo on Saturday, March 21, Colorado Representative J. Paul Brown said his top legislative issue was water storage. He’s introduced HB 1157, a bill to study water storage on the South Platte River.

A member of the House Agriculture Committee, Brown said the bill had received broad support, even from environmentalists. He added that sending water from the state’s Western Slope via transcontinental diversion had to be addressed. Since 2010, 2.5 million acre feet of water has been sent out of state on the South Platte River, Brown said.

“We don’t have anymore water to send down,” the District 59 representative proclaimed.

Much of the American west has experienced drought-like conditions in 11 of the past 14 years. Scientists have warned the area could be entering a 35-year mega drought.

“I keep hoping that we’re getting out of the drought,” said Brown. “I’m an eternal optimist. You have to be as a farmer.”

A life-long sheep rancher in Ignacio, Colo., Brown said the worst drought he experienced came in 2002.

“We don’t know what’s going to happen in the future, but storage is the answer,” said Brown.

Brown added the agriculture committee had received lots of water concerns. He explained a balance was necessary between demands from environmentalists calling for more in-stream flow regulations, for example, and agriculture needs.

“Agriculture is the second leading industry in state at $40 billion,” said Brown. “That’s why we need to store water on the South Platte.”

During the informal agriculture summit discussion, one man questioned Environmental Protection Agency actions.

“The EPA wants a complete power grab,” responded Brown.

Indicating the federal government would control water collected in potholes if they could, Brown said the state would have to be remain vigilant against additional regulations and oversight.

“When they control water, then they control you,” Brown warned.

More 2015 Colorado Legislation coverage here.


Southern Delivery System: “It’s a wonderful, wonderful day to celebrate” — John Fredell

March 19, 2015

From The Colorado Springs Gazette (Jakob Rodgers):

The last 50-foot pipe of the 50-mile-long Southern Delivery System arrived at a construction site Wednesday, marking a key milestone for the project as it nears completion next year both on time and under budget.

“We put to rest a lot of doubters that we’d get this done,” said Lionel Rivera, Colorado Springs’ former mayor, who helped approve the project.

With Kool & The Gang’s “Celebration” playing in the background, a truck hauled the massive blue pipe to a site just south of Pikes Peak International Raceway. Crews will place it underground in the coming weeks, completing a system spanning from Pueblo Reservoir to a new water treatment facility in Colorado Springs, which is under construction.

More than 7,000 of the steel, 66-inch-diameter pipes were installed since in 2010. That included a mile-long stretch bored 85 feet below Interstate 25 – a tunnel that was $10 million cheaper than creating a surface trench, according to Colorado Springs Utilities.

Current and former elected officials from across southern Colorado, along with several contractors who have worked on the project, were among scores of people on hand to watch the pipe being delivered. Many signed their names on it.

“It’s great – we’ve been at this a long time,” said John Fredell, the Southern Delivery System’s program director. “It’s a wonderful, wonderful day to celebrate.”

Three pump stations and the treatment facility are expected to be completed this year, with the system up and running for customers in Colorado Springs by the first quarter of 2016, Fredell said.

The project is on track to cost $841 million, below Colorado Springs City Council’s approved budget of $880 million in 2009, which did not account for inflation or rising material costs. The council also serves as Utilities’ board. Those savings rise to about $150 million when factoring in the cost of inflation and increases in material costs, said Fredell, who credited design changes to the pipeline and water treatment facility for much of the savings.

From the Denver Business Journal (Cathy Proctor):

One of the biggest water projects in the western U.S. will hit a major milestone this month, when the last piece of 50 miles of pipe is laid for the Southern Delivery System, the $841 million project to bring new water supplies to Colorado Springs and nearby communities.

The project includes 50 miles of pipeline, three pump stations and a water treatment plant. It will deliver water from the Pueblo Reservoir to Colorado Springs, Fountain, Security and Pueblo West.

More than 7,000 sections of blue-colored, welded, steel pipe 50 feet long and most of it 66 inches in diameter were installed on the project during the last 3 1/2 years of construction.

The project spent $204 million on pipe and installation, according to the Colorado Springs Utilities.

“The pipe is the main artery for this water project and we are extremely pleased with how the pipeline construction went,” said John Fredell, the program director for the Southern Delivery System project.

The project is in the final year of construction and Fredell said the costs are expected to be nearly $150 million under the original budget…

Northwest Pipe (Nasdaq: NWPX), based in Vancouver, Washington, manufactured the SDS pipe at its Denver plant.

Three contractors installed the pipe, Garney Construction, headquartered in Kansas City with an office in Littleton; ASI/HCP Contractors of Pueblo West; and the heavy civil division of Layne, a construction firm based in The Woodlands, Texas, which has four offices in Colorado.

