ST. GEORGE – The Washington County Water Conservancy District is refuting statements made by University of Utah economists and the Utah Rivers Council that accuse the district of only intending to pay for 28 percent of the controversial Lake Powell Pipeline – leaving the balance on the backs of Utah taxpayers.
The district is also disputing statements that the pipeline would cause massive price increases for water in Washington County.
The Water District responded to an analysis by the economists and the Utah Rivers Council in a letter sent to Gov. Herbert and others Sept. 28 and signed by district general manager Ron Thompson.
Officials say the district will repay the costs of the pipeline according to the terms of the Lake Powell Pipeline Development Act, including “reimbursable preconstruction costs, construction costs, and interest on those costs within the time period specified.”
District officials also say it’s inaccurate to use the term “repayment plan” for documents released after a Government Records and Access – or GRAMA – request and a ruling enforcing the request made by the Utah State Records Committee in May 2016.
The document is not a repayment plan, district spokeswoman Karry Rathje said, but is simply an Excel spreadsheet created by a third-party consultant in 2013 for the purpose of conducting a focus group exercise.
“The claim that the district will only pay for ’28 percent’ of the project cost is the result of misuse of the worksheet,” the letter states.
The district said the worksheet was designed to encourage potential funding options rather than answer questions about how the project will be funded.
“Those who will ultimately determine the project’s financing terms and repayment plan did not participate in the focus group exercise and therefore their opinions may not be represented in the worksheet,” district officials said in the letter.
University of Utah economist Gail Blattenberger, who performed the analysis along with fellow university economist Gabriel Lozada, said that ultimately the analysis is not dependent on what the document is called.
Blattenberger and Lozada’s analysis states that the district’s model includes no interest payments to the state.
The question of who pays for the project depends on interpretation of language in the Lake Powell Pipeline Development Act, Blattenberger said, but whether it’s the taxpayers of Washington County or all of Utah, the costs are “exorbitant.”
Rising cost, lower demand
The economists predict that water rates in Washington County will soar if the pipeline is built and say the rates will go so high that demand for water will drop below levels needed to justify the massive pipeline project.
However, the Washington County Water Conservancy District disputes the statement in a price elasticity statement, saying the economists’ argument was based on faulty numbers, “understating the price actually paid by Washington County consumers by roughly 430 percent.”
The district’s full 37-page statement is available here.
The error invalidates the rest of the economists’ findings and conclusions, district officials said.
“Per capita water use will continue to decrease in the future … however, we must be realistic about water use in our planning efforts,” district officials state in the letter. “The professors project a future water use that has not been achieved to date in any community in the nation.”
Blattenberger, however, said that she and other economists used wholesale water prices rather than retail, and rightly so, because it is the district that will be contracting for the pipeline.
“If the wholesale prices go up by a factor of six, then the retail prices will go up by a factor of six, also,” she said.
After extensive study of water use in Utah and the Southwest, the economists stand by their belief that the pipeline would increase costs dramatically, causing demand for water to drop drastically.
Other areas of the Southwest use far fewer gallons per day than Washington County, so there is lots of flexibility in how much residents would use if prices were higher, Blattenberger said.
For example, gallons per capita per day used by residents of Los Angeles is 132; in Tucson it is just 88, Blattenberger said. According to the water district, Washington County’s gallons per capita per day is approximately 285.
“There is substantial room for improvement in Washington County,” Blattenberg said.
The water district said that if the pipeline is built, water rates will go up slightly, but the economists’ arguments are not valid because water is “an essential human commodity.”
Blattenber said she agrees that water is an essential human commodity.
“But I don’t agree that many of the uses to which water is put by humans are essential,” Blattenberger said. “It’s essential that you have water to drink, but that is such a small proportion of your gallons per capita per day.”
The proposed pipeline would stretch nearly 140 miles and carry up to 86,000 acre-feet of water from Lake Powell to Washington and Kane counties, water which proponents say is needed to support future population growth in Southern Utah.
Opponents say the pipeline is not needed and would be prohibitively expensive.
Initial estimates have placed the final cost of the project at approximately $1 billion, but others believe the initial price tag would be closer to $2 billion, plus the cost to manage and maintain the pipeline.
In November 2015, a study endorsed by 20 economists from three major Utah universities predicted the controversial pipeline would incur debt as high as $781 each year for every man, woman and child in Washington County.
Paying for the pipeline would require extreme increases in water prices, impact fees or both; water rates could increase as much as 678 percent, the study’s authors state.
State officials submitted a formal licensing proposal for the pipeline in December 2015.
In September 2016, University of Utah economists had harsh criticism for a Lake Powell Pipeline repayment plan and said they stand by their prediction of massive increases in water prices and impact fees for Washington County residents if the pipeline is built.
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