The Lake Powell Pipeline will waste at least $2.24 billion of Utah taxpayer money that will never be repaid, while burdening Washington County residents with massive increases in water rates, impact fees and property taxes.  The lobbyists behind the Lake Powell Pipeline have led a campaign to hide these costs and the impacts to local ratepayers and taxpayers across Utah.

The Hidden $2.24 Billion Price Tag of the Lake Powell Pipeline

The Lake Powell Pipeline is the largest new spending proposal in the State of Utah. In spite of repeated requests from the public to know the full cost of the unnecessary Pipeline, project spending advocates refuse to provide an updated cost estimate for the Lake Powell Pipeline. In response to one request by the federal government, the state agency proposing $2.24 billion in new spending claimed it had until 90 days before construction started to reveal its payment plan for the pipeline.1 That was the Utah Division of Water Resources. Most suspect the Division’s refusal to be transparent stems from these lobbyists’ desire to hide the project cost from the public.

What Does a $2.24 Billion Dollar Project mean for Washington County Residents?

357% to 500% Increase in Water Rates

 Your water rate is the amount of money you pay your water supplier to provide the water that you use inside and outside of your home. A group of PHD economists from the University of Utah found that the 357% increase was a clear underestimation of the Pipelines impacts and rates are instead likely to increase by 500%. Imagine your water bill going from $45 per month to $160 or $225, accounting for more than $2,000 of your hard-earned money annually.

This increase will be so painful to Washington County residents that water will be unaffordable, and lifestyles will have to change drastically. This will cause water use in the County to plummet. This market driven drop in use will reduce water use in the County that the Pipeline will indeed dry up with nowhere to send the water too.

108% Increase in Impact fees

Impact fees are a one-time charge that is assessed to new development. So, any time a new house is built, or a new water connection is established, the developer will be charged an impact fee, purportedly to mitigate the impacts of new development. These fees are usually passed on from the developer to the end-buyer, sometimes greatly increasing the cost of a house or building. 

A 2019 Legislative Audit examined the Washington County Water District’s (WCWD)ability to repay the project. In the audit, WCWD said they intend to utilize significant increases in impact fees to pay back over 75% of the Lake Powell Pipeline construction costs and interest payments to Utah taxpayers.

Even before any increases, Washington County already has some of the highest impact fees in the state, second only to Park City. The more-than doubling in impact fees required to pay back the project will cause these rates to soar to $30,000+, burdening Washington County residents and new development with the highest impact fees in Utah.

Imagine trying to buy a new home in Washington County, that is $30,000 above the market rate, simply to pay back a project, that nobody needs, and is indebting residents for generations to come.

54% increase in Property Taxes

To pay back the Lake Powell Pipeline, the Washington County Water District is set to raise resident’s property taxes for water over 54%, according to a recent legislative audit. The WCWD makes more money collecting property taxes for water than it does selling water and has a higher property tax collection rate than any other Water District in the State. Property taxes for water are hidden in annual bills as the Water Districts levy taxes on houses and even car purchases. All this makes it difficult for residents to truly understand the nature of these taxes on water. 

Because the WCWD collects so much revenue from imposing property taxes for water on residents, they can afford to charge absurdly low water-rates. While this sounds appealing, these subsidized water rates lead to rampant water use because there is no incentive to be conservative with this precious resource. 

By using property taxes for water to subsidize the water pricing structure also hurts working families that don’t typically have high, outdoor water use. This also allows property tax-exempt water users like county golf courses, universities, and government buildings to access cheap water rates. To subsidize those low rates, working families that use considerably less water, use their hard-earned money to pay these extra property taxes for water. The Washington County Water District is essentially giving a free subsidy to tax exempt water wasters on the backs of working families who use this precious resource wisely and conservatively.

Economists estimate that eliminating the property tax for water collection in Washington County would reduce water use by 27%, a reduction in water use that would be large enough to meet the County’s forecasted population growth. Through the elimination of these burdensome property taxes, they could lower their water use enough to prevent the need for billions in tax dollars to fund the Lake Powell Pipeline. At the same time, residents would avoid the draconian increases in property taxes needed to pay back the Pipeline, and instead see hundreds of dollars returned to their pockets annually, while large outdoor water users would begin to pay their fair share for wasting water.

What happens when water rates increase? A Comparison of Two Pipelines…

An analysis of a similar pipeline constructed in 2016 by Colorado Springs, the Southern Delivery System, reveals that Lake Powell Pipeline lobbyists are hiding a massive $2.24 billion price tag from the public. This is because the Lake Powell Pipeline is substantially larger than the Southern Delivery System and requires far more infrastructure. The Southern Delivery System, or SDS, is an $825 million water project in Colorado that is much smaller in scope and size than the Lake Powell Pipeline.2 The Lake Powell Pipeline is much longer and needs to pump more water up a greater elevation.

