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Dean J. Miller
McDEVITI & Mn...LER LLP
420 West Bannock Street
O. Box 2564-83701
Boise, ill 83702
Tel: 208.343.7500
Fax: 208.336.6912
ioe (g)mcdevitt -miller.com
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Attorneys for Applicant
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF UNITED WATER IDAHO INC. FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE IN
THE STATE OF IDAHO
Case No. UWI - W -04-
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
REBUTT AL TESTIMONY OF SCOTT RHEAD
Please state your name.
Scott Rhead.
Are you the same Scott Rhead who previously filed direct testimony in
this case?
Yes, I am.
What is the purpose of your rebuttal testimony?
My rebuttal testimony replies to the direct testimony of Staff witness
Sterling. More specifically, I will:
~ Respond to Mr. Sterling s critique of the Design-Build procurement
method for CWTP;
~ Demonstrate that the early completion incentive to CDM was
prudent and cost effective;
~ Demonstrate that Mr. Sterling s proposed adjustment for CWTP
excess capacity and land is over stated;
~ Demonstrate that the amount paid for the Initial Butte water right
corresponds to the value of the usable quantity of the right acquired;
~ Demonstrate the proposed adjustment to purchased water is
incorrect;
~ Demonstrate that the Company s investment in the Integrated
Municipal Application Package (IMAP) should be allowed in rates;
~ Demonstrate that the Company s natural flow right no 63-31409 is
current! y in service;
Rhead, Re
United Water Idaho Inc.
~ Provide an updated Exhibit 8, dated 04/22/2005 with revised
proforma capital additions thru 03/31/2005.
Have you prepared any Exhibits to your rebuttal testimony?
Yes. I have one, Exhibit No. 16, Schedules 1 through 8.
How would you summarize Mr. Sterling s critique of the design-build
procurement process?
Mr. Sterling discusses the advantages and perceived shortcomings of
the process compared to the more traditional design-bid method.
While I disagree with some of his criticisms , I will not discuss each in
detail because, in the end , Mr. Sterling does not recommend any
disallowance based on the decision to employ the design-build
method.
Does Mr. Sterling make a recommendation with which you disagree?
Yes. Mr. Sterling presents several arguments in favor of design-build
and presents no evidence that these benefits have not been achieved.
Mr. Sterling presents several theoretical downsides to design build, but
presents no evidence that these downsides occurred on the Columbia
WTP project. In particular, Mr. Sterling discusses three specific
theoretical problems with design build, and the ways to overcome
them:
1. Owner must exercise greater responsibility to ensure interests are
protected. The Company did this, assigning an experienced project
Rhead, Re 2
United Water Idaho Inc.
engineer to the project to observe daily construction activities and
review all subcontracting decisions.
2. Establish a guaranteed maximum price GMP at some stage in the
process. The Company obtained a GMP prior to issuing notice to
proceed with construction.
3. Require competitive bidding for each element of the construction.
The vast majority of equipment, materials, and construction
elements were competitively bid.
The Company exercised all the cautions recommended by Mr. Sterling,
and realized all the potential benefits of design build that he identifies.
Mr. Sterling has presented no evidence to the contrary. The Company
believes that this method has responded to the circumstances more
flexibly, in less time, and at lower cost than the traditional design-bid-
build method, and Mr. Sterling has provided no evidence to the
contrary. The Company s experience in this area has been favorable
and doesn t anticipate reverting to a design-bid-build method in similar
circumstances.
Has Mr. Sterling made any particular recommendation with regard to
United Water s use of the design-build procurement approach on future
company projects? If so, please reply.
Mr. Sterling recommends that the Company be directed not to use the
design-build method for major projects in the future. This is an un-
warranted intrusion on management's business judgment. The
Rhead, Re 3
United Water Idaho Inc.
Company must keep procurement options open based on future
circumstances of specialty construction, schedule and contractor
availability. Domestic water facilities by their very nature require
experience and a unique understanding of the public health
requirements. The Company must be contractor selective and be able
to use judgment as to the best way to manage, construct facilities and
operate the business.
