2007 Annual Report 022608 FINAL...We’ve all heard the adage attributed to Mark Twain – “whiskey’s for drinking, but water’s for fighting over.” Whether it was really said

Administration Project Overview

General Manager’s Message Administrative Activities

Financials Assessments

Balance Sheet

Facilities & Lands Project Maintenance

POTM Penstock & Siphon Undermining Safety

Master Plan Provo Reservoir Canal Enclosure Project

Kamas Bridges Water Conservation Plan

Little Deer Creek Project Improvement

Operations & Engineering

Water Supply Water Storage

Water Deliveries Water Quality SCADA System

Water Use Water Use Table

pp 2

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8-31

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27

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Administration

Project Overview

General Manager’s Message

Administrative Activities

2

We’ve all heard the adage attributed to Mark Twain – “whiskey’s for drinking, but water’s for fighting over.” Whether it was really said by Twain or not is debatable*, but it always gave me a chuckle. On a hot summer day in 1995 I found there was more truth to this old saying than I imagined. During my first irrigation season with the Association, I was in the office one day when I received an urgent call from the watermaster. It seemed a farmer was preventing him from making a gate change and was threatening to kill him. I raced from south Orem out to Lehi to find a man in his 80s menacingly swinging a shovel over his head and keeping the watermaster away from the headgate. It took me a while, but I finally convinced the farmer that we weren’t trying to steal his water, and he allowed the gate change to take place. I found out years later such exciting happenings are not limited to the western world. While in Korea in 2005, I visited a museum that featured historic farming implements and old drawings and paintings of rural Korean life from centuries ago. Imagine my surprise when I came upon the four-panel painting represented below, of a ‘friendly’ exchange between two rice farmers! [After much persuasion in my limited Korean language ability, thankfully I was able to talk the curator into letting me snap a picture of the painting]

Next to the air we breathe, the water we drink is our most basic necessity. Water to grow crops and provide power for industry isn’t too far behind. Because of this, water conflicts have probably always been with us and will likely occur with greater frequency and magnitude in the future. Recognizing this, the Bureau of Reclamation instituted the Water 2025 Initiative in 2004 to encourage innovative solutions to water challenges in the West. Reclamation awards grants for worthy water improvement projects, primarily in areas identified as potential or real water conflict regions. The Association was successful in 2007 in obtaining a $300,000 Water 2025 grant and a $25,000 Reclamation Water Conservation grant. The Water 2025 grant will provide funds to upgrade the Little Deer Creek

General Manager’s Message

Utah H2O Currents...

Farmers Fighting for Water Rights The Deseret Morning News 3/11/07

4

* http://dmla.clan.lib.nv.us/docs/nsla/archives/myth/myth153.htm

5

collection system near the Duchesne Tunnel inlet, while the Water Conservation grant will be used to update the Association’s water conservation plan. The Association was previously successful in obtaining a Water 2025 grant in 2004 and a water conservation grant in 2002. Benjamin Franklin is reported to have said “when the well is dry, we know the worth of water.” The well of Utah Lake and the Provo River was very close to dry in the 1930s when the Provo River Project came into being. Project founders had an appreciation for the real value of water – not just the actual dollars it cost to sponsor the construction of Deer Creek Dam and other Project facilities, but the value of the future made possible by this Project. Generations since have benefitted from that foresight and vision. I believe the Association Board of Directors continues that vision in its oversight of the important issues facing the Association. All board members serve on one or more committees besides the full board and I appreciate the direction and guidance they provide to staff on financial, policy, engineering, community relations and general matters. Association staff is very diligent and protective of Project water rights as well as lands, rights-of-way, facilities and other assets. The staff takes great pride in their work and have a sense of ‘ownership’ of the Project. Competent experts in the areas of water law, engineering, surveying, real estate, legislative consulting and other fields are retained as necessary to assist staff in monitoring and preventing adverse impacts to Association interests. In the summer of 2007 many meetings were held among state officials and representatives of cities, water districts, irrigation companies and other water users to discuss potential changes in Utah’s water laws. At times as many as forty or fifty people would be in attendance at these meetings. All were anxiously engaged and adding their voices to the debate over water laws and policies. While there were no shovels being thrown around (at least none that I could see), the verbal conflict over water policies in 2007 was as real and sometimes as intense as any ditch bank confrontation. I realized that when it comes to protecting one’s interest in water, there’s really no difference between an old alfalfa farmer in Lehi, an ancient rice farmer in Korea, or a room full of present-day water managers and attorneys. Please enjoy the Association’s 2007 Annual Report while I go have a drink ... of cool, refreshing water, of course.

