“We were anxiously waiting to get to this point. Our intent is to come to a successful end on these negotiations. If we both have the will to succeed, we can make it happen. We have a long history.” So said Ben Wood of the Army Corps of Engineers to the 15 attendees at the meeting in Wilmington on Thursday morning. But at the end of the three-hour meeting there was no meeting of the minds.
After the introductory remarks, Ben Lane gave an update on the John H. Kerr 216 study review. This long-term study will show how water supply is affected downstream and particularly how the ecosystem of the lower Roanoke River is impacted. This information was important because all additional water supply from the reservoir has been put on hold until this study is complete. Henderson, however, was given an exception and is being allowed to proceed with a water storage contract before the 216 study is complete. This will prevent us from having to meet new or additional standards that may arise from this study and the costs associated with them.
Below are questions and answers from the meeting.
Q: Why do we have to have a new contract?
A: Henderson has been directed to convert from a water use contract to a water storage contract by the Corps of Engineers. A letter dated Aug. 2, 1991, “suggested that Henderson begin within the next six months the process of consummating a water storage contract with the federal government to continue withdrawing water from Kerr Reservoir after termination of the existing contract.”
Q: How much do we pay for water now, and what will the new cost be?
A: We pay about $20,000 per year now, and the new contract proposed will be $3,455,197. The corps will finance this cost at 5.125 percent interest. This finance cost will more than likely go up at the end of September if the contract is not signed. This is the lowest interest rate the corps has ever offered.
Q: How did the corps get the $3,455,197 figure?
A: The policy of the corps is to look at four factors in determining cost. Revenues foregone were $398,800. Benefits foregone were $1,559,000, and replacement cost was $1,559,000. The updated cost of storage is $3,455,197, and this is the highest of the four factors.
Q: Why does the corps use the highest price of these factors and not the average of all costs?
A: This is the nationwide policy.
Q: Can we qualify for a Low Income Community Discount?
A: We exceed the supply use of 2 million gallons daily, so we do not meet the guidelines.
Q: How much do other communities pay?
A: The cost of storage is considerably more at Philpot.
Q: Since we will not use 20 millions gallons of water daily until the year 2030, can we graduate the payments over this period, and as we use more water, pay accordingly?
A: No. The corps used to do this but no longer does as the full price has to be paid by the end of the contract anyway.
Q: Could we ask for a specific water supply allocation from Congress that will replace the contract with the corps?
A: Yes, but it might take years, and then you would not be grandfathered in the 216 study and would probably have to redo all studies and new environmental impacts.
Q: What can be done to reduce the cost of the contract?
A: Since you are not using 20 million gallons per day, you could reduce your storage contract from 20 MGD to just what you need now, around 7 MGD.
Q: Why wouldn’t we do this to save money?
A: Water is one of the best resources a city has. If we sign on for 20MGD, we will be sure to have that much in 30 years. This will be a great technical benefit to the future of our vicinity. This will be water in the bank, so to speak. What we are buying should be what we’ll be using in the very near future, and we had to document the need for 20 MGD.
Q: Who gets the money from this contract?
A: Our government pays the federal government the money.
Q: If we had signed the contract sooner, what would have been the benefit?
A: It would have been cheaper.
Q: What can the corps do if we don’t sign the contract?
A: We could be told to “cease and desist any and all future water withdrawals” and to also remove all equipment and structures.
Q: What impact does this contract have on other water supply?
A: No impact. Reallocation of 10,292 acre-feet of storage for Henderson’s contract would leave 28,885 acre-feet of storage for reallocation at Kerr Lake under the discretion of the chief of engineers. The entire reservoir has 2,262,421 acre-feet of usable storage.
Q: Where do we go from here?
A: The corps is going to get back to us on issues that were raised for which it did not have the answers. Right now the contract stands as is, and we can sign the contract or we can litigate, as the mayor pointed out. We are caught between a rock and a very, very hard place.