Colorado Springs Utilities and the U.S. Bureau of Reclamation are drawing closer to an agreement on the cost of long-term contracts that will allow the utility to store and convey water through Pueblo Reservoir for the Southern Delivery System.

“We’re seeing movement and I’m encouraged by that,” John Fredell, SDS project manager, said during a presentation Wednesday at the monthly meeting of the Utilities Board.

The municipally-owned utility and the federal government have held three public negotiation sessions this summer on the contracts needed for the 62-mile pipeline, which will transport water north from the reservoir to Colorado Springs.

During the sessions, CSU’s negotiating team has succeeded in whittling the roughly $200 million that the Bureau has been demanding to about $82 million.

Utilities contends that’s still too much and would like to see the figure decline by another $40 million or so. The next round of talks are scheduled for late August.

“I have confidence with the team assembled that we are going to be able to work through these issues,” said Fredell, who is chief negotiator.

Mike Collins, the leader for Reclamation’s negotiating team, said through a spokesperson that he also was hopeful. “While we have not yet reached agreement on all of the proposals exchanged in the last session, I am optimistic that agreement can be reached.”

Reclamation is involved because it manages the federally owned Frying-Pan Arkansas Project, a complex system of dams, tunnels and conduits that brings water from the West Slope to the East Slope. The Arkansas River is the main water delivery system and the final reservoir is Pueblo Reservoir.

As one of the original beneficiaries of the Fry-Ark Project, Colorado Springs has a certain amount of what’s called “firm” storage in the reservoir.

With SDS coming on line, the utility wants to enter into “excess capacity storage contracts” that will allow it to store water in the reservoir – if and when space is available.

The first phase of the pipeline is expected to cost $2.3 billion in financing and construction costs over the next four decades. Utilities officials have said they hope to begin construction in September.

During the most recent round of talks, Reclamation suggested charging the utility $41.56 per acre foot of water for the excess capacity storage contracts. By contrast, CSU argued that it should be charged $25.31 per acre foot. (An acre foot is 325,851 gallons, or enough to cover an acre of land with a foot of water).

The two sides also disagree about other costs, including an agreement that would enable the utility to do “paper” exchanges of water held in the reservoir with water in other facilities, as well as how much credit the Utility should receive for building a $30 million outlet in the dam that will transport water to the SDS pipeline and can be used by other water providers.

In a question-and-answer session following Fredell’s presentation, Councilmember Bernie Herpin suggested southern Colorado politics were involved. “How much of this is driven by economics and how much of it is driven by politics?” he asked.

“It’s hard to tell,” responded Fredell. “They’ve been unable to give us explanations about their numbers.”

IN OTHER DISCUSSION

A new technology that has reduced emissions at CSU’s coal-fired plants is getting another review.

Bruce McCormick, chief water services officer, told the Utilities Board on Wednesday that the Electric Power Research Institute, a nonprofit that does research and development in the energy sector, will do independent testing of a promising coal emission technology developed by physicist David Neumann.

“It looks very positive at this point,” he said.

The equipment is one-tenth the size of massive scrubbers currently used at power plants, and Utilities officials say it could cut their emission control costs in half.

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