BOARD00103 ‎(2)‎

• Board Meeting Date: 1/23/2007
• Description: CF Section - New Loans - Bull Creek Reservoir, Canal and Power Co. - Reservoir No. 4 Rehabilitation and Enlargement
• Board Meetings - Doc Type: Memo

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Bull Creek Reservoir, Canal & Power Company
January 23-24, 2007
Page 3 of 5

Agenda Item 9b

Reservoir Storage Water Rights Summary

Reservoir Capacity Storage Right Potential Loss
( ac-ft) (ac-ft) (ac-ft)*
Bull Creek No. 1 80 154 74
Bull Creek NO.2 75 120 45
Bull Creek NO.3 59 59 0
Bull Creek No.4 203 313 110
Bull Creek NO.5 247 204 0
Total 664 850 229

* Potential loss figures are taken from the Stipulation and Agreement dated 10/31/03

The Company has applied for a 2006 storage right of 115 ac-ft for Reservoir NO.4 and may also
apply to have a portion of the senior rights from Reservoir No. 1 & 2 moved to Reservoir NO.4.

Proiect Description

Three alternatives were analyzed in the feasibility study:

1) No action alternative
2) Rehabilitate and enlarge Bull Creek Reservoir NO.4 ($1.3 million)
3) Enlarge Bull Creek Reservoir Nos. 1 & 2 and rehabilitate Reservoir NO.4 ($600,000)

The Company originally determined that Alternative 3 provided the best value to the shareholders.
As the project continued to develop, the cost and difficulties associated with enlarging Reservoirs 1
& 2 became insurmountable. The Company has decided to pursue Alternative 2 which will provide a
better benefit cost ratio. The rehabilitation and enlargement of Reservoir 4 will retain the Company's
valuable senior water rights by repairing the dam and will replace the abandoned water rights from
Reservoir 1 & 2, with the enlargement. Access to the reservoir is difficult and the timing of
construction will be critical to maintain the use of the water during the irrigation season.

PROJECT COST ESTIMATE
Planning/Engineering
Construction
Contingency
Construction Services/Management
Total

$157,000
$984,000
$137,000
$55.000
$1,333,000

Construction is expected to begin during the summer of 2007 and be completed by October 2007.
This is a very aggressive schedule and will require final design plan approval by the SEa, Forest
Service permitting, and other reservoir project hurdles prior to starting the project. As a result, the
Company has decided to pre-qualify bidders and thoroughly evaluate each bidder's approach and
assumptions prior to awarding a contract. If the contractor fails to complete the project during the
summer construction season of 2007, significant cost to the project and impact to the water users
will result.

Financial Analysis

Table 1 shows a summary of the financial aspects of the loan request. The Company qualifies for an
Agricultural interest rate of 2.5% for 30-years. Ute Water Conservancy District owns 7% of the
Company stock. This low percentage of municipally owned stock does not materially impact the