LPPD000265

• Contract/PO #: C153756
• Contractor Name: Lower Arkansas Water Management Association
• Contract Type: Loan
• Water District: 67
• County: Prowers
• Bill Number: SB 96-124
• Loan Projects - Doc Type: Feasibility Study

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1. Water supplies, distribution and revenues in a normal year: The normal year
amount of water available for replacement is 18,049 (4,111 afis held in storage at
JMR), but because there are 24,435 shares issued, the share index is 0.74. Though this
would appear to be less water available to the users than under allocation Sl, it is
actually the same amount. Because all users have proportionally more shares. The
distribution of shares among user groups is skewed towards supplemental users, and
supplemental users end up with more water than they intend to use in a normal year,
while sole-source users groups will be short. This situation can be remedied by
secondary trading of water on an annual basis. Approximately 1,400 af of
replacement water would be traded in the secondary market. LA WMA revenues are
$400,000.

2. Water supplies, distribution and revenue in a 1st dry year: In a 1 st dry year
scenario, the replacement pool for LA WMA is reduced to 15,000 af, but this amount
is augmented by a release of 4, III af of water held in storage for a total available
supply of 19,111 af. As with method S I, replacement water (19, III at) exceeds
supplies under normal conditions, but this does not match the increase in demand for
replacement (32,072 at). The supplemental user is still short relative to his increase in
demand (a demand shortfall of21.79%) but because of the higher proportion of
shares, a supplemental user can increase his pumping by 22.18%. In contrast, sole-
source users groups must reduce pumping by 10.4% from levels in a normal year.

3. Water supplies, distribution and costs in 2nd dry year: In a 2nd dry year scenario,
the depletion pool is 15,000 af and there is no available storage water for
augmentation. The absence of the JMR water results in an increased demand shortfall
to all users. Supplemental replacement demand is 14,090 af during a 2nd dry year but
without JMR water supplemental users are allocated 8,650 af. This results in a
demand shortfall of 38.61 %. Other users share the same level of demand shortfall.

Shares Organization: Normal-Yearlll Allocation Method (S3)

Under allocation method S3 the number of shares issued totals 18,049 - the total
replacement demand during a normal year. As with allocation S 1 the initial distribution
of shares among uses is based on the relative proportion of demand during a normal year.
Allocation S3 modifies allocation S 1 in that potential storage water is assigned
exclusively to preferred shares issued to share holders. As an example we will assume
that all preferred shares are held by supplemental users. Storage water is released during
the 1 st dry year scenario to help mitigate the increase in supplemental user's demand.

Though LA WMA revenues remain constant, the distribution of paying for LA WMA
expenses is different from other allocations in that the costs of storage water are allocated
strictly to supplemental users who benefit from the release of storage water during a 1 st
dry year. We assume that the costs of storage are $50,000 per year. This cost is added to
the 9,019 shares held by preferred shareholders, in this case supplemental users. The
remaining $350,000 of LA \VMA's costs are distributed among all shares. As a result, the
bill per share is higher for the supplemental user, $23.49 , versus other users,$17.94 , In
essence, supplemental users pay for the increased insurance of storage water.

EnWater Resource Consultants September 5, 1997 Final Report

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