Water project may get debt deferred

Banks received bailouts. Carmakers received bailouts. Now, the Central Utah Project is closer to a $161 million bailout of its own.

The House Natural Resources Committee on Thursday endorsed a bill by Rep. Jim Matheson, D-Utah, to "defer indefinitely" $161 million that the Central Utah Project owes the federal government so the project can afford to build hydropower plants on its Diamond Fork pipeline.

The same committee also endorsed two other Utah water bills on Thursday, all by voice vote, and all now go to the full House for consideration.

One bill by Rep. Jason Chaffetz, R-Utah, would allow up to $12 million in federal funding for a water reuse project for the Magna Water District, even though the Obama administration has opposed it.

The other measure was a bill by Matheson to allow the Uintah Water Conservancy District in Vernal to prepay the federal government for development of water from the Red Fleet dam to save interest on otherwise long-term payments required by contracts.

The Obama administration in an earlier hearing said the proposed $161 million bailout for the Central Utah Project gives it heartburn.

"The administration has serious concerns about losing our ability to recoup the federal investment made" in the project's dams and pipelines that bring water from eastern Utah to the Wasatch Front, Reed Murray, director of the Interior Department's CUP Completion Act Office, said at a hearing in May.

However, local water officials said they had found that the $161 million debt — the share of overall Diamond Fork costs allocated for hydropower development — would force selling Diamond Fork hydropower at above-market rates, and they doubt they could find anyone to develop it under that condition.

"In essence, any developer of power at Diamond Fork starts in an economic hole of $161 million before installing any power turbines or constructing transmission lines," Donald A. Christiansen, general manager of the Central Utah Project's overseer, the Central Utah Water Conservancy District, testified in May.

Project officials envision building 50-megawatt hydroplants in the Diamond Fork pipeline if the debt is forgiven. They have said that is enough, for example, to provide the power needs of Springville for a year.

Meanwhile, the Magna Water District is seeking up to $12 million in federal funding for a $51 million project. In part, that project would build an electrodialysis reversal plant to remove perchlorate (a chemical found in rocket fuel and explosives) and arsenic from a well field for drinking water.

The project also would use a "bioreactor" process to treat effluent from the electrodialysis reversal facility and use that treated water for outdoor irrigation and to recharge well fields.

The U.S. Bureau of Reclamation has certified the project as feasible, but the Obama administration opposed the bill, saying too many other water-use projects nationally have already been approved and are in line for funding far into the horizon, so it makes no sense to approve any more.

The third bill for the Uintah district could save the district an estimated $4 million to $5 million in interest payments.

e-mail: lee@desnews.com