Xcel Energy will offer water it owns but no longer needs to farmers in the water-strapped Lower Arkansas River Valley, in an innovative deal advocates hope will help the struggling region regain control of vital water supplies and protect its agricultural economy.
Under the preliminary terms of the proposal, valued at more than $44 million, Xcel will sell 12,500 acre-feet of water to a newly formed irrigation company, 70% of which will be owned by farmers and 30% of which will be owned by Colorado Springs Utilities.
An acre-foot of water equals 326,000 gallons, enough to serve two to four urban households for one year, or enough to cover an acre of farmland with a foot of water.
The news comes as tensions continue to rise between farm interests in the Lower Arkansas River Basin and cities, such as Colorado Springs and Aurora, that continue to tap its water to supply growth.
Advocates say this new project may be an important new method for reducing those tensions by keeping farm water in the communities where it has historically been used.
The water sale is backed by a coalition that includes Xcel Energy, the Palmer Land Conservancy, farmers, and Colorado Springs Utilities. The planning work is funded by a $245,000 grant from the Colorado Water Conservation Board and additional support from Colorado Springs and Palmer.
“The new company means farmers will become owners,” said Jennifer Jordan, a spokesperson for Colorado Springs Utilities. “It also means the water will remain in the Arkansas Basin.”
Xcel bought the water back in the 1980s as part of a new coal-fired power plant project that never materialized. Since then, the power company has leased the water to farmers in the region under year-to-year contracts.
The decision to sell the water to farmers is an effort by Xcel to aid the community, according to Todd Doherty, a principal with Western Water Partnerships, which is coordinating the sale.
“Xcel is really wanting to leave this community as good as, or better off, than they found it,” Doherty said. “They could have sold the water to the highest bidder and walked away.”
Closing coal-fired power plants frees up water
Xcel officials did not respond to a request for comment. The power company is also involved in another, larger water sale on the Western Slope, where it has agreed to sell several hundred thousand acre-feet of water it owns on the Colorado River to local water districts and cities.
Power companies are closing coal-fired power plants across the state and the country, and Doherty said the hope is the sale to a company majority-owned by farmers could serve as a model when water previously used for power production is sold.
An appraisal placed the value of the water rights at $9,000 an acre-foot for municipal use and $1,250 an acre-foot for agricultural use, Doherty said. At those prices, the deal would be valued at $44.6 million.
Rebecca Jewett, president of the Palmer Land Conservancy, said the Las Animas project has the potential to create new tools to protect irrigated farm lands in Colorado. During the past 30 years, those lands have shrunk by 30% due to chronic drought, climate-related reductions in streamflows and municipal water purchases.
The state has tried for decades to find ways to keep farm communities whole and to protect their water supplies and economies. To do so, it has spent millions of dollars and crafted new laws that made it easier for farmers and cities to share water, largely through leasing deals. But farm economies have continued to suffer and farmers have called for better tools to protect their water.
Xcel Energy to sell farm water it owns in Bent County in the Lower Arkansas River Basin
As part of the sale, a new company is being formed by combining shares in two irrigation companies the Las Animas Consolidated Canal System and the Las Animas Consolidated Extension Canal, both in in Bent County. (Western Water Partnerships map)
Through the new company, farmers will control their water supplies and will be able to use their water each year. But some dry up of farmland will occur to provide 30% of the water to Colorado Springs, Doherty said.
Originally, some 6,500 acres were served by the irrigation systems that will now become part of a new consolidated ditch company. But because hundreds of acres of irrigated land on the system are no longer being used as farmers have left the system, the sale will likely require a dry up of just 100 new acres, once Colorado Springs Utilities begins taking its water out of the system. That will leave 4,100 acres still in production.
Farmer and rancher Glen Brown, president of the new company, said the intent of the sale agreement and the new company “is to keep the water in the valley. We’ve protected 70% of this water better than it has ever been protected before.”
But other growers in the valley remain concerned that this deal doesn’t provide enough long-term protection.
“If there is no perpetual tying of 70% of the water to the land, that would be a major concern of ours,” said Jack Goble, general manager of the Lower Arkansas Valley Water Conservancy District. “Who knows, when enough money is laid on the table 10 or 20 years down the road, unless it’s a perpetual agreement, what will happen.”
Doherty and Jewett acknowledge that the legal mechanism in place right now, which gives farmers majority control of the new company, might not prevent a future sale of the water if the farmers decided to do so themselves, but they say it would be extremely difficult to pull off.
“At Palmer, our ultimate goal is an unbreakable long-term tying of the water to the land,” Jewitt said, and she said more protections may be added before the final papers are signed early next year.
For now, Brown said, growers are ready to move forward with the purchase.
“Getting the water back on the ground is an opportunity that can’t be passed up,” he said.
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