SDS Whitepaper

Southern Delivery System Page 1
Introduction
By Jerry Forte, Chief Executive Officer, Colorado Springs Utilities
Colorado Springs has a long history of responsible
planning for its water needs. As early as the 1870s, citizens
determined that the provision of safe and sufficient water
was a core function of the municipal government. For
years, Colorado Springs Utilities has served that traditional
function by developing, protecting and enhancing our water
supply and the necessary infrastructure to collect, transport,
treat and deliver water for our community.
This is illustrated in a letter written by former Colorado
Springs City Engineer Edwin A. Sawyer, which he left
in a time capsule for his 21st Century counterparts.
Dated August 2, 1901, the handwritten letter describes
the community’s diligent pursuit of water and water
infrastructure from about 1880 to 1900. Sawyer wrote,
“It seems to me that nothing except the lack of water can stop the growth of a city
so desirable for residence as this.”
“Our people are becoming aroused to the need of securing at once all the available
reservoir sites and water rights …”
— Former Colorado Springs City Engineer Edwin W. Sawyer, 1901
His words echo more than a century later as an inspiration for our community to keep
looking ahead to plan responsibly for the future. Our community has worked hard to
acquire a diverse portfolio of water rights and to build complex water projects to deliver
water to our citizens. For decades, a stable water supply has served as a foundation for
our city’s prosperity and our excellent quality of life.
Fast forward to today. Our major pipelines are nearly 50 years old, and our system is
nearing capacity. The Southern Delivery System (SDS) is needed to deliver additional
water and back up our existing pipelines. But SDS is more than a pipeline. SDS will
serve as an engine, driving more efficiency, effectiveness and reliability in our system,
while protecting our water rights from future threats. SDS makes our entire water system
more than the sum of its parts.
This report provides you an overview of the events leading up to the construction of
SDS. History has proven that the community cannot wait until it has committed the last
drop of water before it begins building for the future. It is my privilege to work with you as
leaders of our community to bring this essential project online – enabling us to continue
our long tradition of serving customers for generations to come.
The Southern Delivery System:
SDS Drives the Efficiency and Reliability of Our Water System
TABLE OF
CONTENTS
Our Water System:
A History of
Visionary Planning . . . . . . . . 2
SDS and the 1996
Water Resource Plan . . . . . 4
What is SDS? . . . . . . . . . . . 6
The Right Solution . . . . . . . . 7
Planning and Permitting –
How We Got Here . . . . . . . . 7
Essential Investment . . . . . . 9
Funding Major
Water Projects . . . . . . . . . . 12
The Economic
Impact of SDS . . . . . . . . . . 13
A Future without SDS . . . . 14
Advantages of
Building Now . . . . . . . . . . . 14
SDS – Water for
Generations . . . . . . . . . . . . 15

Our Water System:
A History of Visionary
Planning
Long-term water needs might not have been
the first thing on General William Jackson
Palmer’s mind when he founded Colorado
Springs in 1871. The beauty of Pikes Peak
was his inspiration. At the mountain’s base,
Palmer found the potential for a thriving
resort community. But he also found an arid
climate, with no river or large body of water
nearby. So began the historic challenge of
supplying a safe and reliable water supply
to Colorado Springs.
The first water supply for Colorado Springs
came from several shallow wells. To expand
this supply, an early step under Palmer’s
leadership was to dig a 12-mile trench to
Fountain Creek called the El Paso Canal.
This open ditch provided water for drinking,
bathing and other needs, until 1876, when
a plague of grasshoppers polluted it. Early
citizens realized that a single source of water
was ill-advised and began to demand a new
water system. Water planning leaders set
their eyes on Palmer’s inspiration – Pikes
Peak – for another source of water.
As a next step, early citizens voted to create
a municipal water system — an indication
that voters considered the provision of safe
and reliable water to be a core function of
local government. To provide for its citizens,
the city constructed a series of dams,
reservoirs and pipelines to bring water down
from Pikes Peak called the South Slope,
North Slope and Northfield Systems.
Planning and construction of these early
systems spanned more than half a century.
Success in building systems to collect and
transport water directly from our closest
mountains led to construction of even more
elaborate systems to bring water from more
distant mountains – across the Continental
Divide – known as transmountain water.
First among these innovative projects was
the Blue River System in the 1950s, which
was instrumental in locating the Air Force
Academy in Colorado Springs. Next was the
Homestake System in the 1960s, which
includes the Homestake pipeline. Today we
rely on this pipeline to deliver up to 70 percent
of the water used in Colorado Springs.
The addition of the Twin Lakes and
Fryingpan Arkansas supplies in the 1970s
and the Colorado Canal supply in the 1980s
added to our diverse portfolio. Finally,
the securing of our Exchange Rights in
the 1980s doubled the potential benefit of
transmountain water by providing an effective
way to reuse those water supplies.
HIGHLIGHTS
• Early citizens
discovered Fountain
Creek could not provide
a reliable water supply
and built a series of
dams, reservoirs and
pipelines to use water
from Pikes Peak.
• Our first transmountain
delivery system, the
Blue River System,
was built in the 1950s
and was instrumental
in locating the Air Force
Academy in Colorado
Springs.
• Today we rely on the
Homestake Pipeline,
built in the 1960s, to
deliver up to 70 percent
of our water.

