An alternative financing plan for the $2 billion Central Utah Project was dealt a hard blow when a Denver-based utility announced it would not support the proposal.

The Tri-State Generation and Transmission Association's board of directors decided the "liabilities outweighed the benefits (of the proposal) and it was unlikely that further negotiations could bring those benefits into balance with the costs," said Frank R. Knutson, general manager of the association.Tri-State supplies power to 25 rural electric cooperatives and public power districts in Colorado, Wyoming and western Nebraska. It is the largest purchaser of power from federally owned owned dams on the Colorado River and its tributaries.

Carolyn McNeil, general manager of the Intermountain Consumer Power Association, said Tri-State's decision is a serious blow to the funding proposal, "but I still think the situation is not totally hopeless and we can pull this thing back together."

ICPA supplies power to 38 small utilities in Utah and surrounding states. McNeil has been an advocate of the alternative plan.

Water developers and public power groups negotiated for more than a year to develop an alternative financing plan for federal water projects in the upper Colorado River basin.

That plan, announced last month, calls for public power groups to pay a substantially higher rate for the power they purchase from federal dams on the Colorado River. This additional money would be used to finance the construction of the CUP and other water projects in the upper Colorado River basin. Part of the money would also be used to fund environmental protection projects on the river system.

In return for the higher costs, public power groups would receive a long-term commitment to the federal hydroelectric power and more stable prices.

The alternative plan was developed because Congress is increasingly reluctant to provide the money for federal water projects.