The Tri-County Water Conservancy District was formed in August 1957.  The main purpose for the organization of the District was to provide an official agency to promote participating projects of the Colorado River Storage Project Act in the counties covered by the District. The original area to be served consisted of the Uncompahgre drainage in Ouray, Montrose and Delta counties.
In order for a project to be constructed, such as the Dallas Creek Project, it was necessary that there be an official body such as this district to contract with the United States of America for the repayment of that portion of the project which must be repaid by the users of water in the area.

In the early days of the District, in addition to planned projects such as what would become the Ridgway Reservoir, there was an intent to create a valley-wide domestic water distribution system. In 1968, a contract was drawn up with the City of Montrose to supply raw water for domestic water use. An initial sign-up period for water taps was begun. The tap fee was $125. In 1970, contracts were let for the construction of a pipeline and series of water storage tanks. In June of 1971, Tri-County Water began delivering domestic water. There were approximately 1200 taps on the system. Today Tri-County Water Conservancy District, in cooperation with the Project 7 Water Authority, serves water to over 7000 meters through 600+ miles of pipeline.