Key achievements in the development of
Colorado Springs’ water system include:
• The South Slope System development
started in the 1880s and includes seven
reservoirs and related systems.
• The North Slope System development
spanned 1900-1960 and includes three
reservoirs and related systems.
• The Northfield System development
spanned 1903-1970 and includes Rampart
Reservoir.
• The Blue River System development
spanned 1948-1966 and includes
Montgomery and Blue River reservoirs,
three tunnels and related collection
systems, and a pipeline.
• The Homestake System development
began in the 1950s as a partnership
between Colorado Springs and Aurora and
includes a pipeline, pump station, three
reservoirs and related facilities.
• The Fryingpan-Arkansas Project,
a federal project that includes Pueblo
Reservoir, Twin Lakes Reservoir, Turquoise
Reservoir, and a West Slope collection
system.
• The Fountain Valley Authority pipeline
and treatment plant, an additional Fry-
Ark Project facility, was completed in 1985
to deliver water from Pueblo Reservoir to
Colorado Springs and other communities in
the region.
• Twin Lakes and Colorado Canal,
Colorado Springs purchased controlling
interest in these companies in the 1970s
and 1980s, and includes a west slope
collection system and Lower Arkansas
Valley agricultural water rights.
• The Exchange Rights, decreed in the
1980s, are the foundation of SDS. The
Exchanges allow us to reuse the majority
of our water supply efficiently and
affordably.
HIGHLIGHTS
• Colorado Springs’
location far from a
major water source
requires visionary
planning and innovative
water projects.
• Beginning in the
1870s, Colorado
Springs has built a
complex water system
that is now reaching its
capacity.
• Our community’s
quest to deliver water
is chronicled in detail
in The History of
Colorado Springs’
Water Collection
System.
• Building projects to
ensure long-term
stability of water
supply has enabled
us to support new
businesses and military
installations.

Water from Pueblo Reservoir
The Fryingpan-Arkansas Project,
which includes Pueblo Reservoir, was
authorized by Congress in 1962 to serve the
agricultural and municipal needs of Southern
Colorado and to provide flood control on the
Arkansas River. Transmission of water to
Colorado Springs from Pueblo Reservoir
became possible when the U.S. Bureau of
Reclamation completed the Fountain Valley
Authority Pipeline from Pueblo Reservoir
in 1985. Also benefiting from that pipeline
are Fountain, Security Water District,
Stratmoor Hills Water District, and Widefield
Water District.
For more than two decades, Colorado
Springs has benefited from short-term
contracts with the Bureau of Reclamation
for storing, conveying and exchanging our
water using these facilities. Since 1958, El
Paso County property owners have invested
more than $70 million in property taxes
used by the Southeastern Colorado Water
Conservancy District to help repay the
federal government for construction of the
Fryingpan-Arkansas Project facilities and
to pay for their operation, maintenance and
replacement costs.
Water System Expansion
Plans Blocked
Colorado Springs and Aurora had always
planned to partner in the expansion of the
Homestake System to meet additional future
water needs. However, the Homestake II
project met with opposition in Eagle County
from environmental concerns.
Between the construction of Homestake I
and the planned undertaking of Homestake
II, a couple of key events occurred. First,
Congress designated the location of the
Homestake II diversion facilities as being
within a wilderness area, and second, the
Colorado Legislature passed House Bill
1041, giving counties land-use jurisdiction
over matters of statewide concern, including
the development of water resource facilities.
While Colorado Springs and Aurora moved
the water rights for the project to originate
from a location outside the newly designated
wilderness area, Eagle County ultimately
denied Colorado Springs a 1041 land-use
permit for the Homestake II project, as it was
envisioned at the time.
Two other options for Colorado Springs to
increase water storage – the Elephant Rock
Dam and Mount Princeton Dam – along with
a “western delivery system” also met with
strong opposition early in the planning phase
from recreational interests and homeowners
on the Upper Arkansas River. Subsequently,
these plans were put on hold while Colorado
Springs pursued more viable alternatives.
SDS and the 1996
Water Resource Plan
Colorado Springs water planners initiated
a comprehensive long-term water planning
process in the late 1980s focused on the
development of solutions, and associated
engineering studies and cost estimates, for
meeting the water needs of Colorado Springs
through the year 2040. Citizens participated
in this process through surveys, public
meetings and workshops.
In 1996, the Colorado Springs City Council
passed a resolution formally adopting the
resulting integrated plan, known as the
Water Resource Plan. This plan set the
direction of water development for years to
come. For more than a decade, Colorado
Spring Utilities has been implementing the
four major components of this plan:
Source: 1996 Water Resource Plan
HIGHLIGHTS
• Plans to expand the
Homestake System
and a “western delivery
system” were blocked
by strong opposition
and the denial of a 1041
land-use permit.
• In the late 1980s, water
planners conducted
extensive studies and
public outreach to
develop a long-term
plan to set the direction
of water development
for years to come.
• For more than a
decade, we have been
implementing the four
major components
of the resulting 1996
Water Resource Plan.
• Implementation of the
key elements of this
plan has enabled us
to delay the need to
invest in a new delivery
system by more than a
decade.

