The Shoshone Power Plant is worth more dead than alive.

The small, early 1900s powerhouse on the Colorado River in western Colorado is on its last legs, crippled by chronic mechanical problems, wildfires, floods and rockslides.

But this faltering facility just east of Glenwood Springs holds something of immense value in the parched West: senior rights to an estimated 845,000 acre-feet of Colorado River water a year.

Communities on the Western Slope of Colorado’s Rocky Mountains have been eyeing the Shoshone plant for decades. The Colorado River District, formed in 1937 to combat transmountain water diversions, recently secured a long-sought contract to buy the plant’s water rights from its owner, the utility giant Xcel Energy, for $99 million.

The goal of the purchase is to keep the river water flowing perpetually to the Shoshone site long after the plant is defunct, to benefit the region’s vital tourism and recreation industries and the environment. The transaction is set to close in 2027, with several legal, financial and administrative hurdles to clear along the way.

The pending Shoshone deal is one of a growing number of non-traditional arrangements for augmenting water supplies in the Colorado River Basin. The Southwest’s most important waterway is shrinking in a hotter, drier climate, and its future rules of operation remain uncertain.

“As things get drier, compact compliance almost certainly is going to be called into question at some point.”
~Estevan López, New Mexico’s top Colorado River negotiator

The seven Colorado River states are deadlocked in negotiations over how the river’s two key reservoirs, lakes Mead and Powell, will store and release water after 2026 when the current operating rules expire. The outcome of that process will decide how the water supply for 40 million people and 5 million acres of farmland from Wyoming to Mexico will be managed for years to come.

The Upper Basin states of Colorado, New Mexico, Utah and Wyoming are particularly under pressure to get creative. With few large reservoirs to capture snowmelt and rain, those states rely heavily on how much rain and snow they get in any given year.

Even in dry years, the Upper Basin states are obligated under the 1922 Colorado River Compact to send a certain amount south to the Lower Basin states of Arizona, California and Nevada.

“As things get drier, compact compliance almost certainly is going to be called into question at some point,” said Estevan López, New Mexico’s representative on the Upper Colorado River Commission, which is charged with ensuring the region’s adherence to the compact.

Banking on Lake Powell

As part of their proposal for future management of the Colorado River, the Upper Basin states have floated the creation of a “conservation pool” in Lake Powell, a water-savings account they can tap to fulfill their compact commitments or otherwise strengthen the river’s resiliency against a water supply crisis.

Agreements like the Shoshone deal that preserve fixed amounts of Colorado River flows could help fill such a contingency bank to benefit the entire Upper Basin and the Colorado Basin.

Another sizable contribution to the proposed Powell reserve could come from New Mexico, thanks to a novel water agreement taking effect on the Colorado’s San Juan River tributary.

The Jicarilla Apache Nation is leasing to the state of New Mexico 20,000 acre-feet of its annual Colorado River share for 10 years. Like the Shoshone deal, the goal is to maintain rather than consume a portion of the river’s flows to support endangered fish and strengthen New Mexico’s water security.

“It would be a good way for us to put water into such an account if and when created,” López said in an interview.

See related Western Water Spotlight article on the innovative three-party water deal between the state of New Mexico, the Jicarilla Apache Nation and The Nature Conservancy.

The amounts and timing of releases from Navajo Reservoir are designed to help the native Colorado pikeminnow and razorback sucker spawn in the San Juan but, López said, the leased water could also go toward the proposed conservation pool.

“We can build up that account using these releases and other conservation measures by all four Upper Basin states,” he said. “It could have utility for the entire [Colorado River] Basin if it’s incorporated into those post-2026 operating guidelines.”

Importantly, the releases from the New Mexico reservoir to help fish and the water funneled through Shoshone’s turbines to generate electricity in Colorado are “non-consumptive” uses that do not diminish or divert flows from the Colorado River. The water stays in the river for hundreds of miles, all the way to Lake Powell on the Utah-Arizona border, where it helps the Upper Basin states meet their compact requirements to send water to the Lower Basin states.