Construction is continuing on other elements of the Southern Delivery System project, including a $125-million water treatment plant and pump station that will have the capacity to treat and pump 50 million gallons of water per day. Three pump stations will help move water uphill, about 1,500 feet in elevation, from the Pueblo Reservoir, also are under construction.

Construction on the remaining portions of the project are expected to be finished by the end of 2015.

From KRDO (Rana Novini):

Community leaders gathered Wednesday to celebrate the completion of pipeline construction for the Southern Delivery System (SDS). The project consists of more than 7,000 50-foot sections of steel pipe that have been installed over the last three and a half years. The pipe will transport water stored in the Pueblo Reservoir north to Pueblo West, Fountain, Security and Colorado Springs.

“It’s taken many years and it’s taken many city councils and it’s taken many leaders and many workers to accomplish this,” said Colorado Springs City Councilman Merv Bennett. “Our friends to the south, the Lord gave them the Arkansas River as their delivery system. To the north, Denver has the South Platte River as their delivery system. We have Fountain Creek and we ran out of that water in 1912.”

Proponents of the SDS argue the pipeline will ensure Colorado Springs and surrounding areas can continue to grow, especially toward eastern El Paso County. The region will have to worry less about drought and watering restrictions.

“Water is important. It’s the lifeline of a community,” said Lionel Rivera, former mayor of Colorado Springs. “It’s the way you grow and I think we’ve ensured the water supply for at least the next 50 years.”

Rivera was mayor from 2003 until 2011 and helped get the project rolling. He said Tuesday that it was one of the most rewarding things he did as mayor.

“It’s very exciting, a little bit emotional to see that pipe,” Rivera said. “It just made me think of all the stuff we had to go through to get this approved. We were told back when we started it that it couldn’t get done from a political standpoint, but we proved the doubters wrong.”

The project has had opponents over the years, many from Pueblo who are concerned over stormwater issues.

Though pipeline construction is complete, workers still need to build water treatment plants and pump stations. The first drop of water is expected to be delivered in spring 2016.

From The Denver Post (Bruce Finley):

Construction crews are poised to lay the final pipeline link for Colorado’s biggest water project in decades — an $841 million uphill diversion from the Arkansas River to enable population growth in Colorado Springs and other semi-arid Front Range cities.

Eleven 2,000-plus horsepower pumps driven by coal-fired power plants will propel the water from a reservoir near Pueblo through a 50-mile pipeline with an elevation gain of 1,500 feet.

This is the first phase, moving up to 50 million gallons a day, for a Southern Delivery System that utility officials estimated will eventually cost $1.5 billion.

“It means we will have greater water security,” Colorado Springs utilities spokeswoman Janet Rummel said. “Businesses need water. Our communities need water to survive. It means we can continue to serve our population as it grows.”

Water challenges loom across Colorado, with state officials projecting a 163 billion-gallon shortfall. A few years ago, drought forced Colorado Springs to stop watering municipal parkways and gardens.

The diverted water can be used only within the Arkansas River Basin, officials said, ruling out sales to south Denver suburbs. And the river water, after treatment, must be returned to downstream farmers.

Colorado Springs residents have been paying for the project through water bills, which increased by 52 percent over four years. Utility officials spent $475 million from bonds.

The water will flow by next March, officials said. At full buildout, the system will store water in two new reservoirs east of Colorado Springs.

The new north outlet works at Pueblo Dam -- Photo/MWH Global

The new north outlet works at Pueblo Dam — Photo/MWH Global

From The Pueblo Chieftain (Chris Woodka):

The Southern Delivery System pipeline’s completion was marked by a contingent of El Paso County officials and a smattering of Pueblo County folks as well.

For John Bowen, president of ASI Constructors of Pueblo West, the SDS project has meant bread on the table as well as water in the pipes.

“It’s generated $50 million in contract values for our company,” Bowen said during a ceremony to mark completion of the SDS pipeline from Pueblo Dam to Colorado Springs. “We were able to grow as a business during a time when a lot of contractors were laying people off.”

ASI was the primary contractor for the connection at Pueblo Dam, as well as 12 miles of the 50-mile SDS pipeline route, and relied on 70 local businesses for support services. The SDS project generated $800,000 in wages for ASI workers.

More Southern Delivery System coverage here and here.


Lawn Lake dam break inundated Estes Park — Loveland Reporter-Herald

March 16, 2015
Lawn Lake Flood

Lawn Lake Flood

From the Loveland Reporter-Herald (Kenneth Jessen):

In 1975, a Colorado dam inspector hiked the half-dozen miles to the Lawn Lake dam and reported that it was in need of a thorough inspection after the snow melted. Another inspector reported two years later that the dam was in fair condition and suggested that its owners make repairs.

On Aug. 8, 1978, a third inspector reaffirmed the marginal rating for the dam and recommended that it be observed when the reservoir was full.

