October 7, 2010 - Bend Bulletin - Bend nears decision on $73M water overhaul

Oct 07, 2010

October 7, 2010 - Bend Bulletin - Bend nears decision on $73M water overhaul

Bend nears decision on $73M water overhaul

By Nick Grube / The Bulletin

Published: October 07. 2010 4:00AM PST

Bend City Councilors are poised to make a decision on whether to continue pursuing a $73 million overhaul of the Bridge Creek water system within the next several weeks.

On Wednesday, councilors heard new financial information that showed upgrading the Bridge Creek infrastructure would save between $372 million and $454 million over the next 50 years when compared to switching to an all-well system that would pump groundwater to meet Bend’s water demands.

They were also given information about complex water rights issues that could threaten the city’s chances of being able to pump more groundwater if it gave up its surface water system.

These issues made some councilors, in particular Mark Capell and Oran Teater, act as if upgrading the Bridge Creek system was the only option.

“This is significantly more clear for me,” Councilor Oran Teater said after the more than an hour long presentation. “I think we do our community a disservice for the next 50 to 100 years if we abandon our surface water.”

An upgrade to the Bridge Creek system has several components, including replacing 10 miles of aging pipelines and adding a high-tech filtration system that would protect against future wildfires and treat for dangerous bacteria and microorganisms, like Cryptosporidium.

City officials also want to add a hydropower plant that would take advantage of Bridge Creek’s higher elevation and use gravity to generate electricity.

When first proposed, the cost of the project was estimated at $71 million, and expected to generate $1.7 million in hydropower revenues in the first year of operation.

It also had the chance of getting up to $25 million in green energy tax credits, loans and grants to help offset the cost. But in August all that changed with a new financial analysis. The cost increased to $73 million. The $1.7 million in revenue dropped to $700,000. And the green energy incentives all but disappeared.

This spurred Councilor Jeff Eager to ask in August for a re-evaluation of the cost of switching to an all-groundwater system to see if it would be cheaper for ratepayers, and to see if it would be feasible to accomplish under current water rights law. Bend gets about half of its annual water supply from groundwater.

A study released Friday by HDR Engineering Inc., which is the company the city hired to work on the Bridge Creek project, found that if the city wanted to make the switch to groundwater it would cost hundreds of millions of dollars more over a 50-year period due in large part to energy costs. It also found the groundwater option would have an initial cost of nearly $60 million just to drill more wells and upgrade other components of the city’s infrastructure.

Getting water rights to pump more groundwater could also prove difficult for the city. According to a water rights attorney the city hired to study the issue, there are a number of tricky scenarios for doing so, including having to get some changes in state law.

“The bottom line is it is trading certainty ... for uncertainty, in the fact that the regulatory environment for getting new groundwater rights is very dicey,” said Rick Glick, of Davis, Wright, Tremaine LLP, of Portland. “Trying to get to an all-groundwater system is pretty speculative and involves a lot of risks.”

City Manager Eric King said during Wednesday’s presentation that he wants councilors to decide at a Nov. 3 meeting if they want to continue pursuing an upgrade to the Bridge Creek system or switch to all groundwater. If councilors choose to reinvest in the Bridge Creek system they will have several options for how to do so, each one with a different impact on ratepayers.

These options include picking a water treatment method to comply with federal clean-water mandates that require municipalities to treat for harmful bacteria and microorganisms like Cryptosporidium, and choosing whether to add a $13 million hydropower plant at the outset of the project.

Depending on which options councilors choose, Bend water customers could see rate increases of between 37.5 and 45.5 percent over the next five years.

King said a decision on the treatment option is scheduled for Nov. 17, and the choice of whether to move ahead with a hydropower plant would be Dec. 1.

Nick Grube can be reached at 541-633-2160 or at ngrube@bendbulletin.com.

Published Daily in Bend Oregon by Western Communications, Inc. © 2010

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