A $2.2 billion financing plan for the Central Utah Project and water projects in other states is being encouraged by state officials but is getting a cold reception from the environmental community.

The plan calls for a 40-year escalating rate increase, starting at 6 mills, on power from federal hydroelectric generating facilities on the upper Colorado River. Money from the increase would be given to Utah, Colorado, Wyoming and New Mexico to finance water projects.The agreement between the water and power users needs congressional approval before it could be implemented. Without an agreement or some other funding mechanism, the CUP will run out of construction money before its massive Bonneville Unit is finished.

"The Bonneville Unit and the entire CUP are critical to development in Utah," said Gov. Norm Bangerter. "This agreement between the upper basin states and public power will have a very positive impact on Utah."

As an incentive for accepting higher power rates, public power buyers would be allowed to lock in 40-year rate contracts for federal power instead of the current 15-year contracts. They could also avoid altogether an impending rate increase, also of about 6 mills, that would have returned money to the federal treasury for water projects that were never built.

An outline of the plan was released Wednesday. That same day, leaders of the Wildlife Federation in the the four affected states, Arizona and national president Jay D. Hair sent a letter to Rep. Morris Udall, D-Ariz., expressing "grave concerns" about the financing proposal, which they say will result in uneconomical and wasteful water development while seriously threatening the environmental health of the Colorado River Basin.

The letter was also hand-delivered to other influential House members who have water and power committee assignments, including Rep. George Miller, D-Calif., who has a reputation for being tough on the CUP.

The group's letter to Udall, chairman of the House Committee on Interior and Insular Affairs, emphasizes the $2.2 billion water fund the agreement would create and points out the money would skirt the congressional appropriation process and go straight to the states involved.

Don Christiansen, general manager of the CUP's state sponsor, the Central Utah Water Conservancy District, told a meeting of the American Water Resource Association Thursday that the $2.2 billion figure is not that impressive because it would accumulate over 40 years and is being divided among four states. The entire $2.2 billion would end up having the value of $1 billion in today's dollars, he said.

The Wildlife Federation also believes the proposal ignores environmental concerns associated with water development. In Utah, the proposal does not directly address minimum and maximum stream-flow issues for the Provo River, the federation's letter states.

Without making reference to the letter, State Engineer Robert Morgan told the meeting of water users Thursday that "there are no existing water rights for in-stream flows on the Provo River system. All in-stream flows on the Provo are maintained by contractual agreement," not by water rights, he said.

Dee Hansen, director of the Utah Department of Natural Resources, told the Deseret News the gap between the negotiators of the agreement and the environmental community may start to close once environmentalists learn more details of the agreement. He said he can't fault environmentalists for being critical of something that was developed without their input.

"Part of it may be that they don't understand the agreement," Hansen said. "And perhaps they wanted more out of it."

Hansen and Christiansen both stressed that a caveat to the plan requires water and power users to contribute about $3 million apiece each year to an environmental mitigation fund that would supplement existing federal mitigation programs and budgets.

Hansen said the agreement does not include plans to trade off any environmental mitigation plans that have already been identified, such as removing salt buildups from the Colorado River system.

The Wildlife Federation also took a jab at federally-subsidized water and power development by telling Udall that a portion of Colorado River Storage Project power revenues "should be directed toward correcting the documented problems of underpayment that have shortchanged the treasury and undercut conservations efforts up to now."