Aspen utilities director seeks more money for hydro project
June 1, 2011
ASPEN – Costs of the Castle Creek hydroelectric project are rising, the Aspen City Council learned during a Tuesday work session.
David Hornbacher, the city’s new director of utilities, told council members of the need for a $1.02 million increase in the project’s overall budget authority during the current fiscal year. The increase is partly due to the city’s recent decision to seek a different type of operating license from the Federal Energy Regulatory Commission – a move that had been expected to extend the project’s cost and completion time, but was seen as necessary because of strong and widespread criticism of the initiative.
No official decisions were made on the request, which is likely to resurface during an upcoming regular council meeting, perhaps as early as June 13. City officials on Tuesday also pointed out that because of the change in the license application process, there are likely to be more new costs associated with the project, expenses that will be discussed later this year.
Overall, if the supplemental funding request is granted, the project’s “budget authority” to date – consisting of money approved for previously completed phases and other scheduled work this year – would rise from $7.3 million to $8.3 million, according to a May 28 memorandum from Hornbacher to the council.
The request for new funding includes:
• $619,290 to help cover extra expenses associated with the installation of the pipeline from Thomas Reservoir to the proposed location of the Castle Creek Energy Center.
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• $195,220 toward the hydraulic improvements needed to ensure full designed capacity of the existing raw water delivery system from Castle Creek to Thomas Reservoir.
• $207,650 for work on the hydro plant’s “support services,” which includes environmental studies, architectural expenses, land planning and legal work relating to the FERC approval process.
Hornbacher and his staff recommend using a portion of the fund balance, or cash reserves, from the city’s water fund to support the supplemental budget request. He outlined the possibility of a $950,000 loan paid from the water fund to the renewable energy fund, to be paid back over five years at a 3 percent rate starting in 2013.
Another option would be to borrow money from the city’s electric fund, which could result in an increase in city electricity rates. “If council chooses to fund the additional project costs with a transfer from the electric fund, electric rates will need to be increased to fund the transfer,” Hornbacher wrote.
He added that the requested funds would cover known expenses. “However, depending on timing connected with the completion of this project, additional expenses could be associated with this project,” Hornbacher added.
City Manager Steve Barwick said that if the hydroelectric plant is approved and completed, then the revenue it generates could be used to pay back the loan from the water fund.
The city announced on April 26 that it was switching gears with regard to its plan for the Castle Creek hydroelectric facility. In a special meeting, the Aspen City Council voted to withdraw its request for a “conduit exemption” from the Federal Energy Regulatory Commission (FERC). That exemption would have allowed the city to move forward on the hydro plant without doing a full-blown environmental assessment on the project and its effect on local stream flows, ecosystems and surrounding areas.
Instead, the city will seek a license for a “minor water power project,” a designation that likely will require a more stringent environmental review and greater federal oversight of the plant. City officials cited the need for more support from environmental, community and governmental groups as a valid reason for the change in direction. That support was tentatively obtained during a closed-door mediation session of various stakeholders, held at the Aspen Institute in March.