-G. Keith Denos, PE-

Duc

hesn

e Ri

ver

As a part of the August 2007 Board of Directors Meeting, a tour of Kamas area Project facilities was

provided. Board members and guests visited the Weber-Provo Canal Diversion near Oakley, two

new bridges under construction by the Association in Kamas City, and a site along the Weber-Provo Canal in Francis. The Board also inspected the progress of the Victory Ranch Development near

Francis. It has been the practice for many years to provide a tour of selected Project features for the

Board at its Summer meeting. In previous years, the Board has observed Safety of Dams work at Deer

Creek Dam, improvements at the Duchesne Tunnel Diversion, and construction work at the Beaver

Creek Diversion, among others.

Board Tour

Administrative Activities


Utah’s Reservoir Levels Low –Dry Spell Plus Hottest July on Record Don’t Help The Deseret Morning News 8/6/07

6

In Spring 2007 Warren Peterson announced his resignation as Association General Counsel to

pursue other opportunities. We will miss Warren and wish him the best in his new endeavors. The

Association has been extremely fortunate over the years to have been represented by such icons of Utah water law as A.V. Watkins, Fisher Harris, Joseph Novak, Shawn Draney and Warren Peterson.

New General Counsel Christopher Bramhall is also highly esteemed by the water community and

comes to us after many years with Salt Lake City Public Utilities. We are looking forward to a long and

beneficial relationship with Chris.

Legal Representation

Longtime Water Steward for SLC Stepping Down The Salt Lake Tribune by Derek P. Jensen 10/9/07 He has his name on a city building but, more important, his stamp on our canyons. Now, after 49 years of protecting Salt Lake City's watershed, longtime Public Utilities Director LeRoy Hooton Jr. is retiring. Having turned 70 this past summer, Hooton says it is time to step away from his grip on the city's water taps to spend more time with his wife and family. "I really struggled with retirement," Hooton said Monday. "The work is important; it's fulfilling." For the past three decades, Hooton, as director, won praise for his steady stewardship of the Wasatch Front watershed and for keeping rates low. He will be remembered as a modest and measured man - quick to laud his employees - who survived eight mayors and 27 commissions and city councils. "LeRoy's service and dedication to Salt Lake City has been tremendous, historic and invaluable to all city residents," Mayor Rocky Anderson said in a statement. "Future generations will feel greatly indebted to LeRoy for his enormous contributions to creating a healthy, sustainable city." Jeff Niermeyer, Hooton's deputy for the past decade, has been named new director by the mayor. The move requires City Council approval. Niermeyer - a private-sector consulting engineer in Alaska, Washington, Oregon and Utah - has more than 29 years of experience in water-resources management in Utah and Alaska. Hooton, who served on a bevy of water boards and received ample awards, was perhaps best known for his work to protect the capital's watershed. In 1983, he helped battle historic flooding and implemented a comprehensive watershed-protection plan, including the Canyon Watershed Master Plan, which was approved by the City Council in 1988 and updated in 1998. Hooton also led initiatives that allowed the city to meet its obligations under the Clean Water Act while keeping sewer rates among the lowest in the nation. He helped secure more than $408 million in capital improvements that will last until at least 2025. And, under Hooton, the capital was able to reduce its water consumption nearly 15 percent between 2000 and 2006. (continued on next page)

The Association is affiliated with and lends its support to various technical and professional

organizations in the fields of water resources, water rights, engineering, water system improvements,

safety and other areas of interest. Association employees are also very much involved individually. In the Fall of 2006, Operations & Engineering Manager Jeff Budge was appointed to serve on the

Sandy City Public Utilities Advisory Board. In early 2007, Facilities and Lands Manager Steve Cain was

invited by the American Water Works Association Intermountain Section to serve on its Board of

Directors as the Operations and Maintenance Council Chairman. Association personnel currently or

have previously served in various capacities with the Utah Water Users Association, Utah Safety

Council, the American Society of Civil Engineers Central Utah Chapter, and other professional organizations. In addition, Association employees have long been active in their communities

volunteering for organizations such as Food for the Poor, the Boy Scouts of America and local

volunteer fire departments. Employees have served on city boards, committees, and commissions,

and System Operator John Whiting is currently in his third term as Mayor of Charleston Town. The

Association is also a sponsor and strong supporter of Water for People, an organization that provides

for clean drinking water facilities in third-world countries.

Water Industry and Community Service

7

Association employees Steve Cain and Sara Larsen were presenters at the Utah Water Users

Association 2007 Workshop in St. George. They demonstrated the usefulness of a GIS-based asset

protection system for water organizations. Sara Larsen also teamed with Keith Denos to give a presentation on a GIS-based growth model that predicted the conversion from rural to urban land

use that could occur in Utah County over the next decade. These presentations were very well

attended and generated considerable interest at the workshop.

