HOT SPRINGS -- Garland County's largest city is positioned to secure the water it will need for decades to come, but it doesn't want to pay for the water until it begins using it.
Hot Springs is already committed to $444,440 a year in storage costs over the next 30 years for the allocation of 23 million gallons a day it secured from Lake Ouachita earlier this year. It can't use the water until a treatment plant and distribution system are in place, but the storage agreement it signed with the U.S. Army Corps of Engineers in May required the city to begin amortizing its share of $12.4 million in storage costs immediately.
The payment is based on the replacement cost of water that will not be available for power generation at Blakely Mountain Dam after the city begins withdrawing water.
The forgone benefits are credited to Southwestern Power Administration's share of storage costs. It's the division of the Corps that markets hydroelectric power to utilities in a six-state region, creating revenue remitted to the federal treasury for the repayment of the public's investment in the federal hydropower program.
City staff and the city's water-system consultant, Crist Engineers Inc., told the Hot Springs Board of Directors last month that they are working to avoid a similar arrangement with the 20 million-gallon DeGray Lake allocation to which the city purchased the rights in 2013 from Central Arkansas Water.
Deputy City Manager Bill Burrough said he is cautiously optimistic the Corps will allow the city to defer storage payments until it begins withdrawing water. Crist Engineers President Stewart Noland told the board that demand models show the water could be needed as early as 2037, presuming a plant to treat 15 million gallons a day of Lake Ouachita water is online by then and the 4 million-gallon Lakeside Plant has been taken offline.
The DeGray Lake Joint Use Agreement the city entered into with Central Arkansas Water in October 2013 requires the city to "make application for purchase" of storage for its allocation by Nov. 1.
City Attorney Brian Albright said that means a storage agreement with the Corps has to be in place by then, but Burrough told the board that Central Arkansas Water is amenable to extending the agreement.
State Desk on 08/11/2017