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Flaming Gorge Proponent Estimates $1.4B Profit

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Flaming Gorge Reservoir (credit: flaminggorge.com)

Flaming Gorge Reservoir (credit: flaminggorge.com)

DENVER (AP) – A Colorado businessman seeking to build a pipeline to deliver water from Wyoming to Colorado’s Front Range estimates that whoever designs, builds, finances and operates the project could see at least a $1.4 billion profit, according to a document shown to potential contractors.

Aaron Million, of Fort Collins, and his team have put out a request for proposals from contractors to develop the project. Proposals are due Friday.

Million envisions drawing Green River water from the Flaming Gorge Reservoir in southwest Wyoming and sending it to water users in southeast Wyoming and northern Colorado. His team still needs federal permits to proceed with the plan, which includes a 578-mile pipeline plus three reservoirs, nine natural-gas powered pump stations and six hydropower facilities.

His team’s confidential business proposal, shown to potential contractors, estimates construction costs of $2.8 billion to $3.2 billion, with annual operating costs of between an estimated $70 million and $90 million per year being paid by water users.

The project would initially deliver about 110,000 acre-feet of water to municipal and industrial users, with re-use available to farm and environmental interests, according to the business plan. The water would be sold under a “cost plus 20 percent” financial model, with 20 percent being added on top of costs for delivering the water. That would result in a one-time $360 million to $480 million profit to the contractor from water sales, according to the plan.

The second stage of the project would deliver up to 140,000 acre-feet, with water sold at market rates.

“Potential net profit is targeted in the $1.4 billion to $2.4 billion range,” the plan said.

Though the business plan lays out staged development, Million said the project likely would be built all at once to avoid having infrastructure costs balloon over time. In any case, costs should be lower if it’s developed privately, not publicly, he said.

“The project is financially sound. We think we can get it done for 30 to 40 percent less than a public sector project,” Million said.

Million provided the business proposal to The Associated Press in response to questions about an earlier version of the plan obtained by the AP.

The role of Million’s Wyco Power and Water Inc. would be to shepherd the project through the permitting process, Million said. It would earn a management fee, which could range from 0.25 percent to 3 percent of money raised for its work, he said.

The plan said Wyco is seeking to raise $15 million through 2015 to get through the permitting process.

Million said the amount he has raised so far is confidential, but he has said $5 million has been spent on the project during the four years since he proposed it.

“We’ve finally learned what this proposal is about. It’s about people wanting to get extremely rich off of the natural wealth of the Colorado River and the communities up and down the basin that depend on it,” said Gary Wockner of Save the Colorado. The nonprofit group is working to conserve the Colorado River and its tributaries, including the Green River.

The environmental law and policy group Western Resource Advocates contends there are cheaper ways to provide more water to Colorado as its population grows. Other critics say it isn’t clear whether there’s enough river water available for Colorado to carry out Million’s plan and still meet obligations under multistate compacts for sharing water.

A rival team led by Parker Water & Sanitation District manager Frank Jaeger is studying the feasibility of tapping the Flaming Gorge as it explores its own proposal.

Million’s team has applied for a 40-year renewable water supply contract from the U.S. Bureau of Reclamation but also has filed for water rights from the state of Wyoming for his project.

“Either proposal is financially irresponsible, shortsighted and unsustainable solutions for Colorado’s Front Range to meet its water supply challenges,” Wockner said. “We need to instead focus on water conservation, better growth management, water recycling and cooperative agreements with farmers.”

- By Catherine Tsai, AP Writer

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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