Utah Water Users 2007 Workshop


Debate over Proposed Lake Powell Pipeline The Salt Lake Tribune 6/19/07

"It's the kind of job where you can say you're accomplishing something in life," Hooton said. "It's more than making a living; it's a job I had great feelings for." Hooton, who labored to establish a succession plan that included Niermeyer, says he hopes to travel, write about water history and continue hiking Utah's mountains. And whenever he cruises by 1530 S. West Temple, he can smile at the name on the city's Public Utilities headquarters. After Hooton's half a century of service, city officials agree the building's moniker is well deserved. Devoted to Salt Lake City's public utilities for five decades - nearly three as director - LeRoy Hooton Jr. has retired. Here is a career snapshot: • Launched public-service journey in 1958 at the Big Cottonwood Water Treatment Plant • Shifted in 1961 to plant manager of City Creek Water Treatment Plant • Became manager of the Parleys Water Treatment Plant in 1963 • Promoted in 1972 to assistant department director • Appointed director of public utilities by Mayor Jake Garn in 1979 • Served on a sea of boards that included Metropolitan Water District of Salt Lake & Sandy, Central Utah Water

Conservancy District, Association of Metropolitan Sewage Agencies, Board of Canal Presidents, Provo River Water Users Association, Utah Water Users Association and the Intermountain section of the American Water Works Association

• Received numerous awards, including the Environmental Protection Agency's Excellence Award and the Utah Division of Water Resources 2002 Citizen of the Year Award

Operations

Water Supply

Water Storage

Water Deliveries

Water Quality

SCADA System

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Water Supply

The 2007 water year was a very good example of the foresight of the developers of the Provo River

Project. A much less-than-average snowpack and a short runoff period without a significant peak

meant that very little water was available from the Association’s Provo River rights. Over 90 percent of the Project water stored from the 2007 runoff came from the Association’s foreign diversions through

the Weber-Provo Canal and the Duchesne Tunnel. These trans-basin diversions, along with carry-

over water stored in Deer Creek Reservoir, allowed the Association to declare a 100 percent allotment

even during a poor water year.

Supervisory Control And Data Acquisition System Improvements are continually being made to the Association’s Supervisory Control & Data Acquisition

(SCADA) system due to technology changes or as a result of equipment or programming changes.

In 2007, metering and programming in the Programmable Logic Controller (PLC) were added at the Murdock Diversion to allow fine adjustment control so that minor adjustments in flow could more

easily be made. PLC programming for Association control of the Point of the Mountain Aqueduct

(POMA) diversion was also completed and is ready to implement for the upcoming canal season. A

new PLC was installed at the Duchesne Diversion to facilitate additional measurements and control

for the Little Deer Creek and Duchesne Diversions. Future improvements that will be necessary for

the SCADA system include construction of a control building with an emergency generator for the Beaver Creek Diversion and an upgraded PLC at the Duchesne Tunnel outlet for enhanced

operation.


Despite rain, drought not over yet The Daily Herald 10/14/07

10

Provo River 5,701 acre-feet

10% of total source

Duchesne River 26,282 acre-feet

44% of total source

Weber River 27,960 acre-feet

47% of total source

Web

er R

iver

at

Web

er-P

rovo

Div

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Deer Creek Reservoir2004-2007 Volumes Including Historical Values

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Month

Tota

l Con

tent

(acr

e-fe

et)

WY 2004

WY 2005

WY 2006

WY 2007

Historical Max. (1949-2004)

Historical Avg. (1949-2004)

Historical Min. (1949-2004)

Full ReservoirLevel

Full Reservoir (152,564 ac-ft)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1995 1997 1999 2001 2003 2005 2007


Final Piece of Pipe Placed in Point of the Mountain Aqueduct KSL.com 4/4/07

11

Dee

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Rese

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Water Storage

Deer Creek State Park Visitation

For the second year in a row and following several years of low deliveries, the Association

transported a near-average volume of water through the Provo Reservoir Canal in 2007. With a full

allotment declaration and several shareholders with significant amounts of holdover water available, water was called for throughout the irrigation season. The combination of good spring weather and

a full maintenance staff allowed the canal to be prepared early, and there were no operational

problems throughout the delivery season.

Water Deliveries


Commission Formed for Utah Lake Preservation The Daily Herald 3/9/07

12

Provo Reservoir Canal Total Annual Flows

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2003 2004 2005 2006 2007

Historical Maximum 124,200 af

Historical Average 71,200 af

Historical Minimum 7,610 af

Utah Lake

Deer Creek Reservoir

21,884 7,610 22,485 70,564 64,444

acre-feet

Prov

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serv

oir

Cana

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Water Quality


Recycled Water Could Grow Grass The Daily Herald 1/25/07

As a result of regular summer drawdown

and in preparation for the Safety of Dams

work on the spillway gate structure planned for the 2008 water year, the

elevation of Deer Creek Reservoir was

lowered significantly throughout the

2007 summer. The reservoir hit its lowest

elevation during the hottest part of the

summer when water temperature and water demands were the highest. This

created a condition where algae and

other microorganisms reached

concentrations that water treatment plants were unable to acceptably treat, resulting in taste and

odor problems for drinking water providers. Through cooperation among many organizations, a

resolution to this situation was reached. Colder water was released from Jordanelle Reservoir, and being denser than the water in Deer Creek, it flowed under the warmer water to the Deer Creek

outlet works. This reduced the microorganism concentrations to treatable levels for downstream

treatment plants.

