City board considering Ouachita over DeGray

When city staff commissioned a water supply study five years ago, DeGray Lake was considered the most immediate option for augmenting the 20 million-gallon per day allocation that serves the city water utility’s more than 35,000 meters.

That belief notwithstanding, the Hot Springs Board of Directors will consider a resolution next week designating Lake Ouachita as the next water supply source. Lake Ouachita appeared inevitable after the city signed

a water storage agreement with the U.S. Army Corps of Engineers for a 23-mgd allocation from the lake’s power generation pool in May, committing it to $444,440 a year for the next 30 years in foregone-benefit payments for lost hydropower production capacity.

“Since the Lake Ouachita water storage agreement is now finalized by executed agreements, and the city is paying foregone benefits, and since the DeGray Lake option still requires continuing negotiations and since the water supply is at a critical need and a top board priority, city staff recommends that the board officially adopt the Lake Ouachita option as the next water source for the city,” said the request form seeking the resolution.

Although the city is years away from being able to access the water, the agreement requires it to begin amortizing its share of $12.4 million in storage costs immediately. The agreement stipulates immediate payment despite language in the 1958 Water Supply Act that defers storage costs until a supply is first used.

The Corps has said the 1963 federal statute that gives local governments permanent rights to purchased storage mandates the immediate payments.

“That’s not fair at all,” Stewart Noland, president of Crist Engineers Inc., the city’s water-system consultant, told the board last month. “I’ve told the Corps that over and over again, but their response is that it’s the Corps’ national policy to do it that way.”

The city has yet to secure a storage agreement on DeGray Lake after purchasing the rights to a 20-mgd allocation from Central Arkansas Water in 2013. The city’s rights to the water expire if it hasn’t secured a storage agreement by Nov. 1, but the city has said CAW is open to extending its joint-use agreement with the city.

It commits the city to a

$1,078,723 payment to CAW, the Little Rock metropolitan area’s water utility, once a storage agreement is executed. In the interim, the city has been paying $25,742 a year to preserve its right to the 20 mgd of the 120mgd allocation available to CAW. “When we first started this project, I thought DeGray was the sure place, because it’s authorized for water,” Deputy City Manager Bill Burrough, referring to the lake’s joint-use pool for power generation and supply, told the board last month. “But now Lake Ouachita is the sure place. Unless we find an amicable solution, I think we’re going to have a long battle with DeGray.”

The city initially sought to withdraw water from above DeGray Lake Dam without having to pay foregone benefits, arguing that the joint-use pool doesn’t entitle Southwestern Power Administration to credits for lost power generation capacity.

SWPA is the division of the Corps that markets hydroelectric power to utilities in a sixstate region. The sales generate revenue remitted to the federal treasury for the repayment of the public’s investment in the federal hydropower program.

The city is now hoping to defer payment of foregone benefits until it begins using the water. Crist Engineers’ demand model indicates that if a 15-mgd treatment plant for the Lake Ouachita allocation comes online, the city could need the DeGray Lake allocation as early as 2037 to keep demand below 80 percent of capacity.

According to Crist Engineers’ supply study, the Arkansas Department of Health asks water systems to begin seeking additional water sources when demand reaches 80 percent of capacity. The health department’s most recent sanitary survey of the water system said average demand last year was 15.12 mgd. Maximum demand reached 20.11 mgd.

The city can treat 25 mgd between its Ouachita Treatment Plant on upper Lake Hamilton and the Lakeside Plant on Pineland Drive. The latter treats water from the city reservoir at Lake Ricks.

Burrough told the board last month a report written by Corps staff on the city’s deferral proposal is working its way through the Corps’ chain of command.

“(The Corps) does admit DeGray is a different lake than they have with some of their other standard agreements around the nation,” he said. “Most of those lakes don’t have a shared pool.”

Designating Lake Ouachita as the next supply source allows the city to begin obtaining permits for a treatment plant and intake and selecting routes for raw and finished water lines.

The resolution was on the consent agenda for next week’s board meeting but was moved under new business at the request of District 4 City Director Larry Williams.

“In light of the importance of this, and that we only have two items of new business to vote on, why wouldn’t we want to put that (under new business), so we can get a little more pop out of it?” he asked at Tuesday’s agenda meeting.