Under the Colorado River Compact, the Upper Basin states must not cause the river’s flow to be depleted below 75 million acre-feet over a 10-year running average. The flow is measured in northern Arizona at Lee Ferry, a point on the Colorado where it crosses into the Lower Basin.

The compact allows the Lower Basin states to force the Upper Basin states to cut back water uses if they violate their compact obligation. The Upper Basin is not in immediate danger of reaching that critical point. However, climate change portends a hotter and drier future in the Southwest, making it increasingly difficult to send enough water downstream while meeting Upper Basin needs. Average flows in the Upper Basin have already dropped 20 percent over the past century.

As the Colorado River dwindles, senior water rights like those attached to the Shoshone power plant are bound to become increasingly valuable.

First in Time, First in Right

Water rights granted in Western states are based on the doctrine of prior appropriation, in which the first water user to tap a river or stream can take as much water for “beneficial” purposes as they can use. 

“That’s not going to save Lake Powell, but it sure helps.”
~Andy Mueller, referring to the amount of Shoshone water filling the key Colorado River reservoir

The Shoshone turbines were installed in 1906, two years before production began on Henry Ford’s Model T. Today, the facility is just a small holding for Xcel Energy, a major Minneapolis-based electric and natural gas utility that operates in eight states with annual revenues topping $14 billion.

The plant’s senior water rights ensure that even in dry years as much as 39,000 acre-feet of water stays in the river for generating electricity and, at the same time, continues to flow down to Lake Powell, according to Andy Mueller, general manager of the Colorado River District.

“That’s not going to save Lake Powell,” Mueller said, “but it sure helps.”

Water conservation efforts have also helped Lake Powell from dropping too low, though to a lesser extent. Last year, the four-state Upper Basin System Conservation Program reduced river diversions by the same amount – 39,000 acre-feet – demonstrating the importance of securing the Shoshone water deal.

The Shoshone plant is one of the few unregulated hydroelectric plants in the country because it predates the Federal Energy Regulatory Commission. The plant cannot be modernized without triggering a lengthy and expensive licensing process. The plant was out of order for nearly all 2023 and more than half of this year.

Michelle Aguayo, a spokesperson for Xcel, said in an email the company plans to run the plant for “years to come.” If the Colorado River District’s purchase is settled, the district will lease water back to Xcel for $10 a year to keep the plant running.

The district isn’t interested in buying the actual plant, just its coveted senior water rights. Keeping the water in the river is vital to the local fishing, rafting and tourism industries that support communities across the Western Slope.

Water released through Shoshone’s turbines currently supports four vulnerable native fish species at a critical spot downstream, near Grand Junction, called the 15-Mile Reach, and would continue to do so if the deal with the district goes through.

The bonytail chub and the Colorado pikeminnow are endangered with extinction. Populations of razorback sucker and humpback chub have recovered enough in recent years to be downlisted from endangered to threatened.

The district has reserved $20 million for the water rights purchase, the state of Colorado has committed $20 million, and a group of Western Slope communities have pledged another $16 million. The district has applied to the Bureau of Reclamation to cover $40 million of the remaining $43 million balance. 

Use It or Lose It

It takes more than money to ensure the Colorado River water flowing through Shoshone’s turbines stays in the riverbed. It’s only a matter of time before the aging facility is no longer worth running and the turbines stop churning for good.

Once that happens, the “use it or lose it” provisions under Western water law kick in. The Shoshone’s water rights to precious Colorado River water would be up for grabs.

Holders of junior water rights like Denver, Aurora and Colorado Springs could lay claim to that water and put it to consumptive use. These and other cities on Colorado’s Front Range – the arid east side of the Rockies – have a long history of trying to acquire the Shoshone water rights for themselves.

About 90 percent of the state’s population lives on the Front Range and depends on water imported from the west side of the mountain range through a network of tunnels.

“They would take that water (for) their growing population,” Mueller said. “I’m not saying they’d waste the water, but it wouldn’t be in the river. Our river, from the headwaters in Rocky Mountain National Park on down, would have less water in it.”