The caulking between the outlet pipe and the release valve started to allow water to trickle along the outer surface of the pipe. Once a small channel had eaten into the earthen dam under pressure, it rapidly expanded.

On July 15, 1982, the Lawn Lake dam failed catastrophically. The release of water was heard by campers along the Roaring River. One man below the dam was swept to his death in the churning water.

The wall of water forced large boulders down 2,500 vertical feet to Horseshoe Park acting as battering rams. The forested banks of Roaring River where scoured away in a landslide of thousands of tons of material.

Much of the impact of the flood was absorbed by the broad expanse of Horseshoe Park. An alluvial fan quickly formed at the mouth of Roaring River. The debris was pushed across Horseshoe Park damming the Fall River and forming a shallow lake.

Fortunately, Steve Gillette was collecting trash at the Lawn Lake trailhead. It was 6:23 a.m. when he sighted the flood coming toward him and alerted park officials.

In an interview with the Loveland Reporter-Herald, he described the noise like that of a plane crashing. Gillette said that it looked like a mudslide of the type you see in the movies.

The vast volume of water poured into Fall River and picked up finely divided glacial silt in the process.

Below Horseshoe Park was the Cascade Dam. The force of the water first backed up behind the dam, and then suddenly toppled the 17-foot high structure at 7:42 a.m. This amplified the intensity of the flood and a wall of water raced through the Aspenglen Campground killing two people.

The mud and water coursed through motels and restaurants, then hit downtown Estes Park. The entire width of Elkhorn Avenue became a river of mud-filled water combined with a great deal of debris. It did an extraordinary amount of damage as entire inventories for the summer tourist season were washed away or ruined.

State inspectors were partially to blame along with the Park Service. Much of the responsibility, however, had to be borne by owners of the dam, the Farmers Irrigation Ditch & Reservoir Co. Its 16 stockholders became worried about legal action, but they were protected by their corporation.

National flood insurance covered only 20 property owners out of some 275 affected by the flood.

High-profile trial lawyer Gerry Spence was hired by Estes Park property owners to represent their interests. He quickly concluded that the entire assets of the ditch company consisted of little more than their $1.4 million insurance policy. This money was turned over to the court system to be disbursed.

Immunity against lawsuits was evoked by both the federal government and the state of Colorado. Damages topped $30 million, which ultimately had to be absorbed by businesses and individuals.

Low interest rate loans were made available. Other federal assistance included unemployment payments, temporary housing, up to $5,000 for out-of-pocket living expenses and food stamps. However, very little compensation was received by anyone financially injured by the Lawn Lake flood.

Less than 10 cents on the dollar was paid to flood victims, forcing the permanent closure of many businesses.

The Lawn Lake disaster became the perfect opportunity for the Park Service to dismantle selected dams.

Lost Lake dam was dismantled followed by the Pear, Sandbeach and Bluebird dams. Spared were Lily, Sprague, Snowbank and Copeland.

More infrastructure coverage here.


Long Hollow reservoir filling — The Durango Herald

March 11, 2015
Long Hollow location map via The Durango Herald

Long Hollow location map via The Durango Herald

From The Durango Herald (Dale Rodebaugh):

Rain and snowmelt have provided the first water for a reservoir on Long Hollow Creek near Redmesa, a long-planned storage unit that will help Colorado meet its contractual water obligation to New Mexico and indirectly provide water for irrigators in southwest La Plata County.

Construction was completed in June 2014 on the Bobby K. Taylor Reservoir, named for the late rancher whose land is now disappearing under the advancing water. When full, the reservoir will be a lake one-mile long.

Flow from Long Hollow Creek and Government Draw fills the reservoir, which has a capacity of 5,300 acre-feet.

“We had 385 acre-feet this morning,” Brice Lee, chairman of the La Plata Water Conservancy District, said Tuesday. “It’s not as much as we’d like, but we’ll take it.”

Colorado shares La Plata River water 50-50 with New Mexico, but the erratic flow makes fulfilling the obligation problematical. Now, Taylor Reservoir water can be released to the La Plata River a mile away for New Mexico consumption, and this will allow Colorado irrigators to take water from the La Plata River.

Construction of the reservoir was on a tight budget. When the Animas-La Plata Project, the last major water work in the West, was downsized in the 1990s, water for irrigation was eliminated.

Long Hollow project advocates patched together a financing plan. They acquired $15 million the Colorado Water Resources and Power Development Authority had set aside for projects in the area, got $3 million from the Ute Mountain Ute tribe and, finally, $1.6 million from the state Legislature last year.

More La Plata River watershed coverage here.