The percentages shown represent the
proportion of the future (2040) water demand
that each component was expected to
provide. Each of these major components
has been completed or is underway.
Successful implementation of the key
elements of this plan has enabled us to delay
the need to invest in a new delivery system
by more than a decade.
Conservation
Conservation has always been an integral
part of our water operations. In the 1940s,
the city was fully metered to help customers
gauge their water use and conserve, long
before it was a standard practice in the
industry. In the 1990s, the community
opened the award-winning Xeriscape
Demonstration Garden and developed
extensive customer education programs. In
the 2000s, Colorado Springs Utilities began
to offer customers rebates for water-efficient
appliances and technologies, and introduced
conservation rates.
The drought we experienced in 2002
heightened customer awareness of the
scarcity of this resource and changed our
water use. Today, our per capita residential
water use is among the lowest along the
Front Range. Colorado Springs Utilities
continues to encourage conservation as
it is environmentally responsible, helps
customers manage water bills, and stretches
our existing supplies.
Non-Potable Water Development
Non-potable water (treated wastewater and
other untreated supplies) has long been
used to irrigate parks, golf courses and other
public properties in our community. In fact,
Colorado Springs pioneered the recycling of
treated wastewater for irrigation in the early
1960s and has the second-largest non-
potable water system in Colorado.
In recent years, we have completed many
improvements to maximize our use of non-
potable water, including the conversion of
the Drake Power Plant’s cooling towers to
use non-potable water, saving more than
1 billion gallons of drinking water per year.
The new J.D. Phillips Water Reclamation
facility, completed in 2007, increased our
potential non-potable water capacity by 10
million gallons per day.
Existing System Improvements
In addition to conservation and use of non-
potable water, Colorado Springs undertook
several projects to maximize the yield of our
existing water system. These improvements
include the expansion of the Otero Pump
Station and Homestake Pipeline among
others, and have added more than 15 million
gallons per day (MGD) of water to our
system’s firm yield.
Major Delivery System
Our focus on the expansion of our
conservation programs, the use of non-
potable water and improvements to
our existing water system have been
instrumental in allowing us more time to
plan, permit and construct the fourth major
component of the plan – a new major water
delivery system. The plan determined that 55
percent of our future water supply would rely
on a new system.
A significant part of the Water Resource Plan
was dedicated to identifying and evaluating
dozens of different configurations for this
project. Among those examined was what
would become known as the Southern
Delivery System.
HIGHLIGHTS
• The 2002 drought
heightened customer
awareness of the
scarcity of water supply.
• Today our per capita
residential water use is
among the lowest along
the Front Range.
• Colorado Springs has
the second-largest non-
potable water system
in the state and has
expanded our use of
non-potable water in
recent years.
• We have made
improvements to
increase the efficiency
of the existing water
system before
constructing SDS.
• The 1996 Water
Resource Plan
identified that 55
percent of Colorado
Springs’ future water
supply would need to
come from a new major
delivery system.

What is SDS?
SDS is a regional project that will bring
water from Pueblo Reservoir to Colorado
Springs and our partner communities,
Fountain, Security and Pueblo West. The
project will be built in phases based on
customer demands.
Phase I – now under construction – will
transport water from Pueblo Reservoir
through approximately 62 miles of
underground pipeline. The project includes
these core components:
• Connection to the North Outlet Works of
Pueblo Dam;
• Pipeline to transport raw water;
• Three raw water pump stations (50 MGD
capacity each);
• Treatment plant (50 MGD capacity) to
purify the water; and
• Treated water pump station and pipelines
to move the water into the existing
distribution system for delivery to our
customers.
Phase I is estimated to cost $880 million
in 2009 dollars (excluding financing).
Construction began in 2010 with water
delivery expected by 2016.
Phase II will be built in the 2020-2025
timeframe, or as more capacity is needed.
This phase of SDS will add two reservoirs
expand the raw water delivery capacity, and
expand the water treatment plant and pump
stations to a be able to meet a peak capacity
delivery of of more than 100 million gallons
per day (MGD) of treated drinking water. The
new reservoirs will have different functions:
Upper Williams Creek Reservoir will serve
as terminal storage of raw water closer to
our community – providing critical storage
during high demands and additional water for
emergency situations.
This reservoir and 131-foot-tall dam will
hold 30,500 acre feet of water and have a
water surface area of 760 acres. It will be the
largest body of open water in El Paso County
– slightly smaller than Denver’s Cherry Creek
Reservoir – with tremendous recreation
potential, including boating, fishing, and
hiking trails. Colorado Springs Utilities will
conduct a public process to help determine
HIGHLIGHTS
• SDS will bring water
from Pueblo Reservoir
to Colorado Springs,
Fountain, Security and
Pueblo West.
• The project will be built
in phases based on
customer demands.
• Phase I construction is
under way with water
delivery expected by
2016.
• Phase II, anticipated
for the 2020-2025
timeframe, will expand
the system’s capacity
and add two reservoirs.

