A plan to finance the Central Utah Project's irrigation system appears to be fatally stalled, leaving water officials and legislators looking for new ways to pay for the proposed $300 million project.

The final undoing came in a letter sent this week by the Colorado River Energy Distributors Association to Rep. Morris K. Udall, D-Ariz., in which CREDA President Joe Falbo said the public power organization has " . . . instructed its negotiators to suspend discussions with the Upper Basin states."The letter followed an announcement by Tri-State Generation in Denver, a CREDA member, that it wouldn't support a plan to impose a 6-mill rate increase on public power users to pay for new water projects in Utah, Wyoming, Colorado and New Mexico. In exchange, public power users would have been excused from meeting other repayment commitments to the federal treasury.

A final draft of the plan was making its last round among CREDA members after almost a year of negotiations, when it began to unravel last week.

Rep. Wayne Owens, D-Utah, said the fact that the negotiations lasted as long as they did showed both sides wanted to compromise.

"I wouldn't characterize (Tri-State) as shooting the whole thing down. There was nervousness among power customers in Colorado and Wyoming," said Clifford I. Barrett, executive director of the Colorado River Energy Distributors Association.

CREDA's letter to Udall was carefully worded so it didn't preclude future developments. "It says (negotiations are) suspended, not terminated," Barrett said. "We kind of wait and see what happens next."

The project itself isn't dead, Owens said. "One way or another we're going to get a bill this year or early next year that will have some sort of funding." The irrigation project is designed to carry water from southern Utah County as far south as Yuba Reservoir in central Utah.

Using public power revenues for new water project financing may still be a possibility, said Carolyn S. McNeil, general manager of the Intermountain Consumer Power Association in Sandy. "I'm not sure that it's all undone," she said. It's possible the other states could be carved out of the plan, leaving Utah public power entities involved in a deal to help finance the CUP. "We've only had a few days to think about it," McNeil said, but there's going to be more discussion about what could be done."

Even states outside the region have been following the negotiations.

"We didn't have any particular stake in it or objection to it," said Bob Will, a Washington, D.C., lawyer who has been watching the negotiations for the Metropolitan Water District of Southern California. "But because it's the biggest reclamation authorization project going, and because they were digging into a lot of areas - yes, we were watching it closely. . . .

"If they could have kept it more narrowly confined to the state of Utah itself and tried to work it on that basis it might have been easier.

"I would be the last to say that it's dead, but it's struggling," Will said.