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OPERATIONAL INFORMATION <br />Operation of the New Cache System is coordinated to optimize the available resources and <br />provide water to stockholders throughout the irrigating season. As a general practice, Timnath <br />Reservoir water is used to supplement direct flow water through Greeley No. 2 Ditch. The <br />general operating strategy in a typical year is as follows: <br />• Reservoir storage begins November 1St and continues throughout the Winter until the <br />reservoir is filled or called out because of a senior priority call. <br />• Irrigating season begins between the 1St and 15th of May and continues until around the <br />10th or 20th of September. <br />• When available, river water diverted through Greeley No. 2 is used in the ditch. River <br />water is typically run from the 2"d week in May through around July lstwhen direct flow <br />water rights are called out due to senior priority calls on the River. <br />• Around July 1St, the River flow drops below the demand for direct flow water by <br />stockholders and the Company will begin delivering reservoir water or operate exchanges <br />as discussed below. <br />The New Cache System is operated as a demand system; water is ordered by and delivered to <br />stockholders when the shareholder requests deliveries. The type of water order a shareholder can <br />place depends on the type of stock ownership (direct flow or storage). <br />Greeley No. 2 Ditch delivers irrigation water to approximately 1001ateral gates along the main <br />ditch, to the North Side Extension gate, and to the North Side Lateral gate. The turnouts, all of <br />which are measured, may serve more than one user or farm and farms may be served by more <br />than one turnout. Most irrigation under the New Cache System occurs downstream of Kern <br />Reservoir. <br />The New Cache System is considered water short by many farmers under the System. Those <br />farmers completely reliant on direct flow water do not believe they have adequate supply of <br />water. Therefore, a majority of farmers under the New Cache System own direct flow shares and <br />reservoir storage shares. <br />Between 1950 and 2000, the average yield per share of New Cache la Poudre Irrigating <br />Company direct flow water ranged from approximately 4 acre-feet per share to 28 acre feet per <br />share for an average yield of approximately 13 acre-feet per share. In calendar year 2004, the <br />quota declaration for Cache la Poudre Reservoir (Timnath Reservoir) shares was 3.0 acre-feet <br />per share. <br />Exchanges and Agreements <br />It is the general practice of the New Cache Company to use water other than share water for <br />exchange purposes. C-BT water is typically exchanged for water in Fossil Creek and Windsor <br />Reservoirs, thereby minimizing the conveyance loss on the delivery of C-BT water. C-BT water <br />is used directly in the New Cache System only when there is no exchange potential. In a <br />separate trade, when Greeley No. 2 is in priority, the Larimer Weld Irrigation Canal can divert <br />water at its headgate in exchange for providing water to the New Cache la Poudre Irrigating <br />Company from Big Windsor Reservoir. Stockholders owning C-BT units are required to inform <br />NewCacheMemo.doc 13 of 14 <br />