Planning for Fort Collins’ future water needs — Kevin Gertig

March 9, 2015
Halligan Reservoir

Halligan Reservoir

From the Fort Collins Coloradoan (Kevin Gertig):

Fort Collins is located in a semi-arid region where the amount of water available from month to month and year to year varies, especially during dry years and drought. Fort Collins Utilities has a responsibility to provide an adequate supply of water to existing and future customers; we made long-term water supply an essential element of our planning efforts decades ago.

For more than a century, Utilities has used an integrated approach to manage our water supply, including:

•Securing senior rights on the Poudre River,

•Purchasing and improving an existing storage facility on the upper Poudre (Joe Wright Reservoir),

•Acquiring nearly 19,000 units of the Colorado-Big Thompson Project, and

•Establishing water conservation programs beginning in the late 1970s.

Recent updates to the Water Supply and Demand Management Policy, which provides direction to meet our community’s future water demands, identified the need for additional long-term water storage. Though the community actively conserves water year-round, storage is a valuable tool in water resources planning. Adequate storage helps meet projected demands and provides reserves for unexpected events, including pipeline failure, fires in the watershed or issues with Horsetooth Reservoir.

This policy also references Utilities’ Water Conservation Plan, which lays out a significant expansion of the water conservation program and targets residential and commercial customers, as well as indoor and outdoor water use.

Water conservation helps ensure the wise use of available water, especially during dry, hot summer months when little moisture is available. Although conservation helps stretch our water supply, Utilities’ current limited storage capacity means conserved water cannot be stored for future use.

If the Halligan Water Supply Project is permitted by the U.S. Army Corps of Engineers and approved by City Council, it will help meet Fort Collins’ future water needs. Careful planning and analysis determined that enlarging Halligan Reservoir is one of the most cost-effective solutions that minimizes environmental impacts compared to constructing a new one. The project also will provide storage of mostly existing water rights and be tailored in size and operations for our specific needs.

Fort Collins Utilities is proud of its strong conservation ethic, which provides a solid foundation for the management of our current and future water use in the Poudre River Basin. Through continued conservation efforts, smart water management and additional storage capacity, such as the Halligan Water Supply Project, Utilities will be prepared to meet the future water needs of our community.

For more information, visit http://fcgov.com/halligan.

More South Platte River Basin coverage here.


Finding the right price point for water customers key to quenching the thirst?

March 8, 2015
Squeezing money

Squeezing money

From The Deseret News (Amy Joi O’Donoghue):

Drought across the West and Midwest is driving renewed concerns over water scarcity and the availability to meet demand in the future. But some groups say finding the right price point for water customers will be the key to quenching the thirst for water.

A conference exploring ways for water utility finance mangers to maintain a healthy bottom line — even as water use declines and system repairs loom — was held in Park City Friday, drawing officials from Utah, Colorado and elsewhere in the West.

Called “CFO Connect,” the session was organized by Ceres, a nonprofit sustainability advocacy group, and Park City.

“More and more, areas in the West are looking at replacing the storage that had been provided by snowpack. And those are expensive projects,” said Sharlene Leurig, a water financing expert with Ceres.

The Boston-based group prepared an analysis two years ago that examines issues confronting public water utilities and their fiscal health in the marketplace, most notably the risk their investors weigh when it comes to borrowing in the municipal bond market, especially for large projects.

In Utah, Colorado, Nevada and other Western states, large diversion projects such as the Lake Powell Pipeline or delivery of water to the Front Range of Colorado are being pursued, even as critics say states should first pursue more aggressive pricing and ways to beef up conservation practices…

Groups like Ceres say that while water districts prepare their own supply and demand blueprints to meet needs into the future, financial managers would be wise to consider a number of factors, including:

Credit rating agencies are starting to build water conservation, pricing and supply risks into their analysis.
Supply constraints are not only impacting the finances of water but aging infrastructure and declining demand are also factors.
Leurig said if the bulk of a water utility’s revenues are solely tied to consumption — and there’s no consumer incentive for conservation — that dynamic does not bode well given national trends of declining consumption.

“Because the majority of systems’ costs are fixed, declines in customer use typically require systems to increase the rates they charge. Yet as systems increase the price they charge per unit of water, their customers use less,” Leurig’s report points out.

“To make up for lost revenue, the water system has to increase the cost of service. … This can create a great deal of discomfort for water managers: they fight the political battle to raise rates, only to see revenue increase by less than that needed to cover costs. And in the meantime, customers are irked that they have to pay more for using less water.”

Leurig said block pricing — bumping water rates up on a graduated scale based on consumption — and scaling impact fees to a home’s “conservation” profile, are examples of how systems can build in sustainability to help them survive longer, on less water and help to delay costly projects.

“In the 21st century, for us to really manage water, we need to understand the economics of water. We have to understand the tools, the pricing, the viability of cost sharing and diversifying our supply,” she said. “Those things are the foundation of what will create a financially resilient system in the 21st century, not just engineering.”

More infrastructure coverage here.


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