"Today" Show Tasters say Salt Lake City Water the Best KSL.com by Keith McCord 7/20/07 We win! Salt Lake City has the best tasting tap water, at least according to a very unscientific taste test on NBC's "Today" show this morning. The bottled water industry has really taken off in the past few years. Some people claim tap water doesn't taste as good. Well, a number of mayors, including Salt Lake's Rocky Anderson say the stuff coming out of the faucet in the lunchroom isn't that bad. Rocky Anderson's opinion was supported this morning, as Salt Lake beat out 11 other municipal water systems for best tasting water. A few weeks ago, the Today Show called KSL and 11 other TV stations across the country and asked for some tap water samples. Now, this wasn't a scientific study by any means. None of the samples was analyzed by a fancy machine. Instead, a couple of professional wine tasters were used, and they were brutal! Joe Bastianich said, "I wouldn't even want to shower with water number eight." After all the swishing, sniffing, tasting and to-the-point comments, they finally narrowed it down to three: Columbia, South Carolina, Boston and Salt Lake, which was sample number 10. All this was certainly good news for LeRoy Hooton, Director of Salt Lake's Department of Public Utilities, who had as much fun as the wine tasters! Hooton told us that our water comes from the mountain snowpack, which then melts and runs through the local canyon streams. Hooton says, "Every community is different. And our geography, we just happen to live of the edge of these magnificent mountains that happen to be great snow catchers!" Joe Bastianich described our water, saying, "It was bright. It was non-flawed. There was a brightness to it and it was delicious." By the way, according to Salt Lake City's stats, on average, each person uses 200 gallons of water per day in a year.

13

Duchesne Tunnel outlet stream

Deer Creek


Water Reserves are High Despite Low Snowpack KSL.com 2/7/07

Safety of Dams

Construction was completed in Fall 2007 on the

Phase II spillway overlay portion of the Safety of

Dams (SOD) work at Deer Creek Dam. This phase included securing dowel anchors into

the existing concrete and adding one foot of

new concrete to the floor thickness. In addition,

a thorough inspection of the stilling basin at the

base of the spillway was conducted. The work

was completed on time and within the Phase II budget which allowed Phase III to begin shortly

after the close of the 2007 water year.

Phase III will include seismic stiffening of the

spillway gates and gate structure, and will

provide new control equipment and emergency power capability. In addition, the

dam crest will be raised six feet to provide

additional freeboard for dam security during a

seismic event. Phase III is scheduled to be

completed in late 2008 or early 2009, and will

be the concluding phase of the Deer Creek Dam SOD work. Based upon discussions with

Reclamation, the Association expects the total costs of the SOD work to be within the $30 million

initially authorized by Congress. As the Provo River Project Sponsor, the Association is obligated by

federal law to repay 15 percent of SOD costs. Accordingly, in 2010 the Association will begin

repayment of its portion of these costs to Reclamation over a 15-year period.

14

Deer Creek Dam is Beautiful Investment Nearing Fruition The Daily Herald by Ted C. Hindmarsh 3/2/07 If you haven't done so recently, take the short drive up Provo Canyon to Deer Creek Dam to get a first-hand look at your tax dollars at work on the long, needlessly delayed revamping of the Provo Canyon highway. Seeing the gracefully curved elevated bridge and reassuring reinforcement at the toe of the dam, alone, is worth the trip. Also, be sure to notice that the beauty and sensitive environmental issues relative to both the canyon and the river have been well protected and carefully addressed. Too bad the project that will benefit so many was derailed for so long by the self-serving interests of an influential few, and that the current project is costing considerably more now than it would have a decade ago. But even at the inflated rate, the increased safety, convenience and aesthetics will be well worth the price.


Bridge Over Deer Creek Reservoir Dam Reopens KSL.com 9/3/07

After many years of construction and a coordinated effort among several agencies, the US 189

highway construction near Deer Creek Dam was completed in 2007. The road was relocated off of

the dam crest and a large berm was placed on the downstream face of the Dam to support a new bridge that spans the spillway channel. These improvements increased the security and structural

stability of the dam, and also allowed the highway to be straightened which improved public

safety. This cooperative effort between the Utah Department of Transportation and the US Bureau of

Reclamation is a benefit to both agencies as well as to the Association and all who travel Provo

Canyon. Traffic began using the new bridge on Memorial Day and a public dedication ceremony

was held October 23, 2007.

