ARVADA, Colo. -- It's the dilemma facing all communities: How do you capture water during wet times and save it for use during drought?

Well, the city of Arvada and Xcel Energy have found a creative solution.

Xcel Energy no longer needs the Leyden facility located 1,000 feet underground north of Arvada Reservoir. The Leyden facility is an abandoned 100-year-old coal mine that Xcel had used to store natural gas.

For the last 40 years, up to 3 billion cubic feet of natural gas had been stored there annually.

But with development creeping in and pending lawsuits over migrating natural gas, Xcel Energy planned to close the plant by 2006. It expected to spend $8.6 million to buy water so it could force out the remaining natural gas.

But by leasing the water from Arvada instead of buying it, Xcel will save about $2 million.

And Arvada can safely store water in the mine -- enough water to supply 4,000 families' needs for a year -- and eliminate its need to build a reservoir.

Arvada, which has rights to more water than it can store, had planned on building a reservoir and other water projects, but with the agreement with Xcel, it could scale back its plans and save $10 million.

"(We would) be able to convert it to water storage at a cheaper cost per acre foot of storage, and without the evaporative losses of conventional storage. The only negative is we can't waterski on it," said Arvada City Councilor Marc Williams.

The deal is expected to save millions for both the city of Arvada and Xcel, and some of those savings could be passed on to Xcel customers.

Arvada officials said they plan to treat the water before and after it is stored in the facility and it will be safe to drink.

If the plan is approved by the Oil and Gas Conservation Commission next month, pipes and pumps will be installed and water could start flowing into the 700- to 1,000-foot-deep coal mine this year.

Water will be pumped from Clear Creek and injected into the underground facility through wells.