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March 8, 2024  |  Written by Maximilian C. Bricker, Ryan J. Mitchell

Proposed Shoshone Water Rights Acquisition by the Colorado River District

The Shoshone Generating Station (Plant) is a hydroelectric power plant located on the Colorado River east of Glenwood Springs, Colorado. The Plant began generating power in 1909 and holds the most senior non-consumptive water right on the Colorado River. The Plant’s water rights allow for the diversions of 1,250 cubic feet per second (cfs) of water with a 1902 priority and an additional 158 cfs with a 1929 priority, for a cumulative 1,408 cfs for hydroelectric generation (the Shoshone Water Rights). Because they are non-consumptive hydroelectric water rights, a Shoshone Water Rights call effectively creates an instream flow right through Glenwood Canyon above Glenwood Springs, benefiting both recreational and environmental uses in the canyon, as well as consumptive uses below Glenwood Springs, while limiting transmountain diversions by Front Range water users in the Upper Colorado River Basin.

The Plant generates an energy supply (up to 15 megawatts) for approximately 15,000 customers. However, the Plant is nearing the end of its feasible lifespan, and the financial and legal realties of obtaining licensing from the Federal Energy Regulatory Commission prohibit necessary modifications and replacements. Thus, Xcel Energy (Xcel), the owner and operator of the Plant, has an incentive to cease operations and auction off the Shoshone Water Rights.

Recognizing the importance of the Shoshone Water Rights to its own operations, in 2007, Denver Water negotiated a Relaxation Agreement, wherein Xcel granted Denver Water, among other things, a right of first refusal to purchase the Shoshone Water Rights. The Relaxation Agreement alarmed West Slope entities—entities that had previously been unable to find a path forward for a meaningful West Slope-Front Range water agreement—and led to the signing of the historic Colorado River Cooperative Agreement (CRCA) in 2013, between Denver Water and numerous West Slope entities, including the Colorado River Water Conservation District (the River District), a quasi-governmental state entity that seeks to protect and expand water uses in western Colorado. Under the CRCA, Denver Water agreed, among other things, to waive its right of first refusal for the Shoshone Water Rights, thus, opening a path for the River District to engage with Xcel on a potential purchase of the Shoshone Water Rights.

On December 19, 2023, Xcel and the River District entered into a Purchase and Sale Agreement (Agreement), setting out a path to transfer ownership of the Shoshone Water Rights to the River District for $99 million. The River District paid $500,000 upfront; plans to pay another $20 million from its own funds; has already received significant funds from outside sources, including $20 million from the Colorado Water Conservation Board; and plans to apply for additional funds from the federal government through the Inflation Reduction Act of 2022.

Under the Agreement, Xcel will lease the Shoshone Water Rights from the River District so long as it continues operating the Plant. The Agreement also requires that, by the end of 2027, the River District change the Shoshone Water Rights from hydroelectric purposes to instream-flow purposes for use by the Colorado Water Conservation Board and obtain approval of the sale by the Colorado Public Utilities Commission.

In sum, the Shoshone Water Rights are vital to West Slope entities, and the River District’s signing of the Agreement in December 2023 (although subject to conditions) is an important step to protecting Colorado River flows and water uses in western Colorado.

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