US 189 Completion

15

Master Plan

Provo Reservoir Canal Enclosure Project

Kamas Bridges

Water Conservation Plan

Little Deer Creek Water Supply Improvement Project

16

17

Provo Reservoir Canal Enclosure Project


PG City Officials Hope Murdock Canal Will be Covered The Daily Herald 8/16/07

18

The Association and other interested parties continued their efforts during 2007 toward the eventual

enclosure of the Provo Reservoir Canal (PRC). Meetings have been held and technical data has been

shared with Central Utah Water Conservancy District (CUWCD) for ten years regarding the possibility of combining forces to enclose the canal. In the past few years these discussions have progressed to

negotiations as the parties have formalized their desires and needs regarding the Provo Reservoir

Canal Enclosure Project (PRCEP). In addition to CUWCD, Metropolitan Water District of Salt Lake &

Sandy, Jordan Valley Water Conservancy District and Provo Reservoir Water Users Company have

participated in negotiation sessions, along with the Bureau of Reclamation and the Department of

the Interior.

Congress passed the Provo River Transfer Act in 2004 which authorizes the transfer of title of the PRC

from Reclamation to the Association. As a condition for approval of the final title transfer, the

Association and the local water districts are required to enter into additional agreements for the

operation, ownership, financing and improvement of the canal. Significant progress was made in

2007 regarding use of the canal corridor and reserved easements for Central Utah Project facilities and other facilities. Good progress was also made in developing descriptions of lands to be

transferred and on other property and lands issues. However, much remains to be accomplished in

the negotiation of management, financing and other agreements. It is anticipated that by the time

Title Transfer is approved and the canal enclosure project is implemented, over 50 separate

agreements will have been executed. These agreements include three separate environmental

assessments relating to the PRCEP, the Title Transfer, and Congressional funding assistance for a recreational trail along the PRC corridor after enclosure.


Canal Roads As Trails? Maybe The Salt Lake Tribune 3/29/07

19

The PRCEP was initially envisioned as part of the Association’s

1995 Master Plan of system improvements. At that time the

estimated cost to build the PRCEP was $90 to $120 million. The current estimate due to inflation is in the range of

approximately $140 to $170 million, depending upon the

materials used and the method of enclosure. Funding is

anticipated to be based upon subscription contracts with

those holding capacity or desiring capacity interests in the

canal. Approximately one-half of the funding is anticipated to come from CUWCD based upon a contract for capacity and water conserved through canal

enclosure. Funding assistance has been requested from the Utah Board of Water Resources (BOWR)

and two $60 million loans were previously authorized in 2006. It is anticipated that the Association

will amend its funding request to the BOWR as the project financing details are refined.

Preliminary engineering design of the PRCEP will be complete in early 2008, at which time the cost

estimate will be updated. Subject to finalizing the agreements called for in the 2004 Transfer Act,

Title Transfer is expected to occur in 2008 and final engineering design of the PRCEP may begin as soon as early 2009.

Provo Reservoir Canal Trail Plans for a trail along the Provo Reservoir Canal

continued to be developed in 2007. Concurrent with

the ongoing PRC Enclosure Project efforts, meetings were held with Utah County, cities along the canal,

and other stakeholders in the trail.

The tasks of developing contracts and defining

relationships among these parties were well under

way by the end of 2007. A process was begun to conduct an Environmental Assessment (EA) as part of

an $11.75 million federal grant awarded for the trail. The EA will be complete in 2008, clearing the

way to construct trail improvements as enclosure project facilities are built.

Provo Reservoir Canal maintenance road

Prov

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Cana

l pro

pose

d tr

ail


Project to Cover Canal Moving Forward The Daily Herald 5/19/07

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Litt

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Master Plan Projects

In 2007 the Association replaced two old road

bridges over the Weber-Provo Canal in Kamas

that had failed to meet Utah Department of Transportation bridge safety standards. The

bridges were replaced with box culverts

constructed by a Kamas area contractor between

June and November 2007 at a total cost of

$791,000. The concrete box culverts meet

modern safety standards, enable the Association to meet its contractual obligations to Kamas City,

and will convey the full capacity of the Weber-

Provo Canal.

Weber-Provo Canal Bridges

During the winter of 2006-07 the Association

partnered with Lehi City and the Utah

Department of Transportation to install 130 feet of ten-foot diameter steel pipe in the

Provo Reservoir Canal at 1200 West in Lehi.

The Association purchased and installed the

pipe which was paid for by Lehi City, with

additional oversight provided by UDOT. The

project was completed in April 2007.