The Southern Delivery System was built to provide “needed” water to residents of the growing Colorado Springs. To pay back the project, water rates increased 100% for Colorado Springs residents, which seems insignificant when compared to the 357% increase of water rates a 2019 Utah Legislative Audit on LPP Repayment Feasibility found, or the 520% increase in water rates that 20 PhD economists found that Washington County ratepayers face due to the LPP.

After receiving their water bills and being billed at the new rate, the residents of Colorado Springs immediately began reducing their water use, which lowered their water bills. This is known as the price elasticity of water. As the price of water increases, the water use decreases, the basis of market economics and of water conservation, that essentially costs nothing. The end result, the Southern Delivery System began piping water to Colorado Springs where the water was no longer needed, due to the decrease in use because of the price. Now, Colorado Springs has to export that water to other cities, in an attempt to save face with their residents and claim the project as successful.

Washington County Water District is risking the same fate. The massive increases in water rates will lead to a huge decrease in water use, completely negating the need for the project. Why spend billions on an empty pipe?

LENGTH

The 50 miles of pipe for the SDS cost a total of $624 million to construct, factoring to a cost of $12.48 million per mile.4 At 140 miles long, the Lake Powell Pipeline will cost at least $1.75 billion for pipe components alone, assuming no other engineering features.

 
Cost of pipe — Lake Powell Pipeline
 

WATER VOLUME

The SDS conveys approximately 56,000 acre-feet of water annually,  while the Lake Powell Pipeline is designed to carry 86,000 acre-feet of water annually.

 
Water Volume — Lake Powell Pipeline
 

VERTICAL ELEVATION OF PUMPED WATER

The SDS has a 1,500 ft. rise in elevation, while the Lake Powell Pipeline has a 2,200-foot elevation gain. 

 
Vertical Elevation of Pumped Water — Lake Powell Pipeline
 

NUMBER OF WATER PUMPING STATIONS

The SDS includes 3 water-pumping stations, each built at a cost of $25.3 million.5 The Lake Powell Pipeline will include 5 pump stations, totaling at least $126.7 million.6

 
Number of Water Pumping Stations — Lake Powell Pipeline
 

Increased Annual Operation and Maintenance Costs

Operations and maintenance costs have recently increased due to the recent removal of hydropower generation from the Lake Powell Pipeline Plan. Washington County Water District was planning to offset a portion of the massive costs of Lake Powell Pipeline by use of the hydropower the LPP would generate. This would have contributed an estimated $65 million annually. Since the decision to take away those hydropower stations was made, they will now have an additional annual O&M cost, despite the Divisions claimed construction savings of $100 million.

Tariffs 

Recently imposed tariffs by the federal government will also increase the cost of the Lake Powell Pipeline. New tariffs on construction materials like steel will add approximately 6.6% to Lake Powell Pipeline construction costs.8 This will increase the cost by $128 million, bringing the updated total to at least $2.07 billion.

Inflation 

With Lake Powell Pipeline construction slated to begin in 2021, adjusting for inflation from 2015 dollars adds an additional $169 million, bringing the total construction costs for the Lake Powell Pipeline to at least $2.24 billion in 2021 dollars. 

With a price tag like this, it’s no wonder Lake Powell Pipeline lobbyists have done everything they can to keep the public in the dark. They are hiding the true cost of the Pipeline in order to trick Utah taxpayers into funding a disastrous $2.24 billion public spending project.

Personal Testimony

Dont take our word for it, take theirs! The following are three excellent letters to the editor highlighting what a $2.24 billion dollar price tag means for Utahns. Utah residents should not face generations of debt so that Pipeline proponents can build a pipedream.

Citations

  1. UDWRe Response to FERC August 11, 2017 Additional Information Request Schedule A
  2. https://coloradosprings.gov/sites/default/files/16-03_2015_sds_monitoring_report_update_4-6-16.pdf
  3. Lake Powell Pipeline Project, Final Study Report 10, April 2016 – Appendix B
  4. Colorado Springs Utilities 2015 Southern Delivery System Monitoring Report, Pg. 2 https://coloradosprings.gov/sites/default/files/16-03_2015_sds_monitoring_report_update_4-6-16.pdf
  5. https://agenda.okc.gov/sirepub/cache/2/ujivvp55xo3spv450qrvjv45/25425771102201803061228.PDF
  6. http://lpputah.org/map-components/
  7. http://lpputah.org/map-components/
  8. Associated General Contractors of America, Producer Price Index for Construction Inputs, October 2018 https://www.agc.org/news/2018/11/09/construction-bid-prices-accelerate-october-contractors%E2%80%99-costs-rise-faster-higher , https://www.agc.org/learn/construction-data/construction-data-producer-prices-and-employment-costs
  9. Lake Powell Pipeline Project Draft Plan of Development November 2018