the recreational uses and will work closely
with the City of Colorado Springs, El Paso
County and the Colorado Division of Wildlife
to make this an amenity that our community
can enjoy.
Lower Williams Creek Reservoir will serve
a different purpose by helping us maximize
the use of our water supplies. When we
bring water over the Continental Divide from
the Western Slope, we can use this water
to “extinction” – getting more than one use
out of it. Customers use this water, and
then Colorado Springs Utilities treats it and
returns it to Fountain Creek. This reservoir
will enable us to divert these “return flows”
from Fountain Creek and store them until we
can exchange, or trade, this water for water
that is stored in Pueblo Reservoir. We would
then move the exchanged water through the
SDS pipeline to Colorado Springs.
The timing of Phase II depends on our
customers’ need for additional water. The
construction cost of Phase II, not including
financing, is anticipated to be between
$387 million and $744 million, based on
preliminary engineering estimates. We will
monitor demand so that this investment can
be phased in as it is needed.
The Right Solution
A pipeline from Pueblo Dam is the most
cost effective option among the dozens of
possible combinations that were considered
for delivering the water our customers need
for the next several decades. A pipeline from
Pueblo Dam is the right solution because it:
• Makes use of water rights we already
own on the Arkansas River. In this era of
water scarcity, acquiring new water rights
to replace those we already own would
would be very difficult, if not impossible.
• Is the most cost-effective means for
delivering water our communities need
for the future.
• Provides significant operational
advantages coming from a stable body of
water such as Pueblo Reservoir.
• Will increase our overall system reliability
in the event that other parts of our system
need maintenance or repair.
• Requires lowest energy use, resulting in
the lowest greenhouse gas emissions of
those studied in the EIS.
• Has fewer environmental impacts and will
allow the protection and preservation of
historic, cultural, and natural resources.
• Follows through on decades of sound
planning and capitalizes on previous
investments.
Planning and Permitting –
How We Got Here
In the course of more than two decades
of planning and permitting, SDS has
been thoroughly reviewed by numerous
independent government and regulatory
agencies at the local, state and federal level.
Decades of Support from
City Leaders
Three different mayors and at least eight
previous city councils have been involved
in the planning of SDS. These leaders have
worked hard over the years to establish
and maintain relationships with their
colleagues in the region which has been key
to the project’s success. Important regional
relationships made it possible to reach
informal and formal agreements that support
SDS and other water needs in Southern
Colorado.
IGAs Paved the Way
To pave the way for SDS, Colorado Springs
Utilities negotiated and signed important
formal agreements with other entities that
have water interests in our region. These
agreements formally outline commitments
to our neighbors and established an early
foundation of support for the project.
• In 2003, Pueblo, Colorado Springs,
several other regional entities, and the
Pueblo Chieftain, signed the Arkansas
River Water Preservation Principles –
a non-binding set of goals that served as
a foundation for how the communities will
work together to establish more formal
agreements regarding water issues of
mutual interest.
HIGHLIGHTS
• A pipeline from
Pueblo Dam is the
most cost-effective,
environmentally
responsible option
and leverages our
customers’ previous
investments in this
federal facility.
• There are significant
operational advantages
coming from a stable
body of water such as
Pueblo Reservoir.
• Three different mayors
and at least eight
previous city councils
have been involved in
the planning of SDS.

• In March 2004, Colorado Springs
Utilities, the city of Pueblo and the
Pueblo Board of Water Works entered
into a Three-Party Intergovernmental
Agreement. This agreement established
each party’s participation in the Arkansas
River Flow Management Program to
maintain more consistent flows on the
river through Pueblo. Participants also
agreed that participation in the flow
program is tied to support of the SDS
project connecting to Pueblo Dam.
• In May 2004, Colorado Springs Utilities,
the Pueblo Board of Water Works,
the Southeastern Colorado Water
Conservancy District, and the cities of
Pueblo, Aurora, and Fountain entered
into a Six-Party Intergovernmental
Agreement essentially adding
more entities in support of the same
principles established in the Three-Party
Agreement.
In addition to a commitment to support
the Arkansas River Flow Program and
SDS originating from Pueblo Dam,
the signatories agreed to cooperate
in developing downstream storage to
manage the exchange of their water
rights and the better utilization of
Fryingpan-Arkansas Project facilities,
including legislation to potentially expand
Pueblo Reservoir for additional storage
(also known as the Preferred Storage
Options Plan or PSOP).
Federal Environmental
Review and Approval
Since the SDS project requires a major
federal action by the U.S. Bureau of
Reclamation to issue long-term storage,
exchange and conveyance contracts for
using Pueblo Reservoir, we were required to
develop an Environmental Impact Statement
(EIS) under the National Environmental
Policy Act (NEPA). The EIS process required
the analyis of various alternatives to the
project and the studies of the environmental
impacts caused by each alternative.
The SDS EIS process was managed by the
U.S. Bureau of Reclamation with input from
cooperating agencies, including the U.S.
Army Corps of Engineers, the U.S. Fish and
Wildlife Service, the U.S. Bureau of Land
Management and the U.S. Environmental
Protection Agency. Hundreds of individual
project components were considered before
identifying seven alternatives for more
intensive analysis, including the SDS pipeline
from Pueblo Reservoir.
Rigorous studies and a comprehensive
public process were conducted as part of the
EIS covering these primary issues, among
many others:
1. Surface Water Flow
2. Surface Water Quality
3. Channel Stability and Morphology
4. Sedimentation
5. Water Rights
6. Fish and Other Aquatic Life
7. Wetlands and Other Waters of the U.S.
8. Wildlife
9. Socioeconomic Conditions
10. Recreation Resources
The Final EIS produced hundreds of pages
of technical information, and hundreds
of public comments were received and
addressed during the EIS process. The
Bureau of Reclamation maintains a website
specifically devoted to documenting the SDS
EIS process at www.sdseis.com.
In March 2009, after five and a half years of
analysis and public process, the Bureau of
Reclamation issued its Record of Decision
for the SDS project identifying the pipeline
from Pueblo Reservoir as the Preferred
Alternative. This alternative was determined
to be the most environmentally responsible
solution to deliver water to Colorado Springs
and our partner communities, and it has the
lowest capital investment and the lowest
cost for operations and maintenance of the
alternatives studied under the EIS.
HIGHLIGHTS
• Regional
intergovernmental
agreements established
a critical foundation of
support for SDS from
Pueblo Reservoir.
• The Bureau of
Reclamation conducted
a five-and-a-half-year,
rigorous analysis
and public process
to produce a Final
Environmental Impact
Statement for the SDS
project.
• The pipeline from
Pueblo Reservoir
was identified as the
Preferred Alternative.