Lehi 1200 West PRC Crossing


Drought Leads to Low Water Level at Lake Powell KSL.com 4/25/07

21

Utah cities get grants for water programs The Daily Herald by Joe Pyrah 10/12/07 Utah is adding residents faster than just about any other state in the country, and they all want to take a shower. Or water their lawn. Or irrigate their crops. And water doesn't just fall out of the sky. Well, it does, just not very much of it. To combat critical water shortages projected over the next two decades, several years ago the U.S. Bureau of Reclamation launched Water 2025 to focus efforts on water education and conservation. More than $25 million in federal grants has been spread over 120 projects through the program. And on Thursday $2.7 million was handed out to nearly a dozen Utah-based projects. "Eleven for Utah is the largest of any other reclamation state," said bureau commissioner Robert Johnson. The projects range from converting canals to pipelines, to the installation of metering systems for more accurate usage. The Provo River Water Users Association received $300,000 to help pay for a $697,000 project to improve runoff control in Little Deer Creek. "When the runoff comes, it comes in a big blast," said association general manager Keith Denos. The project will help preserve 1,700 acre-feet of water. An acre-foot is roughly the amount of water a household of four will use in a year. And with the grant, the conservation becomes economically feasibly. "The potential payback is only six or seven years," Denos said. Payson city also received $300,000 for a $603,000 project to convert an open canal into a pipeline. The project is expected to save 935 acre-feet of water. The Utah Lake Distribution Co. received $59,000 of a $118,000 project expected to save 4,200 acre-feet through better monitoring of the canal system, said president Mel Spencer. That project is expected to be complete by next spring. Any Water 2025 program must be finished quickly, within 24 months. "We don't want projects that are going to linger for a long time," Johnson said. The Bureau of Reclamation also announced a new grant program Thursday under Water 2025 that will help fund system optimization reviews. Federal dollars will be available for water owners to identify issues, establish conservation goals, prevent conflicts and prepare a plan of action.


New Study: Utah Could Lose West Desert Water to Thirsty Nevada The Salt Lake Tribune 6/5/07

22

Federal Grants

In compliance with the Reclamation Reform

Act of 1982 and the Utah Water

Conservation Plan Act, the Association prepared a water conservation plan (WCP) in

2002. These Acts require that the WCP be

updated regularly. In 2007 the Association

obtained a $25,000 grant from the Bureau of

Reclamation to assist in updating the WCP.

Work on the WCP update was begun in the Fall of 2007 and will be completed in early

2008.

Water Conservation Plan

Little Deer Creek Water Supply Improvement Project

In the Fall of 2007 the Association was awarded a

$300,000 Water 2025 Grant from the Bureau of

Reclamation to make upgrades and modifications to the Little Deer Creek collection system near the

Duchesne Tunnel inlet. The upgrades to the

collection system will include enhanced operation

of the diversion gates and screens for more

efficient collection of water, a larger pipeline to

bring the water to the Duchesne Tunnel, hydroelectric power generation to augment

existing solar power generation, and electronic

flow metering. Preliminary design on this project

was begun in 2007 with construction expected to

take place in Summer 2008. It is estimated that

these modifications will increase Project diversions by an average of 1,700 ac-ft of water per year

through the Duchesne Tunnel.


Water District Awarded Funding The Salt Lake Tribune 7/19/07

23

Facilities & Lands

Project Maintenance

Point of the Mountain Penstock & Siphon

Undermining

24

25

Prov

o Ri

ver

Maintenance Activities

The Maintenance Department was fully staffed in 2007 for the first time in many years, which

provided greater flexibility in accomplishing maintenance tasks. The Association continued to receive

very positive reports from Reclamation and other oversight entities concerning the maintenance of the Provo River Project. During a 2007 Provo River Project inspection, a Reclamation inspector stated,

“The Provo River Project should serve as an example of proper maintenance practices to all the other

projects in the intermountain area”.


Provo Dam Under Revision The Daily Herald 9/29/07

New Report Urges Water Management Planning The Salt Lake Tribune by Greg Lavine 2/21/07 A new National Academy of Sciences report indicates that more droughts and reduced flow of the Colorado River are problems that water managers and scientists need to plan for now. The Colorado River is a key source of water for most Western states. "These droughts may exceed the severity of droughts of our recent experience," Ernest Smerdon, a study author and emeritus researcher at the University of Arizona said during a Wednesday today. While climate models all project a warmer climate for the Colorado Basin, there is less agreement on the future of precipitation. But researchers indicate that a warmer climate alone will likely reduce water availability. The report made no specific recommendations on how to deal with future crises, but noted that conservation efforts will not likely solve the problem of supplying the water needs of a growing population, Smerdon said.