To prevent that from happening, the Colorado River District wants to add to the Shoshone’s nonconsumptive water right an “instream flow” right. The entitlement is designed to keep enough water in a river or stream to sustain fish.

Colorado established an environmental water right in 1973, and the Colorado Water Conservation Board, the state’s water policy agency, has used it to protect 9,700 miles of stream and water levels on 480 natural lakes.

The Remaining Obstacles

The Colorado River District needs the board’s permission to obtain an instream flow right and, if successful, would proceed to make its case before the state’s water courts.

While the cities of Denver, Aurora and Colorado Springs have agreed not to oppose the district’s bid in court, the Shoshone water could be theirs if the Colorado River District purchase falls through.

If the district wins the water rights case in court and has the money in hand for the Shoshone purchase, the deal will still have to clear the Public Utilities Commission of Colorado. The commission must decide whether Xcel’s proceeds from the sale should be shared with ratepayers or go toward some public benefit before it can ratify the transaction.

If the commission decides the latter, Mueller said, “Xcel could say at that point, ‘See ya!’”

In the end, if it all works out, the Shoshone plant’s senior water rights will continue to benefit Colorado’s Western Slope communities and help the Upper Basin meet its compact requirements long after the plant shuts down for good.

Another Water Opportunity for the Upper Basin

You have to go back decades to understand the recent deal between the Jicarilla Apache Nation, the state of New Mexico and The Nature Conservancy.

In 1992, Congress passed the Jicarilla Apache Tribe Water Rights Settlement Act, which allowed the tribe to lease their water outside their land in northwestern New Mexico. A federal court order in 1998 enabled the tribe to receive federal project water from the Navajo Reservoir on the San Juan River.

Like many tribes in the Colorado River Basin, the Jicarilla Apache Nation lacks the infrastructure to put their water to full use by their members. So, they leased 16,000 acre-feet a year to the coal-fired San Juan Generating Station –- until its owner, the Public Service Company of New Mexico, started decommissioning the plant in 2019.

The tribe suddenly had to find a new customer. New Mexico’s Interstate Stream Commission was the only entity around that could put such a large amount of water to beneficial use over the long term and thus preserve the tribe’s entitlement to it.

The Nature Conservancy, a veteran negotiator in natural resource transactions, helped tie the knot. The nonprofit environmental organization saw how the water-sharing idea, like the Shoshone deal in Colorado, could also aid the recovery of endangered fish, so it is raising funds to support the 10-year deal.

The U.S. Bureau of Reclamation released the program’s first batch of water last year from the federal Navajo Dam on the San Juan River, a tributary of the Colorado River.

The release flushed sediment from gravel beds for a successful spawn of the Colorado pikeminnow and the razorback sucker, two of the species aided by the flows feeding the Shoshone hydroelectric power plant.

“This is one of the first projects in the Upper Basin that is showing how we can do more with partners working across boundaries.”
~Celene Hawkins of The Nature Conservancy

Such releases also give the state of New Mexico flexibility for responding to climate change, declining river flows and interstate water obligations.

The effects of climate change – longer, more severe droughts, more extreme hot spells and more variable precipitation – are placing a premium on tribal water.

Tribes with recognized water rights in the Colorado River Basin are entitled to use a total of 3.2 million acre-feet of Colorado River water annually, about a quarter of the Basin’s average annual water supply, according to the Water and Tribes Initiative, a group dedicated to enhancing tribal water resources.

Celene Hawkins, tribal water partnerships program director for The Nature Conservancy, said she expects to see more water deals between states and tribes in the San Juan River watershed and across the entire Colorado River Basin.

“This is not the only place where we see state and tribal partners starting to work together in the Basin,” Hawkins said. “But this is one of the first projects in the Upper Basin that is showing how we can do more with partners working across boundaries.”

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Reach Writer Spencer Fordin at sfordin@watereducation.org and Editor Chris Bowman at cbowman@watereducation.org

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