Could Nestlé deal benefit Salida?
Brief by Central Staff
Water – July 2008 – Colorado Central Magazine
We’ve looked at the drawbacks. But perhaps it’s time for Salida residents to consider the possible benefits from exporting mountain spring water from Chaffee County.
Nestlé is a multi-national food products company, and one of its products is Arrowhead bottled water. Nestlé has proposed to take 0.3 cubic feet per second (cfs or cusec) from the Hagen Spring near Nathrop, and haul it to a bottling plant in Denver.
Since this water would be taken from the Arkansas River basin and consumed, state water law requires the company to provide “augmentation” to protect downstream water users with senior water rights.
When the river is running at 4,000 cusecs, as it has been this spring, 0.3 cusec is imperceptible. But if you run the numbers, 0.3 cubic feet per second comes out to about 217.19 acre-feet a year — enough water for 500 to 1,000 average household residents.
That is a serious amount of water, and it could come with a serious price tag. The Upper Arkansas Water Conservancy District offers augmentation water for $3,500 for 1/10 of an acre-foot, which works out to $35,000 per annual acre-foot. Multiply that by Nestlé’s needs, and the cost is $7,601,653.
Upper Ark also charges an initial set-up fee of $75 per diversion. Typically this is a domestic well. We’ll assume here that the Nestlé plan represents only one diversion, so we’ll bump the initial cost to $7,601,728.
That’s just the up-front cost. Upper Ark also charges an annual maintenance fee of $150 per 1/10 acre foot, or $1,500 per acre-foot, so Nestlé would also face an annual charge of $325,785 for augmentation water after paying the $7.6 million.
This assumes, of course, that Upper Ark does not offer a volume discount.
In all probability the company wouldn’t actually offer anywhere near that much. But the price would be substantial.
Nestlé is a big company, big enough to buy its own shares of Twin Lakes project water diverted from the Western Slope (that’s where Upper Ark gets much of its augmentation water). A Twin Lakes share is approximately an acre-foot, and the most recent price we could find was from 2004, when Pueblo West paid $21,500 per share. If Nestlé could get 217 acre-feet at that price, the total would be about $4.67 million.
Nestlé has approached the City of Salida about leasing water for augmentation. When the city purchased the Vandaveer Ranch, it got some water rights with an 1864 priority that it will not need for ten to twenty years, depending on the municipal growth rate and related factors.
Jay Moore, who sits on the Salida City Council, said Nestlé has mentioned numbers like $1,000 per annual-acre-foot, which would come to $217,000 a year. The way city finances are structured, he said, the money would almost certainly have to be spent on capital improvements, rather than lowering taxes or hiring more police or the like.
That’s considerably less than Upper Ark’s posted annual maintenance charge, and there’s no huge up-front charge as there would be with Upper Ark or Twin Lakes. On the other hand, the city’s augmentation water would be temporary, whereas the other two sources would be permanent. Further, an augmentation arrangement with the city would likely require a potentially expensive visit to the water court.
Moore is of the opinion that Nestlé will get the water it needs one way or another, and if there’s a way for Salida residents and taxpayers to benefit, it deserves consideration. After pondering that, we’ve changed our opinion about whether a public body should work with Nestlé.
We don’t like the idea of 30 trucks a day running between Nathrop and Denver, but if they’re going to run anyway, it’s worth looking into, especially if the city can get more than the $217,000 a year that Nestlé has mentioned.
Another consideration: Think how much more mischief Upper Ark could cause if it had lots more money in the bank and big annual maintenance fees from Nestlé. We won’t argue that our city council is always wise and just, but we elect city councilors and can replace them as necessary. It’s almost impossible to do that with water conservancy directors.
In other words, if Nestlé is going to spend some money with a public body, why not an accountable one?
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