Pueblo County 1041 Permit
Pueblo County is one of the counties in
Colorado that has implemented 1041 land-
use regulations. In August 2008, Colorado
Springs Utilities filed an application with
Pueblo County for a land-use permit for the
SDS project.
In April 2009, after months of active
negotiations and extensive public process,
the Pueblo County Commissioners voted
unanimously to approve a Pueblo County
1041 land-use permit for SDS – a historic
milestone for the project. The 1041 permit
terms and conditions cleared the way for
SDS, while requiring the mitigation of SDS
construction impacts and operation and
providing protection for Fountain Creek,
Pueblo Reservoir, landowners and the
residents of Pueblo County. In addition
to outlining the terms and conditions for
SDS construction in Pueblo County, the
agreement led to the commitment of a
$50 million contribution to Fountain Creek
administered through the newly established
Fountain Creek Watershed, Flood Control
and Greenway District. The contribution will
be made in installments begining when the
SDS pipeline is delivering water to Colorado
Springs.
Valuable Approvals and Permits
Water projects in the Western United States
are becoming increasingly challenging to
permit and construct given the ever-changing
regulatory and political climate. Several
major water projects in the state still are in
the permitting phase and are years away
from construction. A number of these water
providers started permitting for their projects
around the same time as SDS. And, the SDS
project is the only one to have cleared these
hurdles. The fact that SDS has obtained all
of its major permits and approvals puts our
community in an enviable position.
The effort to obtain the permits and
approvals to construct the SDS project has
taken years to complete. It also has required
a considerable financial investment by our
customers. Each of the permits has a limited
“shelf life” and would be very difficult, if not
impossible, to replicate or replace. Making
the most of these approvals and permits to
build SDS now is the most cost-efficient use
of our ratepayers’ significant investment to
obtain them.
Essential Investment
Long-term Solution
El Paso County is now the most populous
county in the state. According to the
Colorado Demography Office, our county’s
population is expected to grow by more than
70 percent by 2050. Our need for water
will increase as our population increases.
Half of the expected growth will come from
the children and grandchildren of existing
residents. Business and military facility
expansions also will contribute to increased
demand. Colorado Springs Utilities must plan
ahead to have an adequate supply of water
when we need it.
Balance of Many Factors
Scheduling the construction of a large project
such as SDS is a challenging tug-of-war
balancing multiple factors, risks, and impacts.
In determining the timing for SDS, Colorado
Springs Utilities has carefully considered the
rate effects on customers along with other
very important factors, including supply and
demand risk, permit constraints and financial/
economic considerations.
Based on rigorous analysis of hydrology, our
water system, historic and projected water
demands, and the state demographer’s
population growth projections, Colorado
Springs Utilities’ customer demands could
exceed supply as early as 2016. Every year
that a new water delivery system is delayed
past 2016 will increase the risk that our
community will not have the amount of water
needed.
HIGHLIGHTS
• In April 2009, the
Pueblo County
Commissioners
unanimously approved
a 1041 land-use permit
for SDS.
• As part of the permit
terms and conditions,
Colorado Springs will
contribute $50 million
to the Fountain Creek
Watershed, Flood
Control and Greenway
District once SDS is
delivering water to
Colorado Springs.
• Water projects are
becoming increasingly
difficult to permit
and construct given
regulatory and political
challenges.
• The SDS permits have
a “shelf-life” and would
be very difficult, if not
impossible, to replicate
or replace.
• SDS is a long-term
solution to meet water
supply needs over the
next several decades.
• Projections show that
customer demands
could exceed supply as
early as 2016.

