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Flow conditions and calls by senior water rights are such that Santa Maria and Continental <br />reservoirs seldom fill to capacity. Continental has filled once since it was constructed. Santa <br />Maria has filled approximately twice since it was constructed. <br />The Company also has agreements with the Rio Grande Canal Water Users Association (Rio <br />Grande Canal) and the San Luis Valley Irrigation District (Farmers Union Canal) that allow <br />storage of direct flow water rights in Santa Maria and Continental reservoirs. Direct flow storage <br />for these Companies was decreed in Case Nos. W-3979 and W-3980. Decisions regarding <br />storage of direct flow water rights is made by the individual ditch companies and in accordance <br />with their agreements with Santa Maria Reservoir Company. <br />Reservoir Operations <br />As previously described, subset of the owners of the Rio Grande Canal Water Users Association <br />own approximately 90 percent of the stock in Santa Maria Reservoir Company. The remaining <br />10 percent of the Company is owned by a subset of the owners of the Monte Vista Canal Water <br />Users Association. Although they are separate entities, the Company and the canals work closely <br />towards the benefit of their water users. Additional information concerning operations of the Rio <br />Grande Canal can be found in a memorandum documenting discussions with the Rio Grande <br />Canal Water Users Association. Additional information concerning operations of the Monte <br />Vista Canal can be found in a memorandum documenting discussions with the Monte Vista Canal <br />Water Users Association. <br />Water may be stored in by the Company in Santa Maria and Continental reservoirs by three <br />separate means: (1) under the reservoir's storage decrees; (2) under direct flow decrees; and (3) <br />by exchange. Separate accounting is maintained for the different owners of water in Santa Maria <br />and Continental reservoirs. These accounts include the Company account, the direct flow <br />account, and several small accounts that hold augmentation supply water (totaling about 500 af). <br />Water in the Company account is divided between users on the Rio Grande Canal and the Monte <br />Vista Canal based on their respective share ownership in the Company. Water held in the direct <br />flow account is divided between the ditches that stored direct flow and the division is based on <br />the amount they stored. The Company, however, has first priority on reservoir storage space to <br />store under their own water rights and Company water can never be displaced by other users. <br />Reservoir Storage Decrees <br />Storage occurs during the winter months and during peak runoff under the Company's own <br />decreed storage water rights when the water rights are in priority. Water stored in Santa Maria <br />and Continental under the Company's own rights is allocated to it's shareholders on a prorata <br />basis proportional to share ownership. As previously described, 90 percent of the Company <br />shares are owned by a subset of the shareholders in the Rio Grande Canal Water Users <br />Association. The remaining 10 percent of Company shares are owned by owners in the Monte <br />Vista Canal Water Users Association. Shareholders request deliveries from the Company, who <br />coordinate releases with ditch company representatives. A 10 percent charge is assessed to all <br />releases of Company water from the reservoirs. Efforts are made to combine reservoir water <br />orders with direct flow diversions through the ditches to improve delivery efficiencies. For <br />example, the Company generally prefers to make reservoir releases to owners under the Rio <br />Grande Canal when the Canal's direct flow rights are in priority for at least 300 cfs. <br />C:Acdss\SMRes.doc Santa Maria Reservoir Company Interview July 6, 1999 -Page 3 of 4 <br />