26

Litt

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Cree

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serv

oir

site

D

uche

sne

Div

ersi

on a

cces

s ro

ad

Prov

o Ri

ver

831527

1,772

3,473

997

1,674

3,472 3,423

2,944

2,178

1,834

882

0

5001,000

1,5002,000

2,5003,000

3,500

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

kWh

Thou

sand

s

Deer Creek Power Plant Gross Generation

Point of the Mountain Penstock & Siphon Undermining

The Point of the Mountain Penstock and Siphon pipelines faced the threat of failure due to

undermining from the activities of an adjoining gravel operation in the Spring of 2006. The

Association has been working cooperatively with adjacent landowners Staker-Parsons and Salt Lake County to develop a plan for relocating the pipes. The work will be performed in conjunction with

gravel mining activities at the site and the development of Utah Transit Authority’s commuter rail

project in Utah County. The pipeline relocation work is expected to be complete by April 2009.

There were no lost time accidents for Association employees during 2006-2007. Through November

2007, Association employees had accumulated 129,750 hours of safe work or the equivalent of

16,219 employee-days since the last lost-time accident. Continuing this pattern of safe work will result in reduced workers compensation insurance premiums for the Association in the future.

Safety


Irrigation Pipe to be Installed in American Fork The Daily Herald 8/16/07

27

Financials Assessments

Balance Sheet

28

Assessments


Snowpack Good, But 2006 Keeps Up Warming Trend Salt Lake Tribune 12/31/06

29

Prov

o Ri

ver

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

2007 2012 2017 2022 2027

Construction Repayment Assessment

The Association is obligated to repay the construction costs of the Provo River Project (PRP) at a rate of

$285,000 per year. In November 1994 the Association entered into agreements with Western Area

Power Administration (WAPA), WAPA’s customers (the Power Users) and Reclamation regarding the disposition of power generated at Deer Creek Power Plant (DCPP) and assistance with the repayment

of PRP construction costs to Reclamation. The 1994 agreements specified that in return for the

opportunity to purchase power generated at DCPP, the Power Users would contribute a set amount

to the annual repayment of the PRP on the Association’s behalf. This amount was set at $102,243.80

from 1995 through 2008, and $76,520.00 from 2009 through the remainder of the Association’s

repayment obligation.

Accordingly, beginning with the regular assessments which will be levied in Fall 2008, Association

shareholders will see their annual Project construction costs repayment assessment increase from

$1.828 per share to $2.085 per share.

Balance Sheet

30


Snowpack Dwindling, Utah in Desperate Need of Storms KSL.com 1/30/07

$-

$5.00

$10.00

$15.00

$20.00

$25.00

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Project Repayment Project O&M Capital Improvements

Assessments

Provo River Water Users Association Balance Sheets

October 31, 2007 and 2006 2007 2006 Assets

Current Assets Cash and cash equivalents (Notes 1 & 2) $ 280,572 $ 218,024 Cash and cash equivalents - restricted (Notes 1 & 2) 245,889 48,252 Investments (Notes 1 & 2) 600,429 98,716 Accounts receivable (Note 1) 767,394 12,325 Accrued interest receivable 11,731 7,849 Prepaid insurance 75,802 73,332 Total current assets 1,981,817 2,358,498 Fixed assets, net of accumulated depreciation of $2,411,105 and $2,103,777 (Notes 1 & 3) 7,238,084 6,012,518 Other Assets Beneficial interest in water rights 24,070,460 4,070,460 Bond issuance fees, net of accumulated amortization of $32,253 and $25,802 32,253 38,703 Total other assets 24,102,713 24,109,163 Total assets $ 33,322,614 $ 32,480,179


43,000 Endangered Fish Planted in Utah Lake The Daily Herald 8/29/07

31

Mid

way

Liabilities and Stockholders' Equity Current Liabilities 2007 2006 Accounts payable $ 24,287 $ 16,774 Accrued liabilities 17,397 27,180 Accrued compensated absences (Note 1) 55,474 50,711 Accrued interest 7,582 98,499 Current portion due to Summit County (Note 9) 15,082 15,082 Current portion of bond payable (Note 6) 195,000 185,000 Current portion of note payable (Note 5) 285,000 285,000 Total current liabilities 599,822 678,246 Long-Term Liabilities Accrued liability due to Summit County, less current portion (Note 9) 80,560 95,643 Bond payable, less current portion (Note 6) 1,095,000 1,290,000 Note payable, less current portion (Note 5) 5,642,482 5,993,682 Total long-term liabilities 6,818,042 7,379,325 Total liabilities 7,417,864 8,057,571 Stockholders' Equity Capital stock (Note 4) 23,915,867 23,915,867 Future stockholder assessments (Note 4) (5,927,482) (6,278,682) 17,988,385 17,637,185 Retained earnings Reserved for master plan improvements 5,652,843 4,408,225 Reserved for debt service 202,582 284,457 Designated for emergency 693,771 693,771 Designated for equipment 37,532 54,875 Unreserved, undesignated 1,329,637 1,344,095 7,916,365 6,785,423 Total stockholders' equity 25,904,750 24,422,608 Total liabilities and stockholders' equity $ 33,322,614 $ 32,480,179