2003-2009 National Environmental
Policy Act Review
The U.S. Bureau of Reclamation’s 5½-year
review under the National Environmental
Policy Act included a Draft Environmental
Impact Statement, Supplemental
Information Report, Final Environmental
Impact Statement and a Record of Decision
that outlines requirements for avoiding or
mitigating environmental impacts.
• Draft Environmental Impact Statement
(February 2008); public comment
period starts
• Public comment period ends
(June 2008)
• Supplemental Information Report (SIR)
(October 2008); public comment
period starts
• SIR public comment period ends
(November 2008)
• Final Environmental Impact Statement
(December 2008)
• Record of Decision issued (March 2009)
APRIL 2009 Pueblo County 1041 Permit
The Pueblo Board of County Commissioner
approved an historic 1041 land-use permit
that will mitigate the impacts of SDS
construction and operation and provide
protection to Fountain Creek, Pueblo
Reservoir, landowners and the residents of
Pueblo County.
JULY 2009 Utilities Board approval
Colorado Springs Utilities Board approved
moving forward with SDS from Pueblo
Reservoir and a 2016 in-service date.
JAN. 2010 Fountain Creek Watershed,
Flood Control and Greenway
District Approval
The Fountain Creek Watershed, Flood
Control and Greenway District voted
unanimously to support SDS components
that fall within the Fountain Creek Corridor
and recommended approval to the El
Paso County Planning Commission for
SDS facilities in El Paso County outside
the Corridor but within the Fountain Creek
watershed.
MARCH 2010 El Paso County Location
Approvals
The El Paso County Planning Commission
passed a series of resolutions for
approval of land use for the construction
of major SDS project components within
unincorporated El Paso County. Individual
site development plans are being reviewed
and approved by County staff.
APRIL 2010 State Water-Quality 401
Certification
The 404 permit application automatically
requires a water-quality review by the
Colorado Department of Public Health and
Environment (CDPHE). The 401 certification
process evaluates water quality impacts
and mitigation measures for the project. The
CDPHE approved the state water quality
certification for SDS.
MAY 2010 404 Permit | U.S. Clean
Water Act
The Army Corps of Engineers approved
a 404 Permit, which is required under the
U.S. Clean Water Act because the project
will have permanent and temporary impacts
on jurisdictional wetlands.
MAY 2010 Fish and Wildlife
Mitigation Plan
The Colorado Water Conservation Board
and Colorado Wildlife Commission
approved a Fish and Wildlife Mitigation Plan
developed in partnership with the Colorado
Division of Wildlife. The plan outlines
projected impacts to fish and wildlife as a
result of SDS operations and provides a
blueprint to address those impacts.
MAY 2010 City Council approval
of water rate adjustments
for 2011 and 2012
Colorado Springs City Council approved
phased-in water rate adjustments needed to
fund initial construction of the SDS project
and costs for operating and maintaining the
existing water system.
Southern Delivery System Permits/Approvals Timeline

Reliable Water for All Customers
The 76-mile-long Homestake pipeline, our
primary water delivery system, crosses
rugged mountain terrain and is nearly 50
years old. Man-made water systems require
ongoing repairs and maintenance. The
Homestake System alone has experienced
seven outages in the last 10 years. Colorado
Springs relies heavily on this delivery
system – as it nears its full capacity – and
a prolonged outage could have severe
consequences for water availability and
reliability for all of our customers. SDS will
provide an essential backup to mitigate that
risk and enable Colorado Springs Utilities
to take this pipe line and other parts of the
system out of service for extended repairs
as needed. SDS will provide an additional
means to access our water using Pueblo
Reservoir.
Protection from Supply
Uncertainties
A new water delivery system will become
increasingly important as climate variability
and other future uncertainties impact our
existing water supply. An essential benefit
of SDS is preparedness for water shortages
through diversification of our water supply
sources, giving us access to supplies that
may not be otherwise available to us.
Drought
Colorado Springs’ semi-arid climate is prone
to periodic drought. From 1999-2005, the
snowpack from mountain watersheds that
we rely on to replenish our reservoirs was
drastically lower than normal. As a result,
Colorado Springs Utilities was forced
to severely limit our customers’ outdoor
watering in 2002. Even with stringent water
restrictions, the levels of local reservoirs
dropped significantly and took years to return
to normal.
SDS will help protect our community from the
effects of inevitable drought cycles by having
another way to deliver our water from Pueblo
Reservoir, and the Phase II Upper Williams
Creek Reservoir will provide a “water savings
account” closer to home.
Colorado River Shortages
Up to 70 percent of our water comes from
the Colorado River and its tributaries.
The Colorado River Basin is currently
experiencing a prolonged drought. Storage
levels in the major reservoirs on the Colorado
River – Lake Powell and Lake Mead – are
causing great concern that our supply of
water from the Colorado River could be
reduced as water demand in Colorado
and the Southwest outstrips the river’s
supply. This could occur if conditions trigger
a curtailment under the Colorado River
Compact – the set of laws and agreements
that govern the allocation of the water in the
Colorado River. SDS protects us from this
situation by giving us the ability to diversify
our water supply so we are not overly
dependent on the Colorado River.
Water for Emergencies
Another major risk related to supply
diversification is the threat of a catastrophic
wildfire event in our mountain watersheds.
Wildfires in our watersheds can damage
water quality, physical structures and
potentially cripple our water system
operations. SDS provides us with additional
water supply located generally outside the
wildfire threat area. This would be extremely
valuable in an event like the “Hayman Fire.”
HIGHLIGHTS
• The Homestake System
has experienced seven
outages in the last
decade.
• SDS will ensure we
can continue reliably
delivering water to all
our customers even
when existing pipelines
are out of service for
extended repairs.
• SDS will protect
Colorado Springs
from water supply
uncertainties related
to climate variability,
drought and shortages
on the Colorado River.

