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Peter Van Zant: What is the cost of Centennial Dam? And who pays?

Other Voices
Peter Van Zant

In 2009, the Brown administration proposed the Twin Tunnel “Water Fix” project to ship water from Northern California watersheds to Southern California water districts at a price tag of some $17 billion.

It included a financing plan: the project would be paid for by water districts and their customers getting the water. Water districts are now deciding whether to commit and many are not.

In 2014 the Nevada Irrigation District floated the Centennial Dam project. It would be between Rollins and Combie reservoirs, on the last publicly accessible free-running section of the Bear River. They published the basic project statistics: 110,000 acre-feet capacity behind a 275 foot high dam and a new 1,000 foot long bridge over the reservoir in the Dog Bar Road area. But it did not include a financing plan.

The cost of Centennial has been a moving target starting at $160 million and rising steadily, with the latest cost pegged at $372 million in NID’s recent application for Proposition 1 funds from the California Water Commission. NID has not provided a comprehensive line item list of all project components, costs, and financing approaches.


In frustration, the American River Watershed Institute published the only comprehensive cost analysis of Centennial in 2016. Its estimates on construction, permitting, and mitigation costs including the replacement bridge, and the initially proposed hydro power plant are below:

Dam construction: $259,203,000

Spillway: $26,750,203

Hydroelectric: $54,500,000

Dog Bar Bridge: $56,000,000

Permits & Reports: $11,000,000

Mitigations: $85,000,000

Contingency: $1,000,000

2016 subtotal: $493,453,000

Add in a standard 3.5 percent annual cost escalator and the total project cost in 2020 comes to $605,350,473. The institute’s cost analysis report showed that at 4.5 percent financing the total cost would be $1,104,199,891, and with the more likely 5.5 percent financing it would be over $1.2 billion.

Let’s look at the funding mechanisms NID has proposed so far.

State funding from Proposition 1: NID is applying for $12 million for recreation and ecosystem benefits. NID’s application is admittedly incomplete and is likely to be denied. Even if issued, $12 million is less than 2.5 percent of the needed funds.

State revolving loan funds: Centennial does not qualify.

Recreation income: NID currently losses money on their recreation operations.

Federal infrastructure funding: Congressman LaMalfa recently told a constituent that no federal funds will be made available and NID needs to figure this out on their own.

Hydro revenue: NID has dropped hydro from the project, although Centennial could be subsidized by existing hydro operations. However, electric power markets are undergoing dramatic change that can’t be predicted.

Public financing: At a recent public forum, the NID board president said they could issue revenue bonds. These are bonds sold to investors who are first in line for revenues produced by the project.

Water sales: Since new hydro revenue is not part of this project and recreation doesn’t pay, the only other revenue source is water sales. NID’s customer base can’t buy enough water to service that debt even considering future growth. The only way to sell enough water to service the debt is to sell out of the area with the downside risk that water contracts, once executed, supersede use in the district.

Rate Payers: So that leaves you and me. NID has stated that rate payers are the financial “backstop” for borrowed funds. Financial investors wait for no one. At $1.2 billion, if it all falls on rate payers, the bill is $43,514 over 30 years per customer. As a special district, NID’s taxing authority is limited and rate payers are the backstop for paying off bonds and other debt.

NID has yet to provide the public with a comprehensive estimate of the cost of, or a financing plan for, their proposed Centennial Dam.

NID has also not provided the operational and hydrologic evaluation needed to show how often Centennial might fill and how its operation would address long drought periods like our recent one.

In addition, Centennial would be located lower in elevation from the vast majority of current customers. And with all this, NID is grabbing water rights from our farming neighbors in the valley supplied by the South Sutter Water District.

Where is the fairness in you and me paying for a dam that brings us no additional water, robs farmers of water, and requires selling our water elsewhere to service debt to private investors?

Peter Van Zant is a SYRCL Centennial Dam Work Group volunteer. He is also a former Nevada County supervisor and a former president of the SYRCL board of directors. He lives in Nevada City.


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