the adjacent Salt River Landfill in several years.

WATERWAYS Summer 2013 NEWS ABOUT SRP WATER STEWARDSHIP GRUSP NEARS MILESTONE AS LEASE NEGOTIATIONS CONTINUE GRUSP has a milestone almost in grasp after a long pause in operations. After a two-year operational hiatus because of elevated area water levels, the Granite Reef Underground Storage Project (GRUSP) reopened in March 2012 and recharged 15,549 acre-feet (af) of water before the end of the calendar year. The modest recharge volume, combined with a coordinated pumping plan in the GRUSP area and minimal surface water releases over Granite Reef Diversion Dam, have helped dissipate the groundwater mound under the facility. This has created the most favorable water-level conditions at the adjacent Salt River Landfill in several years. The original lease arrangement of the GRUSP property with the Salt River Pima-Maricopa Indian Community (SRPMIC) expires later this year. SRP has spent considerable time in recent months working with the SRPMIC to structure a new lease acceptable to the SRPMIC and the GRUSP participants Chandler, Gilbert, Mesa, Phoenix, Scottsdale, Tempe and SRP. After the new lease is finalized, GRUSP will be poised to continue its tradition of improving water management in the East Valley as it approaches its milestone of recharging 1 million af since inception in 1994. Overview: Underground storage Underground storage projects, also known as water recharge projects or water banks, offer a low-cost alternative to other storage options, such as reservoirs, while increasing the amount of water that can be stored for the Valley s future. Through underground storage, water is retained in huge, porous earthen basins and allowed to seep and slowly percolate into the aquifers natural underground storage reservoirs. Aquifers are made up of porous Continued on Page 2

GRUSP NEARS MILESTONE AS LEASE NEGOTIATIONS CONTINUE Continued from Page 1 material, including gravel, fractured rock, sand, silt or a blend of these. Aquifers vary in thickness from a few feet to 1,000 feet or more. Water is stored in the aquifer and withdrawn by well-pumping when needed. Some of the water deposits made are saved for the long term when water supplies run short, while other withdrawals are made soon after they re deposited at other locations. Water stored at GRUSP primarily comes via the Central Arizona Project aqueduct, which is connected to SRP s canal system near Granite Reef Diversion Dam. Arizona water recharge projects allow the state to collect its full share of Colorado River water, even when it doesn t need it, and to then protect it from the stresses of growth and drought for future use. For more about SRP s underground storage projects, visit srpnet.com/ water/waterbanking.aspx. SRP takes your H 2 O calls 24/7 SRP s call center for water customers, better known as the Water Contact Center, handles more than 324,000 calls a year and serves irrigation customers throughout the Salt River Reservoir District in metropolitan Phoenix. For service, call (602) 236-3333. Our mission is to extend our industry lead in customer satisfaction and loyalty, said Cheryl Zittle, Shareholder Services Director, Water Delivery Services. We want to ensure that customers find doing business with us to be rewarding, easy and pleasant. The Water Contact Center is open 24/7 year-round and employs 36 customer service representatives. During the summer, customer service representatives answer about 35,000 calls per month, about double the calls the Water Contact Center receives during the winter. Types of calls handled include: Irrigation orders Irrigation schedule inquiries Irrigation water flooding streets or nearby property Private irrigation facility problems New-customer orientation and education 2

51st LEGISLATURE CONSIDERS A NUMBER OF WATER-RELATED ISSUES Water augmentation and funding for a special master highlighted water-related issues addressed under the Copper Dome during the 51st Arizona Legislature. After two years of study and discussion by the Water Resources Development Commission, a proposal to authorize the establishment of Regional Water Augmentation Authorities (RWAAs) was unveiled this session. House Bill 2338, sponsored by House Speaker Andy Tobin (R-Paulden), would have allowed public and private entities to form agencies to co-manage large water infrastructure projects. The bill quickly ran into opposition from agricultural interests, who expressed fears that the RWAAs would attempt to acquire water from farmers. Other issues raised during the discussion included the authorities proposed eminent domain powers, the participation of private entities and oversight. After an informational hearing on the bill, the speaker announced the formation of an ad hoc group that will gather more information and meet in communities statewide during late spring and early summer after session ends. Another issue addressed during the session was funding for the General Stream Adjudications Special Master. The special master assists the court by issuing reports and making preliminary findings. It has been funded largely by the parties filing fees, but these fee revenues will be exhausted by the end of the year. Without the funding, there is a risk that the decades-old legal proceedings could be shifted out of the Arizona courts and restarted in federal court. The adjudications statutes were designed to anticipate this possibility, and the Legislature provided direction to future legislators to pay the special master s expenses from the state general fund. The expenses, to cover the salary of one judge and a paralegal, are relatively small $75,000 for fiscal year (FY) 2014 and $215,000 for FY15 and have been included in early budget proposals. 3