Improvements to Fountain Creek
Fountain Creek plays an important role in
our water operations. Since we use the
creek to convey our return flows back to
the Arkansas River for subsequent use,
it serves essentially as a component of
our infrastructure – one that we have a
responsibility to help maintain.
The 1041 land-use permit approved
by Pueblo County for SDS includes a
number of requirements for avoiding or
mitigating impacts to Fountain Creek.
The Environmental Impact Statement and
Record of Decision by the U.S. Bureau
of Reclamation also contain a number of
requirements for avoiding or mitigating
impacts to Fountain Creek. In many cases,
the mitigation planned as part of SDS will
actually make the health of the creek better
than current conditions.
The monetary mitigation from SDS can also
be used to leverage additional state and local
funding for more projects to improve and
protect this important waterway and create
a regional amenity for many communities
to enjoy.
Funding Major
Water Projects
Combination of Rates and Bonds
Rate increases are a necessary component
of investing in large capital projects. While
the majority of SDS will be funded by issuing
40-year bonds, rate increases are needed to
help fund debt service payments. Colorado
Springs Utilities, and other utility service
providers, typically use bonds (or debt) to
pay for large infrastructure projects, which
lessens the immediate impact on rates.
No single generation could afford to pay
for an entire water system. People who live
in Colorado Springs today are benefiting
from the investments that their parents and
grandparents, and other residents have
made in our existing water system. By
using bond funding, the costs for SDS are
being spread over 40 years so that future
beneficiaries will share in the investment.
Phased-in Approach to Rate
Increases
Colorado Springs Utilities has developed a
phased-in rate plan that amounts to water
rate increases of 12 percent each year
beginning in 2011 and ending in 2016.
These increases are shared by residential
customers, as well as commercial and
industrial customers.
The development industry also is sharing the
cost to build SDS. Development (tap) fees
have increased by 138 percent since 2002.
For each new home that is built, builders
and developers pay an average of $9,000
or more for a new water tap. That means
that new residents — either our children
staying to raise their families or people who
move into our community, have been and will
continue to pay their share
for SDS.
The planned water rate increases are
not all related to SDS. About two-thirds
of the rate increases will fund SDS; the
other third will be necessary to fund
maintenance and operation of the existing
water system, not including SDS.
Concern for customer impacts was a key
factor in the construction schedule approved
by City Council in July 2009. Stretching
construction over a longer period, with an
in-service date of 2016, is allowing for rate
increases to be phased in over time to ease
the effect on customers.
HIGHLIGHTS
• In many cases, the
mitigation planned as
part of SDS will make
the health of Fountain
Creek better than
current conditions.
• The majority of SDS will
be funded by issuing
bonds that will help
spread the cost of the
project over 40 years so
that future beneficiaries
will share in the
investment.
• Stretching construction
over a longer period,
with an in-service date
of 2016, is allowing for
rate increases to be
phased in slowly, over
time to ease the effect
on customers.
• About two-thirds of the
water rate increases
will fund SDS, with the
remaining funding used
to operate and maintain
the existing water
system.

SDS Compared to Previous
Investments
Residents of Colorado Springs have made
similar investments in the water projects that
we rely on today.
From a historical perspective, the cost of
building SDS (as measured by bonds issued
for financing) for existing water customers is
significantly less per capita than other major
water projects built throughout the history of
Colorado Springs. Additionally, the water rate
increases necessary to build SDS are less
than or similar to rate increases necessary
to build previous parts of the water system,
as measured per capita and adjusted for
inflation.
While water rates are expected to double
from 2009 to 2016 as we construct SDS,
this is not unprecedented. Customer water
rates also doubled as we constructed the
Homestake pipeline project in the 1960s.
Following this period of investment, rates
leveled off and customers benefited from
decades of stable water rates.
At today’s rates, 1 gallon of water costs
our customers approximately one-half
cent. By 2016, water is expected to cost
approximately 1 cent per gallon, which
includes miles of transport, treatment and
reliable delivery to customer homes and
businesses.
Economic Impact of SDS
The Southern Delivery System is an
essential investment in the community’s
water delivery system, and it will have a
very important economic impact, helping
to drive the local and regional economy
over many years by contributing to the
creation of thousands of jobs and billions
of dollars in earnings for the population.
Job increase 2011-2015: Up to 786
construction-related jobs gained in the
region.
New jobs: Estimated impact of more
than 13,000 new jobs by 2020 and
the potential for 36 percent greater job
growth by 2050 generated by a growing
economy certain of its water supply.
Return on investment: Virtually the
entire construction cost of SDS Phase
I will come back to the community each
year after 2020 in increased individual
earnings due to employment gains.
Source: Economic Impacts of the Southern Delivery
System on the Regional Economy of Pueblo, Colorado
Springs and Surrounding Areas, commissioned by the
Chamber of Commerce Center for Regional Advancement
and conducted by Summit Economics LLC. Colorado
Springs Utilities helped fund the study.
HIGHLIGHTS
• The investment in
SDS for existing
water customers is
substantially less per
capita than other major
water projects built
throughout the history
of Colorado Springs.
• Customer water
rates also doubled as
we constructed the
Homestake pipeline
project in the 1960s,
followed by a long
period of rate stability.
• By 2016, water is
expected to cost
approximately 1 cent
per gallon, which
includes miles of
transport, treatment
and reliable delivery to
customers.
• According to a recent
economic study, nearly
the entire construction
cost of SDS Phase I
will come back to the
community each year
after 2020 in increased
individual earnings due
to employment gains.
Comparison of Major Water Projects in Colorado Springs' History
South Pikes Peak Homestake SDS
Decade of Construction 1880s 1890s 1960s 2010s
Bonds Issued/Capita
Adj. for Inflation /a
$ 2,440 $ 2,417 $ 4,348 $ 1,610
Population 4,226 11,140 70,194 416,427
Bonds Issued in period
(in 000's)
$ 312 $ 634 $ 42,100 $ 670,400
Bonds Issued/Capita /b $ 74 $ 57 $ 600 $ 1,610
/a The inflation adjustment converts the value of the bonds per capita into 2010 dollars (adjusted for inflation) so a direct
comparison is possible. /b Bonds issued stated in nominal dollars (not inflation adjusted) in the decade supported by the
population at the beginning of the decade bonds were issued
Source: CSU, Time Capsule, Summit Economics

