Cascade Water Alliance Reaches Agreement to Purchase Lake Tapps; Sale of Former Power Project Aims to Preserve Lake, Provide Regional Water Supply.

BELLEVUE, Wash. -- The Cascade Water Alliance and Puget Sound Energy have agreed on the key terms and conditions for a sale of Lake Tapps to Cascade. The two parties said they'll now work to complete final agreements on the property transaction by August.

Cascade intends to develop a municipal water supply at the Pierce County lake while continuing to manage the reservoir for public recreation, fish needs, and other purposes. By 2025, Lake Tapps is expected to provide the public with 65 million gallons of drinking water per day -- a small percentage of the total water that flows into the reservoir. It will be the first major new regional water supply permitted in Washington in decades.

"This acquisition is a major step forward in securing a future regional water supply," said Grant Degginger, a Bellevue City Council member and Chair of Cascade's Board of Directors. "The region is growing, and so are its water demands -- for people and for fish. Recurring drought conditions and possible impacts of climate change make development of new water sources even more critical for continued economic development and environmental enhancement."

"In the next 20 years King County alone is expected to grow by 300,000 people," Degginger added. "Conservation is important, but it can't sustain the region's growth. Having Lake Tapps as an additional source of water provides increased reliability and flexibility for the entire region. It's critical that we plan for the long term and get ahead of the curve. With transportation, we've seen how hard it is to catch up when we don't plan far enough ahead."

Cascade and PSE have been pursuing this proposal in close cooperation with the Lake Tapps Task Force, co-chaired by Pierce County Executive John Ladenburg and Pierce County Council Chair Shawn Bunney. The Lake Tapps Task Force was formed in 1998 to identify options for preserving the Lake Tapps reservoir. The Task Force identified the development of a municipal water-supply project as the preferred option.

"I can't overstate how much Puget Sound Energy appreciates all the hard work and commitment that members of the Task Force have invested in this process," said Eric Markell, PSE's senior vice president of energy resources. "We never could have reached this agreement and been in a position to preserve the many public benefits that Lake Tapps provides the region without the Task Force's involvement."

"Pierce County welcomes its partnership with the Cascade Water Alliance to make Lake Tapps a new drinking water source for the region," Bunney said. "This partnership ensures a plentiful water supply for the Pierce and King County region provides for a water pipe system that will move water where it's needed, and ensures survival of the recreational gem that is Lake Tapps. This is an example of the success possible when government and private enterprise work together to solve difficult problems."

Under the conditions of the April 27 term sheet signed by Cascade and PSE, Cascade will acquire water rights, property, and other Lake Tapps assets from PSE, such as the utility's White River diversion dam, the canal that feeds river water into Lake Tapps, the lake and its dikes, and PSE's power plant. These assets, when combined with a new water-treatment facility and water transmission pipelines, will make up Cascade's water supply project.

Cascade will pay PSE a minimum of $10 million for these assets. The final price could increase by an additional $27 million (subject to adjustment under certain circumstances) once final municipal water rights for Lake Tapps are issued. PSE will continue to operate the project, under contract to Cascade, for an interim period.

The State Department of Ecology granted PSE new water rights in 2003 that would allow the development of a Lake Tapps as a municipal water supply. The water rights were appealed by a number of parties, but revised water rights providing for use of the lake as a municipal water supply are expected to be issued in mid-2005.

Cascade and PSE remain optimistic about the possibility of reaching mutually satisfactory agreements with the major water right appellants, including the Muckleshoot Indian Tribe, the Puyallup Tribe of Indians and City of Auburn. Cascade and PSE, Markell noted, continue to work with the Puyallup Indian Tribe in an effort to move forward in a manner that is consistent with the Tribe's interests. Markell said the Tribe "has worked diligently with us over the course of the last several months and we are optimistic that we can find ways to meet the objectives of the water supply project and the Lake Tapps community in a way that is consistent with the Tribe's interests."

The White River Hydroelectric Project was built in 1911, and operated for nearly a century until PSE shut down its power-generation facilities in 2004. Working collaboratively with the Lake Tapps Task Force for six years, PSE has been exploring a broad range of potential uses for the reservoir, including working with Cascade to determine the feasibility of developing a water-supply project. In preserving all options for future use of the project's facilities, PSE and Cascade hope that the many public benefits that have historically been supported by the White River Project can be maintained for years to come.

"There are multiple beneficiaries from this project," said Michael Gagliardo, Cascade's General Manager. "Cascade and the region get a new water supply, PSE transfers surplus assets, and Pierce County residents get continued recreational use of the lake. Moreover, without the demands of power generation, more water should be available to maintain stream flow to benefit threatened fisheries in the White and Puyallup Rivers."

Cascade purchases water from the City of Seattle under a 50-year contract and is finalizing a wholesale purchase contract with the City of Tacoma. Development is underway for major new transmission pipelines to serve its Members. Lake Tapps represents a long-term water supply, with initial operations anticipated by approximately 2025. Cascade's regional conservation programs supplement the conservation efforts of its Members.

"Cascade recognizes the need for regional planning and cooperation among utilities to ensure sufficient future supplies and a flexible transmission system to deliver water where it is needed. This cooperation and coordination is essential if we are to meet our long-term water supply objectives," said Mary-Alyce Burleigh, Mayor of Kirkland and a Cascade Board Member.

"Since Lake Tapps is already an existing reservoir, the cost to develop it as a water supply will be less than developing a new reservoir," said Gagliardo. "And it has less impact on the environment. By 2025, a state-of-the-art treatment plant and associated transmission pipelines will be built to provide a safe and reliable source of water to the region."

Cascade is a nonprofit Washington corporation composed of eight cities and special purpose districts (the cities of Bellevue, Issaquah, Kirkland, Redmond and Tukwila, the Sammamish Plateau and Skyway Water and Sewer Districts and the Covington Water District) that have joined together to provide water supply to meet their residents' current and future needs.