A $500 million repayment obligation on the Central Utah Water Project could become a $2 billion nightmare for public power utilities unless federal legislation governing funding for dam projects in the Colorado River basin is rewritten.
Carolyn McNeil, Intermountain Consumer Power Association executive director, told ICPA board members last week current legislation contains a formula that escalates repayment obligations associated with water projects that is unfair and is creating a serious financial threat to public power utilities.Public power groups such as the ICPA are already committed to repaying some $500 million in federal money that has been spent for power-generating facilities associated with the CUP. Officials are in the process of determining when those expenditures should be brought into the repayment plan that affects rates charged to utilities receiving power from Colorado River Storage Project hydro plants.
The Colorado River Storage Project Act, passed by Congress in 1965, includes a formula requiring $2 be spent on projects in Colorado for every $1 that is spent in Utah, principally for the CUP. McNeil said Colorado has no intention of building many of its originally proposed projects and that several others do not meet cost-to-benefit requirements set by the federal government. She said those projects should be removed from the act and that the formula for future repayment be adjusted to reflect their removal.
McNeil said the money does not go to Colorado but remains with the U.S. Treasury in the form of a funding obligation should Colorado decide to pursue a project. But, the threat of a repayment obligation remains.
ICPA is considering helping to pay the costs associated with rewriting the legislation. She said the potential long-term cost benefit is worth the cost ICPA would incur in helping to get the act changed.
Officials say the potential repayment obligation will only increase as work continues on the CUP. The act creating the Colorado River Storage Project specifically obligates those receiving power from Colorado River hydro projects, which includes ICPA. ICPA has members in Utah, Wyoming, Idaho, Colorado, New Mexico, Arizona and Nevada.
McNeil said the repayment obligation is already there, the concern now is putting limits on the obligation to keep future rates as low as possible.