Southern Delivery System construction may accelerate

June 24, 2011

As initially planned, the Southern Delivery System water pipeline’s first phase was supposed to take five years to build and cost $880 million, plus financing costs. Colorado Springs Utilities now says it’s looking at ways to finish the first phase a year ahead of schedule, and millions of dollars under budget.

Utilities staff and construction personnel are analyzing different scenarios to see whether hiring more workers or buying more materials now could save money or time during the next few years. Building materials, such as steel, are cheaper now, thanks to the recession.

“If — and this is a big if — you could get some savings on materials and construction, then that’s what they’ll come back and say,” said City Council President Scott Hente, who chairs the Utilities board. “If you can do things cheaper, I’m all for it.”

Speeding up SDS construction could lessen rate hikes for ratepayers, though it’s far from certain, said SDS spokeswoman Janet Rummel. As it stands, water rates are expected to increase by 12 percent yearly until 2016 for the project’s first phase, which includes a 62-pipeline and the hookup into Pueblo Reservoir. A second phase includes building two new reservoirs.

If Utilities is able to save money on the project, those savings could transfer to ratepayers, said Rummel.

SDS is designed move water from Pueblo Reservoir to Colorado Springs to meet expected population growth. SDS also will provide redundancy in the Utilities’ aging water delivery system, officials said. Fountain, Pueblo West and Security are partners in the project.
Utilities staff have much to consider about accelerating construction, Rummel said. They could conclude that they would spend the same amount of money, just on a shorter timeline.

That wouldn’t necessarily change the financial situation for Utilities or for customers.
And there are other factors, such as what impact such moves would have on other Utilities operations.

“A lot of it hinges on what the rest of the organization needs,” said Rummel.

Still, Utilities officials are already finding ways to cut millions off the price tag, Rummel said. Utilities is about to sign a contract with McCarthy Building Companies Inc. and Carollo Engineers to build SDS’s water treatment plant, at a price much lower than what Utilities originally estimated.

“They identified millions in possible construction cost savings, if they design it in a certain way,” Rummel said.

“It’s all about, is there a way we could save our customers in the end?”

Utilities’ study will be presented to the Utilities board at its July 20 meeting. The 1 p.m. meeting, on the fifth floor of the south tower of Plaza of the Rockies, 111 S. Tejon St., is open to the public.

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