MAKING WATER SENSE: SRP WATER CONSERVATION EXPO More than 700 people enjoyed SRP s sixth annual Water Conservation Expo, held March 2 at SRP s Valley PERA Club in Tempe. The half-day festival focused on water management, stewardship and conservation, and it featured SRP exhibits about water supplies, energy efficiency, water safety and residential water conservation. Municipalities, water agencies and commercial vendors partnered with SRP to provide information about a wide variety of water- and energy-efficiency technologies and programs. The expo continues to be recognized by customers and exhibitors as one of the Valley s best water-themed events. The expo also featured classes about smart irrigation controllers and information about creating and maintaining a water-efficient landscape using xeriscape principles. Low-water-use plants and irrigation technologies provide the potential for significant water savings. Xeriscapes require less pruning, mowing and fertilizing, thus providing the added benefit of less maintenance. SRP partnered with Ewing Irrigation Inc. to offer a rebate and discounted pricing on the Rain Bird ESP-SMT smart irrigation controller at the water expo. A total of 531 Rain Bird smart irrigation controllers were distributed at the event and Valley Ewing retail locations. Up to 70% of residential water use is outdoors. Installed, programmed correctly and maintained, these WaterSense-labeled controllers promote water efficiency by using historical weather data, on-site rainfall and temperature information to determine daily watering run times. Soil condition, plant type, shade factor and slope are also considered to ensure correct watering needs for plants and trees. WaterSense, a partnership program by the U.S. Environmental Protection Agency, seeks to protect the future of our nation s water supply by offering people a simple way to use less water with water-efficient products, new homes and services. To earn the WaterSense label, smart controllers must be able to adequately meet the watering needs of a landscape without overwatering it. WaterSense smart controllers are third-party certified to ensure that they meet the WaterSense criteria for efficiency and performance. Efficient watering is one way to conserve water supplies. For more water-saving tips, visit togetherweconserve.com. 4

2 CONSTANTS: DRY CONDITIONS AND WATER RESOURCE PLANNING No surprise: Expect it to be dry and hot this summer. The Arizona outlook suggests drought conditions will persist or intensify in most of the state through August. According to the latest information, all of the state is exhibiting some impact, ranging from abnormally dry to extreme drought conditions. Temperatures are forecast to be above normal for the same time period. Total SRP reservoir system storage currently is 58% of capacity, compared with 59% a year ago. SRP s reservoir system declined 37% of capacity since January 2011 because of below-median runoff during that time. This season marks the third consecutive winter with below-median runoff. The 2012 winter produced the 16th-lowest runoff in SRP s historical record; 2011 was the 23rd lowest. This past season produced only about 84% of median. SRP s Board of Governors has approved a full 3 acre-feet (af) per acre allocation for 2013, composed of 2.2 af of surface water and 0.8 af of groundwater. SRP s water management goal is to reduce the probability of having to cut the allocation of water to 2 af per acre to less than a 1% chance two years into the future. Arizona depends upon wet winters to reverse drought conditions. Unfortunately, winter 2012 was the second consecutive winter with La Niña conditions. Since 1950, there have been 20 La Niña winters the majority of those have been dry. Recent history on the Salt and Verde river watersheds, and results from tree-ring research with the University of Arizona, indicate that a wet year in the midst of an extended drought can happen. However, one wet year in the midst of a severe drought does not relieve the cumulative harm to forests, range, wildlife, and surface water and groundwater supplies. Another result of the tree-ring research indicates that the current drought is about as severe to date as the drought of the 1950s. Droughts as severe as or worse than this particular period have occurred eight times in the past 800 years. SRP assumes that the end of every runoff season is the start of the next severe sustained drought period and will continue to manage the Valley s water supplies this way to provide a reliable and adequate supply for maintaining the economy and lifestyle we enjoy. Roosevelt Lake, early 1940s 5