Mr. Sterling also questions the early completion bonus paid to CDM
and in the absence of further cost justification recommends its
disallowance. Have you developed additional support for the bonus?
Yes. The incentive payment earned by CDM has a direct impact on
bringing down the overall project cost. There is a legitimate project
management cost for labor, overhead and expenses spread throughout
the contract duration. These costs are calculated on a per day basis
and are attached as Schedule 1. As shown these legitimate costs are
191/day and are charged until the project is substantially complete
so long as the Guaranteed Maximum Price is not exceeded. Pushing
the project to an earlier completion by paying an incentive of
500/day saves the overall project a direct benefit of $1 691/day.
The sooner the project could be completed the less the overall cost.
The project benefited a total of $1 691 x 82 = $138,662 from this
incentive provision, it is justified and should be allowed in rate base.
Rhead, Re 4
United Water Idaho Inc.
What is your understanding of Mr. Sterling s recommendation
regarding portions of the CWTP that will accommodate future
expansion?
Mr. Sterling estimates that approximately 3,200 sq. ft. of the plant will
accommodate future addition of ultraviolet disinfection. He then
multiplies the 3 200 sq. ft. by an estimated cost of $110 per square foot
and proposes that $352 000 of investment be considered plant held for
future use.
Do you agree with this calculation? Please explain.
No. The main process building was designed and laid out in the most
efficient way possible. It would be unreasonable to deny recovery of
any floor space constructed that took advantage of economics of scale
during the initial construction. Certainly it is unreasonable and unwise
to penalize future customers more by paying a premium for future
space that can be enclosed now at a fraction of the future cost. The
200 sf in question is specifically this situation. The construction
this space was the least costly area of the entire process building.
Costs to enclose were floor slab, roof system and simple masonry wall.
The building as a whole is used and useful. The as built cost of this
200 sf space as documented by CDM is $173 630 or $54.26/sf (See
Schedule 2). This space should not be classified as plant held for
future use. If, however, any adjustment for recovery is thought
Rhead, Re 5
United Water Idaho Inc.
necessary the actual construction costs, not the design estimate, is the
appropriate measure which would yield an amount of $173 632.
Do you agree with the recommended adjustment of 2.8 acres of land
held as future use totaling $181 083. 70? Please explain.
No. United Water believes the entire site should be allowed in rate
base. Mr. Sterling cites 2.8 acres of the plant site as being unused and
intended for future facilities. In response to United's Production
Request No. 27 , Mr. Sterling provided his calculations used to arrive at
8 acres as shown on Schedule 3 , this calculation is incorrect and the
correct amount is 1.84 acres. Mr. Sterling states that it was prudent for
the Company to acquire this land. Mr. Sterling incorrectly includes for
disallowance approximately .64 acres of site space that is devoted to
stormwater management and septic tank/drain field that are required
by Ada County and are an integral part of the initial facilities. Ada
County Comprehensive Plan Policy # 3 for Storm Drainage, as stated
under paragraph 2.2 on page 4 of the August 22 , 2002 Conditional Use
Permit, requires that on-site treatment (bioswale), storm drain, and
flood control (detention basin) facilities be constructed coincident with
the development of the rest of the site. In addition, the project could
not have been built on only the space required for the footprint of the
initial facilities. All construction projects require space, beyond that
required for the facilities themselves , for materials laydown, staging,
construction offices and storage, construction equipment access
Rhead, Re 6
United Water Idaho Inc.
maneuvering, and setup. The small amount of additional land acquired
was essential for the construction of the initial facilities. Any
adjustment for recovery would be unreasonable but if any adjustment
is thought necessary the area should be no more than 1.2 acres due to
the requirements discussed above. The cost of the 1.2 acres is 10.43%
of the total 11.5 acres and equates to $77,571.73 (743 736.64 x .1043)
using the same cost basis.
Please explain the background and history of the Integrated Municipal
Application Package (IMAP) that has been submitted to the Idaho
Department of Water Resources.
