Northern Water has halted some design and construction contracts and is cutting back its multibillion dollar, two-dam supply project after its biggest customer said it was pulling out, officials said, as they detailed how the budget for their decades-long ambition suddenly jumped to $2.69 billion from $2 billion.
Four design-and-build contracts for the Northern Integrated Supply Project, meant to serve growth in 15 communities and water agencies, were pulled from the bidding process for at least three to four months while engineers consider how costs could be cut, Northern Water General Manager Brad Wind said in an interview Monday. The Fort Collins-Loveland Water District, serving about 60,000 people, was responsible for about 20% of the water supply and construction costs, the largest share, when it said Aug. 8 that it would no longer participate in the project.
Inflation in construction expenses, including salaries and materials, legal and permitting costs extended by environmental challenges, and a $100 million mitigation settlement with Save the Poudre all sent project costs soaring in 2025, Wind said.
“We’re taking a brief pause,” Wind said, given Fort Collins-Loveland saying it would withdraw from NISP and was securing other water supplies to meet growth. “But that’s given us an opportunity to step back and begin processes to resize the project, something that might be a little smaller, do some value engineering associated with that in preparation for continuing on with the project. But it’s certainly still a very viable project and an important one for the region.”
NISP isn’t the only water project that is seeing costs rise.
Denver Water has seen construction costs on the Gross Dam expansion project surge $34 million, according to spokesman Todd Hartman, with a current price tag for construction alone at $565 million, up from $531 million in 2021, when the contract was signed. But the total cost of the project tops out at $819 million when counting other costs including environmental mitigation.
This Fresh Water News story is a collaboration between The Colorado Sun and Water Education Colorado. It also appears at wateredco.org.
The $819 million Gross Reservoir project total has recently been published in the agency’s budget, but has not been widely cited as the true cost. The fate of the project is still up in the air — federal courts have allowed dam construction to continue for safety reasons, but a federal district court judge declared the construction permit issued by the U.S. Army Corps of Engineers to be illegal because of inadequate environmental reviews.
Contracting that Northern Water has stopped includes key pieces such as inlet canals to the proposed Glade Reservoir northwest of Fort Collins. Northern Water has already awarded and will continue with the design-construction project to move U.S. 287 out of the bottom of the valley that will become Glade, to higher ground nearby. The highway must be moved even if Glade Reservoir is downsized, officials said.
Options to cut building costs for the Glade portion of the delivery system include anything from lowering the height of the dam, to smaller inlets and outlets and pumping equipment if demand has dropped from a large customer like Fort Collins-Loveland dropping out, Wind said.
“We just want to evaluate what components of the project could be kind of right-sized, become smaller and still meet the needs of the remaining participants,” he said.
Fort Collins-Loveland said budget updates since the Save the Poudre settlement was announced in March had pushed the price of NISP water 50% higher than what developers would be willing to pay for new water hookups.
No other members have come forward to threaten withdrawal, Wind said.
After Fort Collins-Loveland, the next biggest shareholders of NISP among 14 other towns and districts are Erie at 16.25% or 6,500 acre-feet of water supply; Fort Morgan at 9% or 3,600 acre-feet; and Central Weld at 8.75% or 3,500 acre-feet. One acre foot of water is generally enough to supply the needs of two to three average households for a year.
The budget still is uncertain
Even the latest $2.69 billion cost total is not certain, Northern Water says, because the $500 million currently allotted to building Galeton Reservoir storing South Platte River water east of Fort Collins will rise before contracts are signed. Construction on the Galeton side of the complex system is three or four years away, Wind said.
“Ultimately, where the rubber meets the road with all of this project is when you get contractors that price their involvement, that’s truly when you get a final cost,” he said.
Fort Collins-Loveland appears to be finding other water sources for its growth, Wind said, but the other members who signed up for NISP water are not in the same position.
“For almost every participant, this water supply is crucial,” Wind said. “It’s crucial not in 10 years, not in 20 years, but it’s crucial tomorrow that we get this project underway and get it operational, to meet the demands that they see on the horizon in the very near future.”
Erie’s population of about 40,000 was up 9%, 7% and 6% annually in the past three years, the town planning division says.
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Gary Wockner, who with Save the Poudre and a coalition fought NISP in court and at permitting agencies for years in order to secure healthier flows for the Poudre River through Fort Collins, said Save the Poudre will watch to make sure the $100 million environmental settlement stays in place.
“The $100 million mitigation is only 3.7% of the total $2.69 billion cost of the project,” Wockner said. “If NISP can’t afford this minimal mitigation cost, it doesn’t deserve to be built. Nature has to be on the balance sheet, and this settlement fund sets that important precedent in Colorado.”
Northern Water has continued talking with Fort Collins-Loveland about NISP, and has still not received a formal withdrawal notice, Wind said. The water district has the right to withdraw without having to find a buyer for its shares, Wind added, but there are no refunds on the $34 million Fort Collins-Loveland has already contributed for its share of permitting, design and legal fees.
Fort Collins-Loveland manager Chris Pletcher said Tuesday the district had no information to add since it went public in early August with its intent to leave NISP.
Fresh Water News editor Jerd Smith contributed to this report.