ARIZONA FALLS: A SITE FOR RENEWABLE POWER AND ONGOING HISTORY The natural 20-foot drop on the Arizona Canal, near what is now 56th Street and Indian School Road, has been the ideal location for generating renewable hydropower and bringing people together for more than a century. In the late 1800s, local residents enjoyed gathering at the waterfalls for dances and picnics. The sound of the waterfalls provided a soothing backdrop, and the mist provided a welcome respite from the summer heat. Arizona Falls, as some called it, also was a natural location for a low-head hydroelectric power facility; the first was completed by the Phoenix Light & Fuel Co. in 1902. Salt River Valley Water Users Association leaders, recognizing the canals hydropower potential, decided to replace the plant at Arizona Falls and build a plant on the South Canal and on the newly constructed Crosscut Canal. The combination of these three low-head hydroelectric plants increased SRP s generating capacity by 69%. The refurbished Arizona Falls Plant produced electricity from 1913 until it was dismantled in 1950. Almost 50 years later, SRP, the Bureau of Reclamation and the City of Phoenix collaborated to redevelop the historic site as a modern, public destination that fused engineering and art with a new hydropower plant and an educational center. Designers Lajos Heder and Mags Harries incorporated recycled components from the original plant into their plan to create a site that connects the Valley s past with its present. The new Arizona Falls hydroelectric unit generates up to 750 kilowatts of clean, renewable electricity. The new South Consolidated hydroelectric facility, moved twice since its first construction, generates 1.4 megawatts (MW) at its current location. The Crosscut hydroelectric facility has the capacity to generate 3 MW. Today, as in years past, the natural fall of the water along SRP s canals supports production of clean electricity for shareholders and customers. Arizona Falls, once again, delivers more than power by being a destination for the community and a place where learning and creativity are produced. 6

GATEKEEPER EXPANSION TO CONTINUE and lower gates to deliver water to irrigation customers. In recent years, zanjeros have driven about 1.4 million miles annually to manually adjust 3,459 gates. With the ability to control gates remotely, zanjeros may drive less, resulting in lower automobile emissions and reduced exposure to traffic hazards. Meanwhile, productivity and customer service have increased, and safety has improved. The door is wide open for the continued growth of SRP s GateKeeper system. The initial 10 GateKeeper units were installed during the fiscal year (FY) 2012 annual dry-up, and 10 more sites were added during the FY13 dry-up. An ambitious deployment schedule is planned over the next three to five years, with 30 additional GateKeeper units slated for installation in FY14. Gatekeepers installed in SRP s water service territory are operated via manual, on-site or remote/wireless access. GateKeeper is changing the way zanjeros deliver water by allowing them to adjust gates remotely from laptop computers in their trucks. With GateKeeper, zanjeros can make several gate changes at once. New installation locations are selected based on flow volume and gate usage, as well as safety and/or access issues. Gates at the heads of laterals (the first or controlling gates that redirect water from SRP canals) are being targeted because of larger flow volumes. Zanjeros regulate and measure irrigation flows in the SRP water distribution system. For decades, they traveled among gates, the barriers that occur intermittently along 131 miles of canals and 1,200 miles of laterals. Zanjeros would manually raise Consistent water delivery is another benefit to GateKeeper, which allows water flow to be adjusted automatically so it stays the same. As water is delivered to irrigation customers over several hours, the pressure changes and flows may fluctuate. Irrigation customers often notice and call Water Customer Services to have a zanjero return to the gate and manually adjust the flow to the correct level. GateKeeper can manage water delivery with a high level of accuracy and consistency and help reduce the number of customer calls and zanjero return trips. GateKeeper also scores points for its sustainability; each unit is solar powered. It also reduces SRP s carbon footprint by saving gas and emissions from reductions in field visits. 7

NEW DRY-UP SCHEDULE WELL-RECEIVED SRP s new seven-year canal dry-up plan was well-received by all involved when it was implemented last November. Thousands of fish, including white amur grass carp, were relocated, and 20 linear canal miles were cleaned and repaired. Crews removed 56,000 cubic yards of silt from the canal system, and 664 cubic yards of concrete were used to repair broken canal lining. Segments of both the Consolidated and Eastern canals were drained for inspection and routine maintenance. The new dry-up work plan addresses each canal segment once every seven years and is built around the time constraints of relocating fish and completing all maintenance activities for a given canal reach. The plan allows for approximately 18 miles of canal to be drained nine miles north of the Salt River and nine miles south of the Salt River. The dry canal segments are not contiguous, so the fish can be relocated efficiently with minimal losses. On the Southside, the Consolidated Canal dry-up will begin at Broadway Road and extend to Queen Creek Road later this year. On the Northside, the Arizona Canal will have three different segments dry between 56th Street and 75th Avenue. The Southside dry-up begins Nov. 22 and ends Dec. 22. The Northside dry-up begins Jan. 10 and ends Feb. 9. The seven-year plan was developed with cooperation by internal SRP departments, city representatives and representatives for major water contracts. Before implementing the plan, city water treatment plant operators provided feedback about the proposed schedule. Prior to the introduction of the white amur grass-eating carp, SRP would close the head gates and drain the entire canal system to allow for inspection, maintenance and construction activities. When the white amur was introduced into the SRP canal system in 1989, draining a canal became a costly and time-consuming process because of the need to relocate the fish. Pressure from customers to keep the water flowing also influenced the decrease in canal dry-up activities. Unless there was construction or an obvious maintenance need that needed to take place, the canal was not drained. When a canal is not drained completely, it is difficult to evaluate the condition below the water line. 8