HERMISTON — The Hermiston City Council on Monday, Feb. 24, voted to approve a 25-year water service agreement with Amazon Data Services that will allow the company to build additional data centers while returning at least 100 million gallons per year of drinking water to the city.

“This is a water supply agreement with Amazon Web Services that largely relies on the technology of aquifer storage and recovery,” Assistant City Manager Mark Morgan told the council.

Morgan said the agreement means the city will have more available drinking water once the deal is put into action.

“A lot of people think (data centers) use a lot more water than they actually do,” he said. “But one of the major components of this water supply agreement is that it will actually result in a net increase of drinking water for local residents during our peak summer demand of around 100 million gallons per year.”

Morgan said AWS will pay for all of the construction costs associated with this agreement and will pay the same water rates as all other customers.

Regional water system is key

The city has about 80 miles of water main and 5,868 customers the city delivers water to from its system. There also is the regional water system that has about 14 miles of water main for six users.

“The city system has literally thousands of users, but the regional water system has just six customers total, none of which are residential,” Morgan explained. “It is a system that is entirely geared and predicated toward serving large-scale industrial users.”

RWS consists of an intake pump on the Columbia River at the Port of Umatilla as well as a transmission pipeline and treatment plant. Its customers take raw river water, but the treatment plant has the capability to treat water to a potable drinking water standard to send water to the city if it chooses to use that.

Its peak capacity in the summer is 20,000 gallons per minute with an actual winter demand of around 8,000 gallons per minute.

Morgan said the city’s system averages roughly 1.4 million gallons per day of demand in the winter compared to nearly 8.5 million gallons per day in the summer.

“But when we’re planning our system, we’re planning for accommodating that peak demand,” he said.

How the water deal works

Morgan explained the proposed arrangement will maximize the existing infrastructure by pumping upward of 400 million gallons of water from the Columbia River between October and March (when demand is low) and storing it approximately 1,500 feet underground in the deep basalt aquifer. That water then will cool the new data center campuses Amazon plans to build. This will allow for additional economic development without additional summertime withdrawals from the Columbia River when demand is highest from fish, farmers and other users.

The water supply agreement has two phases. Phase 1 will physically drill the ASR well and install equipment for injecting water at a cost approximately $8.1 million. Phase 2 will install the equipment to pull water back out of the ground and deliver it out to the distribution system at an estimated cost of $12 million.

AWS will pay to process, treat and inject at least 100 million gallons of water per year beyond what it uses for cooling each year. That 100 million gallons of water will be available for the city to use as needed.

“Not only will they be paying for the water that they use, but they will also be paying for at least 100 million gallons per year more than what they actually utilize,” Morgan said.

Morgan said, however, the total number of data center campuses to be supplied is unknown and depends on how the company manages their water with on-site storage and recirculation.

“Really, what we’re guaranteeing them in terms of actual volume of water is that 105 millon gallons figure,” he said.

This arrangement will tap the city’s unused potable water capacity from the RWS from approximately October through March to supply water to go down in to the ASR Well.

25 years, 3 billion gallons

During the course of the 25-year agreement, the city anticipates storing 3 billion gallons over and above Amazon’s cooling purposes.

The city of Hermiston owns approximately 1,500 gallons per minute of potable water treatment capacity directly in the regional water system. This is the source of water that will be used to inject into the aquifer. Morgan said the water demand levels are such the city has not utilized any of its allocation from this source for many years.

In July, 2024, the city supplied 258 million gallons of water to customers. In January 2025, the city supplied 44 million gallons of water to customers. This variance implies that for all day-to-day needs of residents, excluding irrigation, the true water supply need is roughly 1.4 million gallons per day compared to the 8.34MGD being supplied in the summer.

The city has the water rights and developed system capacity to supply 8.34MGD to customers in July without even utilizing any source water supply from the RWS. Morgan said the community’s wintertime demand would have to increase 5.8 times before RWS water would be necessary during the winter months.

“Put another way, the city has this developed asset that is going unused and won’t be needed until the city grows to a population of at least 120,000 residents,” Morgan wrote in a report to the council.

‘Wide-ranging benefits’

Morgan said the agreement will have wide-ranging benefits to fish, the environment, farmers and more.

“This should be celebrated by environmental and fish folks out there because we’re supporting significant industrial development in the community with no additional water coming out of the Columbia River in the summertime,” he said, when stream flows decline to their lowest during the year and fish need the water.

Farms will “benefit significantly,” he said. “With this agreement, we anticipate seeing probably somewhere in the range of 50 million gallons of water a year discharged back out during the peak irrigation season.”

Morgan said the city will discharge it to the Hermiston Irrigation District’s canals and ultimately Amazon will have paid “the freight” on that. Agricultural users cannot sustain the cost of pumping water all the way from the Columbia River 9 miles uphill to where they need it like industrial customers can.

Morgan said the 50 million gallons of water a year discharged back to irrigation canals equals an estimated 63 acres of farmland, which can be fully irrigated for an entire season in the region’s highest-value commodities of potatoes, corn, and onions.

“This is predominantly small farmers that will benefit,” he said.

Future generations also benefit

Storing more than 100 million gallons of water per year will result in an expansion of the city’s water rights capacity by 3.3 billion gallons over the term of the agreement — equal to 2.3 years’ worth of the entire city’s current water demands. As a result, Morgan said, future ADS data centers will be net contributors to Hermiston’s peak summertime capacity needs.

There also will e financial benefits to the agreement. Morgan said it not only generates revenue from the infrastructure but forms a critical component in driving down future costs for ratepayers by improving the economies of scale through the RWS’ drinking water treatment facility.

For example, Morgan said when Shearer’s Foods was operating and purchasing potable water from the RWS, the unit-rate through the RWS was approximately $3. That is the same rate the city had to purchase water from the RWS wholesale, and then turn around and retail it to customers within the city at roughly $3.80. That 80 cent margin did not justify the cost of pumping and conveying the water into town.

Through this agreement, Morgan said ADS will guarantee purchasing nearly five times as much potable water each year from the RWS as Shearer’s did, “thus driving the unit rate for potable RWS water down to a projected $0.61 by 2027. This improvement in economies of scale will make accessing potable water for residential customers within the city in the summertime significantly more affordable.”

The EO updated this report to clarify how much water future data centers will receive is unknown.