A Future Without SDS
As a utility, we have a responsibility to plan
ahead to ensure our customers will have
water when they need it. SDS is critical to
meet our community’s water needs for the
next several decades.
Without additional water, higher rates would
be needed to manage a limited supply.
Outdoor watering restrictions could be
necessary again, and possibly, become
permanent. In addition, as existing pipelines
age, the risk for long-term outages increases.
While we own the rights to more water, we
need a new delivery system to increase
our existing system’s capacity to transport
the additional water. Colorado Springs
could attempt to implement smaller projects
over time, but that approach was carefully
considered and found to cost our community
more without ensuring the long-term stability
of supply and added reliability that SDS
provides. Additionally, those smaller projects
would require significant lead time and
additional costs for planning, designing and
permitting.
SDS is critical to maintain the water rights we
already own and to pursue additional rights
in the future. Also important is our ability to
store additional water in Pueblo Reservoir
under long-term agreements for SDS with
the U.S. Bureau of Reclamation. SDS will
provide us the flexibility to further diversify
our water supply.
Our community has already made a major
investment in SDS ($125 million through
February 2011) on permitting, engineering/
design, program management, land
acquisition, NEPA analysis, and construction.
We have already acquired more than half of
the 300 parcels of land – mostly easements
– required to build SDS.
If the project were stopped before
completion, it would mean our customers
wouldn’t receive the additional water for
the investment we’ve already made. Costs
already incurred for SDS – and those
required to postpone or cancel the project
– would still mean rate increases, however
ratepayers would receive no benefit from
their investment.
Failure to proceed with SDS would result in
financial consequences that could lead to
downgrades in Colorado Springs Utilities’
bond rating, which is similar to a credit rating
for an individual. That could mean much
higher costs to fund any utility projects that
are needed. Higher borrowing costs mean
customers pay more.
A future without SDS could jeopardize our
ability to meet future water demand, the
reliability of our water system, our valuable
permits and approvals, and our community’s
economic stability.
Advantages of
Building Now
Now is an opportune time to build SDS.
Contractors and vendors are eager for
the opportunities made available by
SDS construction. Bids on some of the
initial work for the project have come in
well below the original estimates. With the
economic downturn, prices now are lower for
construction materials and labor. Regional
contractors and suppliers have already
benefitted from early SDS construction
contracts.
Now is an optimal time to borrow money for
construction while interest rates are low. For
the $180 million in bonds that were issued in
September 2010, we received a historically
low interest rate of 3.62 percent, which will
save customers millions over the 40-year
repayment period.
The availability of water is critical to retaining
and attracting businesses to the region.
SDS puts us in the position to welcome new
businesses – and support military expansion
plans – with the assurance we can provide
for their long-term needs. Water is the
backbone that supports future economic
vitality, and our community’s prosperity relies
on the availability of water. If we fail to ensure
a reliable future water supply, businesses will
choose to locate in other communities that
have a more stable water outlook.
HIGHLIGHTS
• Through February 2011,
our community has
invested $125 million in
the SDS project.
• If the project were
stopped before
completion, customers
would still experience
rate increases to pay for
the investment already
incurred, without the
long-term benefits that
SDS provides.
• Without additional
water, higher rates
would be needed
to manage a limited
supply and we would
eventually be forced
to implement outdoor
water restrictions.
• Now is an opportune
time to build the project
and take advantage
of lower costs for
materials, services
and interest rates on
borrowing.
• SDS will provide a
stable long-term water
supply to attract and
retain new businesses.

SDS: Water for
Generations
Colorado Springs Utilities has a history of
visionary and responsible planning to serve
its citizens. We have now reached another
chapter in that legacy of providing reliable
water service to our community. Envisioned
in the 1980s, planned in the 1990s, and
initiated in the 21st Century, Colorado
Springs Utilities has made a significant
investment in the planning, permitting, and
financing for the next major delivery system
for our community – the Southern Delivery
System. SDS is one of the few water projects
in the state of Colorado that has obtained
the necessary permits and is now under
construction. SDS will ensure our community
has a stable supply of water for the next
several decades. SDS is a major part of the
legacy our generation will leave for the next.
SDS PHASE I
• Pueblo Dam connection
• 62 miles of underground
pipeline
• 1 water treatment plant
• 3 water pump stations
COMMUNITIES
SERVED
• Colorado Springs
• Fountain
• Security
• Pueblo West
CONTACT
INFORMATION
Southern Delivery System
Colorado Springs Utilities
P.O. Box 1103, MC 930
Colorado Springs, CO
Phone: 719-668-7582
Toll Free: 866-719-4737
E-Mail: sdsinfo@csu.org
Website:
www.SDSwater.org

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