Three main factors motivated the Company to submit the !MAP. First
the Idaho Department of Water Resources ("IDWR") is beginning to
implement conjunctive management of water rights in Idaho, which
means that ground water rights are managed in conjunction with
surface water rights. Before now, ground water rights generally were
administered separately from surface water rights. Under conjunctive
management, junior priority ground water rights may be curtailed in
order to make more water available for senior surface water rights.
major goal of the IMAP is to allow the Company to use its most senior
ground water rights at its most productive wells. This would allow
United Water to respond efficiently to a ground water curtailment in
the Treasure Valley. To achieve this, United Water had to file an
application to transfer essentially all of its ground water rights to
Rhead, Re 7
United Water Idaho Inc.
recognize all of its ground water wells as alternate points of diversion
for each right. It involves 93 separate transfer applications and
separate applications to amend water rights permits.
Is the possibility of curtailment a present day reality or only something
that might occur in the future?
It is a present day reality. For example, the curtailment order affecting
ground water pumpers in the Eastern Snake Plain Aquifer that has
been in the news recently is a good example of the effect of
conjunctive management. In response to this order, and potential
additional orders, communities are having to restrict or make plans to
restrict municipal water use. For example, the City of Shoshone
recentl y imposed water use restrictions on its citizens and is making
plans to impose further restrictions if another curtailment order is
issued. A major goal of the IMAP is allow the Company to use it most
senior ground water rights at its most productive wells in response to
potential curtailment orders. For example, if a curtailment order
restricted use of ground water rights in the Treasure Valley with
priority dates junior in time to 1967, without the IMAP the Company
could not divert from any of its wells that were drilled after 1967, even
if these wells were the most productive wells. When the IMAP is
approved the Company can utilize its pre-1967 water rights to pump
from its most productive wells and thereby maximize its ability to
serve its customers in the event of a curtailment order. To achieve
Rhead Re 8
United Water Idaho Inc.
this, United Water had to file an application to transfer essentially all
of its ground water rights to recognize all of its ground water wells as
alternate points of diversion for each right. This application for
transfer is the foundation of the IMAP. This is a massive undertaking,
but one the Company believes is imperative to serve its existing
customers in this new era of conjunctive management. The Company
believes conjunctive management in the Treasure Valley is inevitable.
The IMAP is a proactive tool that will maximize the Company
ability to effectively serve its customers in response to conjunctive
management.
What are the other factors that led United Water to submit the !MAP?
The second major reason United Water submitted the IMAP was to
consolidate its water rights in advance of review by the Snake River
Basin Adjudication ("SRBA"), including the alternate point of
diversion transfer described above. In the SRBA, the Idaho
Department of Water Resources and the Snake River Basin court
evaluate each party s water rights as part of a court process that
reviews most of the water rights across the state. Other water rights
holders have the opportunity to challenge others' water rights in this
process. We believe our chances of successfully defending our
existing water rights in the SRBA are enhanced by seeking a transfer
to consolidate points of diversion and to recognize a consistent service
area and municipal purpose of use for all of the Company s rights.
Rhead, Re 9
United Water Idaho Inc.
The IMAP seeks to consolidate Company s water right portfolio in this
manner.
Are there any other reasons for submitting the IMAP?
Yes. The third major reason the Company submitted the IMAP was to
bring our water right portfolio into compliance with the Municipal
Water Rights Act of 1996 (the "1996 Act"). This Act encourages
municipal water providers to plan to meet future demand. While this
requires an aspect of future planning, our primary motivation for
seeking protection under the 1996 Act is to protect our existing
portfolio of water rights, and particularly our most senior ground water
rights, from forfeiture. Importantly, the IMAP does not seek any new
water rights. But to ensure protection of our existing, senior water
rights, and to prevent forfeiture of those rights, we need to show that
those rights will help to meet some future demand.
Would the Company have filed the IMAP even if the 1996 Act had not
been passed?
I think we would have. We had discussed the need to respond
possible conjunctive management scenarios and the need to
consolidate our water rights in preparation for the SRBA even before
the passage of the 1996 Act. Accomplishing these goals would have
required a comprehensive transfer application like the IMAP
regardless of the 1996 Act.