Water Use Water Use Table

32

33

2007 Extra HoldoverTotal Use Allocated Used Allotment Available Used Paper Towards

October 31, 2007 Shares (AF) (AF) (AF) Used (AF) (AF) Spill 2008MWDSLS Account #1 500 1,000 500 500 0 500 500 0 330 Account #2 200 400 200 200 0 200 200 0 132 Account #3 15,000 30,000 15,000 15,000 0 15,000 15,000 0 9,900 Account #4 46,000 38,702 46,000 22,863 0 15,839 15,839 0 13,066Total 61,700 70,102 61,700 38,563 0 31,539 31,539 0 23,428

Orem MWD Account #1 1,300 1,063 1,300 442 0 1,300 621 0 1,537 Account #2 200 268 200 68 0 200 200 0 132 Account #3 754 1,010 754 256 0 754 754 0 498Total 2,254 2,341 2,254 766 0 2,254 1,575 0 2,167

Dixon Irrigation Company 300 600 300 300 0 300 300 0 0

Provo MWD 8,000 4,083 8,000 3,200 0 6,342 883 0 10,259

American Fork MWD 500 0 500 0 0 118 0 0 0

Beaver/Shingle Creek 900 200 900 200 0 700 0 0 1,400

Diamond Bar X 86 86 86 86 0 0 0 0 0

Bar X Mutual Water Company 10 10 10 10 0 0 0 0 0

MSH Corporation 10 10 10 10 0 0 0 0 0

Noblett's Creek Mutual Water Co. 19 19 19 19 0 0 0 0 0

Highland Conservation District Highland Conservation District 3,289 3,289 3,289 3,289 0 168 0 0 0 Highland City 1,721 1,721 1,721 1,721 0 60 0 0 0Total 5,010 5,010 5,010 5,010 0 228 0 0 0

Lehi City 500 500 500 500 0 0 0 0 0

Lindon MWD 200 33 200 33 0 192 0 0 359

Pleasant Grove Irrigation 1,011 1,068 1,011 1,013 0 55 55 0 (2)

Pleasant Grove MWD 300 300 300 300 0 0 0 0 0

Provo Bench Irrigation Orem MWD 900 1,524 900 624 0 900 900 0 276 Provo Bench 1,100 0 1,100 0 0 1,100 0 0 2,200Total 2,000 1,524 2,000 624 0 2,000 900 0 2,476

Provo Reservoir Co. JVWCD 10,417 15,736 10,417 9,975 0 5,761 5,761 0 442 Orem MWD 3,029 4,164 3,029 1,159 0 3,005 3,005 0 1,870 Alpine District 1,328 1,479 1,328 1,479 0 0 0 0 0 Pleasant Grove MWD 241 241 241 241 0 0 0 0 0 Sandy City 78 78 78 78 0 0 0 0 0 Highland City 575 575 575 575 0 0 0 0 0 Lehi City 182 107 182 107 0 0 0 0 75Total 15,850 22,380 15,850 13,614 0 8,766 8,766 0 2,387

South Kamas Irrigation 500 0 500 0 0 0 0 0 0

Victory Ranches 200 0 200 0 0 200 0 0 400

Washington Irrigation 500 500 500 500 0 0 0 0 0

Total 99,850 108,766 99,850 64,748 0 52,694 44,018 0 42,874

Project Water Use for 2007 Water Year

2007 Allotment Holdover from 2006

Staff G. Keith Denos, General Manager Donna D. Connor, Office Administrator Geraldine L. Bradford, Secretary/Receptionist

Board of Directors

Michael W. Wilson, President Harley M. Gillman, Vice-President C. Ross Anderson Genevieve Atwood Richard P. Bay Merril L. Bingham Bruce W. Chesnut LeRoy W. Hooton, Jr. Jeff Niermeyer Shane E. Pace Lon Richardson, Jr.

Steven H. Cain, Facilities & Lands Manager Sara G. Larsen, GIS Coordinator Kerry Durrant, Maintenance Lead Man Farrell Hatfield, Maintenance Troy Heap, Maintenance Travis Pool, Maintenance

Jeffrey D. Budge, Operations & Engineering Manager James C. Reed, Information Systems Technician Mark Rawle, Chief System Operator Jack Powers, System Operator John Whiting, System Operator Roger Ford, System Operator D. Lynn Clark, Operations Technician

Professional Services

Christopher Bramhall, General Counsel Jennifer Thornton, Accounting Bowen, Collins & Associates, Engineering Hawkins, Cloward & Simister, Auditors

34

Documents

2007 Annual Report 022608 FINAL...We’ve all heard the adage attributed to Mark Twain – “whiskey’s for drinking, but water’s for fighting over.” Whether it was really said