Northern Water earned a mixed scorecard on its troubled $2.7 billion, two-dam supply project in recent months, with the northern Colorado provider lopping an entire dam to cut costs, even as more cities depart the venture.
The cities who spent the spring researching whether to stay in or flee the Northern Integrated Supply Project are also hearing distressing news from Northern Water’s other stumbling showcase project, Chimney Hollow reservoir.
Towns like Erie now assume the uranium contamination combined with lack of runoff to fill Chimney Hollow mean they won’t be able to sell water from that reservoir to customers for five or six more years, complicating the fundraising they need to pay for their shares of the larger NISP project.
Erie’s council voted in May, after an existential discussion about how much population growth is possible, to contribute another $2.9 million to NISP planning and final design for 2026. The fast-growing town of 43,000 also cut its subscribed share of future NISP water from 6,500 acre-feet each year to 4,500. But because six of the original 15 cities and water districts buying into NISP have now dropped out, Erie’s share of the overall project actually rose to the largest membership at 23% of expected water.
With interest rates remaining high and construction inflation rising even faster than general inflation, Erie now says the project cost of each acre-foot from NISP will be $85,000 to $95,000. The actual cost will double over time as the community pays interest on the bonds. Those fast-rising costs have each remaining NISP member demanding more details from both Northern Water and their own utility managers on which water customers will end up paying higher rates.
“And two months from now, three months from now, you may come back and go, oh, the water bills are going to triple, maybe not, but double, I think that’s the dilemma I feel,” said Erie Mayor Andrew Moore, who ended up in the minority voting against the 2026 payment for the town to stay in NISP. “And then I think about the big participants that have bailed.”
Erie’s growth was supposed to pay for itself, Moore said, with developers and newly hooked-up water users paying the cost of finding major new sources like NISP. If new water costs are so high that longtime residents’ bills also shoot up, he said, it may be time to reconsider.
“We talk about Erie at what, 85,000 or 90,000 people,” Moore said at the May council meeting. “Could Erie be OK at 65,000 people, or whatever, using Chimney Hollow water and Colorado-Big Thompson? I asked that rhetorically, because I know we don’t have the answer at this moment. But there’s definitely a feeling that says, why should we put these additional costs on if the only reason to do it is to grow?”
Ultimately, a majority of the council decided Erie should spend the $2.9 million this year while it waits for detailed construction bids and final costs from Northern Water. Erie has already sunk about $30 million for its share of NISP planning and permitting, council member Emily Baer noted.
“Thirty million is a lot to walk away from, over two decades,” she said.
Northern Water, meanwhile, is taking some solace from a possible buy-in to the shrinking NISP from the City of Fort Collins, which has storage expansion needs of its own.
Northern Water General Manager Brad Wind has been trying to keep the NISP coalition together since estimated costs began to soar in 2025. Northern Water’s original goal for the 15 communities was to move U.S. 287 northwest of Fort Collins and build Glade dam and reservoir in that valley; a second portion of the massive project involved exchanges of water with farm users along the South Platte River east of Greeley and another reservoir, called Galeton.
Along the way, NISP has lost the participation of Fort Collins-Loveland, Eaton, Evans, Morgan County Quality Water District, Severance and Firestone. Still in are Erie, Frederick, Windsor, Lafayette, Fort Morgan, Left Hand Water District, Central Weld County Water District, Dacono and Fort Lupton. and
Some communities have cited rising costs in dropping out, while others have said their population growth projections and water needs changed, Northern Water spokesperson Jeff Stahla said. Northern Water commissioned engineering studies to lower the costs of building Glade by $100 million, and has put off the start of Galeton reservoir and associated work until Glade can move forward.
That puts the cost of finishing the Glade portion of the project, which will store water rights from the Cache la Poudre River, at $2 billion instead of the overall projection of $2.7 billion, Stahla said.
Fort Collins’ water utility, separate from Fort Collins-Loveland district, said recently it was running the numbers on getting its future growth needs through joining the Glade project and NISP, rather than via a proposed $300 million expansion of Halligan Reservoir. Fort Collins would in effect buy into Glade to store the water it otherwise would have used to fill an expanded Halligan, Stahla said.
Northern Water expects Fort Collins to make a decision by the end of the year, he said.
“Of course, it’s in Northern’s best interest to point out that this project is still under enough demand that there are folks who still want to join, but I think it’s also interesting to see that Fort Collins is taking another look,” he said. All public agencies facing major infrastructure projects right now are suffering from construction inflation and adjusting their cost projections, Stahla said.
“We’re seeing this and hearing about it from cities all over: The cost to do any type of project is going up, and cities are having to look at how does this affect their futures in terms of what their cost estimate would have been five years ago versus what it is today,” Stahla said.
Leaving out Galeton for now reduces the amount of annual water yield from NISP from about 40,000 acre-feet to 20,000, Stahla said. Cities like Erie are filling their gaps right now by buying up shares of the Colorado-Big Thompson Project, which brings Colorado River Basin water under the Continental Divide from Grand County. But the cost of C-BT water is also high — not far off the $80,000 to $90,000 per acre-foot projections for NISP water, he added.
And there aren’t 20,000 units of C-BT water available for growing communities, he said, leaving Glade and NISP as the best option for many.
Further complicating many northern Colorado water agency decisions are the ongoing travails of Chimney Hollow, completed in a valley west of Carter Lake Reservoir in 2025. In testing water that had collected at the base of the newly finished dam, Northern Water discovered natural uranium had leached out of a construction quarry up the basin and was contaminating the pool of water.
Northern Water said it would hold off beginning the fill of Chimney Hollow until it completes a series of tests about how long uranium will continue to leach into a diluted reservoir, and whether there’s any danger of uranium contaminating groundwater in the area.
The ongoing drought also delays Chimney Hollow’s use. The Windy Gap water rights Northern Water owns do not come in for filling Chimney Hollow unless there is healthy precipitation and snowpack in Grand County. Northern Water couldn’t begin filling Chimney Hollow this year even if the uranium issue was already solved, Stahla said. The same could be true if next year is dry.
If the Colorado River basin does have higher than average snowpack in the next few years, Northern Water’s members could still use their Windy Gap water rights even if Chimney Hollow is not yet resolved, Stahla said. The excess water can be delivered from Grand Lake storage through the existing Colorado-Big Thompson system.
“When you build a reservoir, there’s always that element of how much water will be available to be able to put into it,” he said.