Rhead, Re
United Water Idaho Inc.
Mr. Sterling states that based on the IMAP the Company is seeking to
hold and protect at least 160 cubic feet per second (cfs) under its
current portfolio for future growth. Is Mr. Sterling correct?
No. Mr. Sterling s 160 cfs number is derived from a summary of the
IMAP that assumes the application will be approved in a manner that
will allow the Company to pool all of its water rights without any
conditions. In reality, water rights and administration are more
complicated than this, and any approval of the IMAP will very likely
include conditions that restrict the manner in which the Company can
use its rights. The Company has always recognized this and has
engaged in extensive negotiations with other parties to the IMAP
regarding possible conditions that should be imposed. Thus, even
though the total authorized diversion rate under the Company s ground
water rights is 310 cfs when all the rights are pooled, the rights have
(and likely will continue to have) limitations that include, among other
things, where they can be diverted, and/or when they can be diverted.
Consequently, even though the Company s peak demand in 2000 was
about 150 cfs, the Company cannot meet this demand simply by using
150 cfs worth of its water rights. To meet its annual demand, the
Company must use all, or at least nearly all, of its existing water rights.
Does Mr. Sterling dispute the prudence of the Company s actions
regarding the IMAP?
Rhead, Re
United Water Idaho Inc.
No. In fact, he says, "I am not challenging the prudence of IMAP
activities in any way; in fact IMAP is something United Water should
be doing." (Sterling Di. Pg 34).
Even though he acknowledges the prudence of IMAP activities , Mr.
Sterling recommends disallowance of the entire investment, claiming
IMAP is intended to preserve and protect water rights for future use.
(Emphasis in original). Does Mr. Sterling correctly understand the
nature of the IMAP?
, I do not think he does. As I explained above, the main thrust of
the IMAP is to consolidate the Company s water right portfolio in a
manner that will allow it to respond efficiently today to potential
ground water curtailments and to maximize its ability to defend the
existing water rights from challenges, including challenges that it has
forfeited some of its most senior water rights in the ongoing Snake
River Basin Adjudication.
Do the Company and its customers obtain value today from knowing
that there is security in the Company s water rights portfolio?
Absolutely. As described above, the Company s ability to serve its
customers is threatened by potential ground water curtailments under
conjunctive management and also by challenges to the existence of the
Company s most senior water rights. The present challenges require
the company to take proactive measures to protect its water rights so
that it can continue to serve its existing customers most effectively.
Rhead, Re 12
United Water Idaho Inc.
Mr. Sterling also recommends a disallowance with respect to water
permit No. 63-31409, believing that the permit relates solely to future
ground water recharge projects. Is this water right intended only for
future recharge projects?
No. Recharge projects are only one component of permit 63-31409,
and an ancillary one at that. The primary purpose of permit 63-31409
is to allow the Company to divert natural flow from the Boise River to
the Columbia Water Treatment Plant (CWTP) for municipal purposes.
Based on his Response to United Water Idaho Production Request No.
31 Mr. Sterling now recognizes that this water right has two purposes.
As stated in the Response: "Upon further investigation and
examination of the actual permit and other documents contained in the
water rights file held by the Department of Water Resources, Mr.
Sterling now recognizes admits that the water right has two purposes.
This water right is used and useful now and this investment should be
allowed inrate base. The use of flood flow when available is not only
prudent but very economical because of no annual costs.
Please explain the background and history of the three water rights
known collectively as the Initial Butte Water Right?
In 2002 the Bureau of Land Management (BLM) had negotiated for
the land purchase of the Initial Butte Farm totaling 2055 acres. The
BLM wanted the land for habitat purposes associated with the Birds of
Prey facility and therefore wanted to let the land revert back to its
Rhead, Re
United Water Idaho Inc.
natural condition. This provided the unique opportunity to separate
the land from the associated water rights. This situation does not
happen very often without injury to some party. The landowners
approached the Company about the potential purchase of this water
right. The difficulty for the Company was to determine a price for
Snake River water due to the fact the Company s pumping and
treatment facilities are all located on the Boise River. After many
work sessions with interested parties a creative and efficient exchange
was approved between the Snake and Boise River. This exchange
occurs during summer periods of salmon flow augmentation and is
monitored by Water District #63, Idaho Department of Water
Resources and Bureau of Reclamation (BLM). This exchange
provided raw water availability during the summer without the
significant capital cost of pipelines and pumping infrastructure to
deliver the water 25 miles to Boise. Of course it is not possible to
purchase a partial water right for a portion of the season. It was
necessary for the Company to purchase the entire 9 247.5 acre-feet
with a combined diversion rate 35.21cfs.
