PIERRE, S.D. (KELO) — A state lawmaker wants the proposed Gregory County pumped-storage project de-listed from South Dakota’s water resources management system because, after decades of discussion about its potential, he says its intended purpose no longer would be drawing irrigation from the Missouri River.
The projects on the system list, according to state law, are “the preferred, priority objectives of the state.” But the potential change of status is opposed by utility companies looking at whether they can turn the project into a profitable source of electricity.
The bill will be up for House debate Wednesday.
Lawmakers made their decisions without showing much certainty about what they might be doing.
“I’m not sure what we’re trying to accomplish here,” Republican Rep. Drew Peterson said.
Republican Rep. James Wangsness wondered the same thing. “I’ve got more questions than answers as well,” he said.
A history of the project is summarized in a state annual report that wasn’t mentioned Tuesday. The summary indicates the project, dating back to 1981, was primarily intended to generate electricity.
“The (federal) Water Resources Development Act of 1986 (Public Law 99-662) authorized the construction of a $1.3 billion hydroelectric pumped storage facility by the Corps of Engineers,” the report says. “After extensive geotechnical and environmental studies of the site, the Corps was forced to abandon the investigation when its mission was altered and hydroelectric development projects were no longer federally funded.”
That was followed by three decades of public and private explorations of the project. Missouri River Energy Services was the most-recent permit holder.
Gregory pumped-storage also was to serve potentially as a water supply. “The project has the potential to provide water for irrigation and municipal, rural, and industrial purposes using the hydroelectric project’s upper bay as a water supply source. The Bureau of Reclamation completed a Special Report on the Gregory Unit of the Pick-Sloan Missouri Basin Program, South Dakota in 1992,” the summary said.
Lobbyist Brett Koenecke, representing MidAmerican Energy Company, opposed the legislation Tuesday. MidAmerican has studies under way on the latest version of the project. MidAmerican would supply electricity for distribution to the 61 communities that are customers of Missouri River Energy Services.
Koenecke said the only thing the legislation would accomplish is changing which state fund receives the 2% contractor-excise tax revenue from constructing the project.
Currently, state law says contractor’s-excise tax revenue from constructing the project would go to the state water and environment fund. Koenecke said taking it off the irrigation-project list would put the revenue in the state general fund instead.
State law appears to put the state Water and Natural Resources Board in charge of the water and environment fund. The board operates under the state Department of Agriculture and Natural Resources and makes loans and grants to water and wastewater projects across South Dakota.
The contractor-excise tax revenue from water projects began flowing into the water and environment fund in 1996.
Republican Rep. Randy Gross asked why the project’s current backers care which fund gets the contractor-excise revenue. Koenecke said someone had a reason for putting Gregory pumped-storage on the system list long ago.
“Right now we’re having an incomplete conversation because it goes back so far,” he said.
Two DANR officials — Andy Bruels, director for the Division of Financial and Technical Assistance, and Eric Gronlund, water-rights chief engineer — were at the hearing but didn’t testify and weren’t consulted by the committee.
MidAmerican has 24 studies under way to help decide whether the potential $4 billion investment should be built, according to Koenecke. He said the current timetable calls for completing the studies in 2026, possibly breaking ground in 2029 and possibly having the project producing power in 2035.
“Is the juice worth the squeeze? That’s what we’re trying to find out,” Koenecke said.
Lobbyists for Missouri River Energy Services and other utility interests testified against the bill, too. None of their representatives seemed to know Gregory pumped-storage’s full history.
The bill’s prime sponsor, Republican Rep. Marty Overweg, said he didn’t understand why the project’s current backers were against his proposal. “I don’t think much of the opponent testimony had much to do with the bill I brought you,” he told the committee.
Overweg said his memory was that the project originally was to help farmers and ranchers. “Now it is a private business, a private entity, for profit.” He added, “There is no talk right now of irrigation…It has changed. It is no longer an irrigation project.”