The power of water rights
Regional interests mull purchase of Shoshone hydroelectric plant
Western Slope interests are beginning to speak with one voice about their interest in purchasing a historic Glenwood Canyon hydroelectric plant viewed by many as more valuable for its water rights than for its electricity.
But there’s no indication for now that the Shoshone Generation Station is even for sale. And a purchase presumptively would involve a high price tag due to the considerable and highly senior water rights, meaning that a funding mechanism would need to be identified, not to mention a buying party.
“I’m sure if the plant was for sale something like that would be put together,” said Jim Pokrandt, spokesman for the Colorado River Water Conservation District in Glenwood Springs.
The 15-megawatt plant, owned by Xcel Energy, is tiny by hydroelectric facility standards. But its 1905 water right of 1,250 cubic feet per second wields a lot of power in the water world, ensuring the flow of that much water down the Colorado River at least as far as the Glenwood Springs area. If the right didn’t exist, it could open the door to further diversions of water to junior rights holders wanting it for municipal purposes on the Front Range.
“Shoshone’s really the controlling right on the river,” Pokrandt said.
The Shoshone flows are so important to Western Slope governments, irrigation districts and other entities that part of a recently finalized, wide-ranging agreement dozens of them struck with Denver Water formalizes a protocol for generally continuing flows required by the plant during plant outages. The deal also seeks to mimic those flows even if the plant no longer is operational. Under the deal, Denver Water also would support possible purchase of the plant by a Western Slope entity.
Meanwhile, a Colorado River Basin roundtable group currently is helping draw up a basinwide plan to submit for consideration as part of development of a state water plan. Louis Meyer, a Glenwood Springs engineer who is doing public outreach around the basin as the group prepares its recommendations, said he’s hearing a unanimous consensus in support of buying the plant.
“I believe that will be one of the seminal things going forward in our plan,” he said.
He said one of the things driving the concern is that while there may be a deal with Denver Water, other Front Range entities aren’t bound by it. Pokrandt, who chairs the roundtable group, said the fear is that an entity would buy the plant just to close it down and retire its water rights, enabling it to divert more water with junior rights.
He said it’s good to see the concept of buying the plant take root, but added, “it would be a very expensive proposition.”
Meyer agreed, but said that if the cost is spread among numerous counties, “it’s not very much at all.”
Pokrandt said the river district would be the logical entity to take the lead in a purchase.
“But we certainly couldn’t do it on the revenues that we have for our current operations. A revenue stream would have to be figured out,” he said.
“… The financial package would definitely have to be a West Slopewide discussion.”
He said there’s an increasing recognition on the Western Slope of the Shoshone rights’ value in keeping water in the river for environmental and recreational purposes, and ensuring its availability for municipal consumption, Grand Valley irrigation and other purposes downstream of the plant.
The water rights are designated for electricity generation, which would mean the buyer would have to continue operating the old plant to keep the rights. Pokrandt said that wouldn’t be easy for the river district, but it already does things such as operate reservoirs.
But he was quick to point out about the Shoshone plant, “It’s not for sale, though.”
Xcel spokesman Mark Stutz said he can’t comment on whether the plant is for sale, due to general company policy about not speaking on acquisitions or sales of assets “unless there is some cause for doing it.”
He said people “shouldn’t read too much into that one way or the other.”
Even with its small size, the plant is a component for meeting electricity demand in the area, he said.
“It’s obviously a relatively modest facility but it still provides a big benefit to the company in supporting the grid in what’s obviously a more geographically challenging part of our service territory,” he said.
Building transmission and generation is harder in the mountains, and Shoshone “remains a very important piece from the grid support standpoint,” he said.
Xcel spent $12 million repairing the plant after a penstock ruptured in 2007, putting it out of service.
“We will continue to operate that facility based on that investment,” he said.
Pokrandt said that in probably the best of all worlds, Xcel would continue to own and operate the plant.
He added, “I think Xcel also understands the politics of the situation and the preferred status quo of operating the plant under the current conditions.”
Stutz said the company understands the significance of the plant to entities in the region, and tries to be a good neighbor.
“We’ve always tried to work with any agreements made with other entities in terms of where that water goes,” he said.