Colorado River District shares details of $99 million Shoshone water rights deal
Eagle River Water & Sanitation District and Upper Eagle Regional Water Authority asked to contribute combined $1.5 million
Zoe Goldstein/Vail Daily
The Colorado River Water Conservation District made a deal with Xcel Energy on Dec. 19 to purchase the Shoshone water rights, the oldest and largest non-consumptive rights on the Colorado River.
The Shoshone water rights amount to 1,408 cubic feet per second of water, or 1 million acre-feet of water per year, flowing through Glenwood Canyon. When the Shoshone call is in place, junior water users upstream have to stop or supplement the water they take from the river.
The deal has wide-ranging environmental repercussions, including keeping water in the river for recreation, preserving the purity of the water for drinking and agriculture, and protecting endangered fish.
On Feb. 22, representatives of the Colorado River Water Conservation District, also called the Colorado River District, met with the Eagle River Water & Sanitation District and Upper Eagle Regional Water Authority boards to share details of the deal, and request funding.
Front Range negotiations
Denver, recognizing the importance of the Shoshone call, negotiated a right of first purchase of the rights with Xcel Energy. The river district negotiated with Denver to carve out an exception, “which is if a West Slope entity or entities are buying this water right, that Denver will waive temporarily, and in a limited scope, its right of first purchase,” said Andy Mueller, general manager of the river district.
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The agreement with Denver “is critical to our ability to move forward,” Mueller said.
“You’ll hear that we don’t need to buy Shoshone, we don’t need to spend the money, we have protections in place already. That’s not the way the Front Range is acting,” Mueller said.
“We believe that we’ve been reasonable, with your help, in building in (the Front Range’s) drought protection,” he said.
“On the other hand, the damage that could be caused to our economy and our environment by allowing that water right to go away and therefore allowing more water to go east is just tremendous,” Mueller said.
Xcel Energy negotiations
Xcel Energy is headquartered in Minneapolis, Minnesota, and provides service across eight states. Xcel Energy does not specialize in understanding Colorado River water law.
The river district has approached Xcel Energy four times with proposals to purchase the Shoshone water rights. Xcel Energy agreed on the fourth approach, in part due to a changeover in the team overseeing the negotiations.
Led by Hollie Velasquez Horvath, regional vice president of state affairs and community relations for Xcel Energy, the team served as “internal advocates for this transaction within the large, publicly-traded company that is Xcel,” Mueller said.
Mueller said he toured the Shoshone Hydroelectric Facility after the deal was signed in December. The plant, which was built beginning in 1905, still relies on large parts of the original infrastructure.
The Shoshone Hydroelectric Facility generates up to 15 megawatts of power, or enough to power around 15,000 houses, according to Mueller. For Xcel Energy, “that is almost nothing. They could replace that with a solar field or a couple of wind turbines very quickly and much cheaper,” Mueller said.
The plant generates power through two turbines, which drive two generators. Water is drawn from a dam about two miles upstream from the plant through tunnels to penstocks at the plant, where the water is returned in full to the river after turning the turbines.
Mueller said he walked one of the tunnels, and noticed places where the sides of the tunnel are slabbing off. One of the two power-generating turbines is also broken, and is undergoing repairs, he said.
“As we walked up (to the plant), there was a giant pile of boulders that were being held up by (Xcel Energy’s) old headframe that they brought most of their equipment up with and replaced it. Their headframe was knocked off two of its four bolted pedestals and was holding back huge amounts of boulders that will hit the plant if they let loose,” Mueller said.
The Shoshone Hydroelectric Facility was built before the Federal Energy Regulatory Commission (FERC) existed and is not licensed by the body. If something were to go wrong — like one of the boulders hitting the plant — Xcel Energy would have to go through the licensing process to continue operating the plant. Xcel Energy staff “have said that their dam, their penstock, and their power plant and its location will never receive FERC approval, is their professional opinion,” Mueller said.
Instream flow
The river district will not buy the power plant, but needs to attach the non-consumptive water right to something else to preserve the flows in perpetuity. According to Mueller, an instream flow is “the only right that would match” the volumetric and year-round needs of the Shoshone call.
Instream flows can only be operated by the Colorado Water Conservation Board. The river district is in negotiations with the Colorado Water Conservation Board to create a contract that can be enforced by the West Slope water entities, enabling the Shoshone call to go on automatically when the power plant goes down.
If the contract works out, this would be the biggest instream flow right the state has ever seen, Mueller said.
Building to $99 million
In 2016, the river district had the Shoshone water rights evaluated by an expert, who placed the value at $99 million. That number wound up being the total price tag on the Shoshone water rights deal.
“We think it’s a good deal, at $99 million,” Mueller said. “It is a huge price tag for the West Slope.”
The river district has four years to pay for the water rights, with a deadline of Dec. 31, 2027.
The river district has already paid $500,000 to Xcel Energy for transaction costs, leaving $98.5 million left to account for.
The river district plans to commit $20 million from its own funds, collected through taxes enabled via ballot measure 7A in 2020. The Colorado Water Conservation Board voted on Jan. 29 to recommend committing $20 million to the cause, as part of the state’s water projects bill.
The river district will also apply for around $20 million in funding from the federal government through the Inflation Reduction Act of 2022, which has $195 million earmarked for projects focused on drought reduction and supporting ecosystem health. However, Mueller said, “the federal money is far from certain.”
Competition for the funding will be fierce, and the Bureau of Reclamation is trying to use the money to convince states to cooperate with each other, which they are not. The funding, which is available through the end of September 2026, may also be delayed into an election that alters the way federal money is assigned.
To avoid relying too heavily on the federal funding, Mueller’s goal is to collect $20 million from the river district’s constituent and partner counties and water entities.
Already, three of the river district’s 19 partners in the Shoshone Water Right Preservation Coalition & Campaign have made commitments: the Ute Water Conservancy District for $2 million, the Clifton Water District for $250,000, and the Grand Valley Water Users Association for $100,000.
The river district is requesting that Eagle River Water & Sanitation District and the Upper Eagle Regional Water Authority consider committing a combined $1.5 million.
The ask of Eagle County will be $1 million, and the river district will reach out to towns and cities, too. Private donors are also on the table, and the river district is setting up a 501(c)3 nonprofit to receive donations.
It may pose a challenge to the district and authority to come up with the funds. Together, the district and authority have planned 2024 expenditures of upwards of $90 million, but the money is already earmarked for other projects, including updating out-of-date infrastructure and building the Bolts Lake reservoir. However, the board members of both entities recognized the significance of the water rights in the bigger picture.
“We’ve worked on this too long, of course we’ll try to be there for you, subject to our 50-year-old — 60-year-old infrastructure,” said George Gregory, board chair of the authority.
No decisions were made about funding on Feb. 22; the topic will resurface at a future meeting.