Mr. Sterling recommends that the purchase price of $1 838 560 be
discounted to take into account portions of the rights he believes
cannot physically be used. Is this adjustment appropriate? Please
explain.
Rhead, Re
United Water Idaho Inc.
No. Based on his Response to United Water s Production Request No.
33, it appears that Mr. Sterling has not considered the price paid by the
Company compared to market value. The Company knew that only a
partial summer use was available related to the exchange discussed
above. Because the owners were also getting value for the land sold to
the BLM they were willing to negotiate a below market value for the
water right. The market price was estimated at$300/acre foot and was
later confirmed by an independent appraisal completed for the State of
Idaho associated with the Bell Rapids Water Right Purchase in 2004.
(See Schedule 4). Mr. Sterling also recognizes this market price based
on the attachment to his Response to Request No. 33. The Company
purchased Initial Butte for $ 135/acre foot (See Schedule 5) or 45% of
market value with the understanding that approximately 45% of the
volume could be diverted under the exchange. Lee Sisco, Watermaster
for Water District #63 confirmed that salmon flow was 60 days in
2004 (See Schedule 6). This calculation is as follows:
Both water plants at 2005 Capacity 35cfs x 2 af/day/cfs x
60 days = 4 200af. Total purchase 4 200 af/9,247.5 af = 45.42%. This
matches almost exactly with the purchase price compared to market
price of $135/$300 = 45%. In other words, the water right "yield" and
price paid are fair and appropriate. The Company should be allowed to
recover the entire price of the Initial Butte water right, as it is all used
and useful.
Rhead, Re
United Water Idaho Inc.
Does the estimated 4 200 af Initial Butte water right provide all of the
surface water needed for both the Marden Water Treatment Plant and
Columbia Water Treatment Plant?
No. Both plants combined require approximately 12 000 af to operate
at capacity during the summer.
Do you agree with Mr. Sterling s adjustments No.9 for a total
purchased water cost of $117 83 7?
No. Mr. Sterling fails to consider the overall volume requirements of
both plants and the variety of annual mechanisms necessary to assure
availability
Do you consider 2005 a "normal" water year related to these annual
mechanisms?
No.
Can you explain and provide an estimate of what the normal level of
expense should be?
Yes. For the past 10 years the supply and demand on the Boise River
has been reasonably stable. The Company has had rental leases and
storage contracts in place to augment the early natural flow from the
Boise River drainage. Three primary changes all occurred at the same
time, which have now complicated the certainty and associated price.
These changes are extended low snowfall conditions, Bureau of
Reclamation Lucky Peak contract renewal uncertainties and
Rhead, Re
United Water Idaho Inc.
conjunctive management enforcement between ground water and
surface water in the upper Snake River.
Willing parties , relationships and competition have been in
tremendous flux over the past 12-18 months. The "picture" is
beginning to clear but as a result of market forces all of the prices
increased both for annual and acquisition costs. Examples are, Basin
63 rentals increased from $6.50 to $14.00 af, State administered water
bank leases increased from $11.00 to $20.62 af, natural flow
acquisition on the Snake River increased to $300 af etc. This
background is provided in an effort to explain the difficulty in
predicting "normal" annual purchased water costs. The Company also
must make the difficult decision each year to keep its own storage and
lease water beyond the natural flow uncertainties or drain the system
and hope for r~fill next year.
Several contracts were not known and measurable during
staff review as discussed by Mr. Sterling s Response to Request No.
34. These items have since been executed and previously have been
provided by Jerry Healy (4/27/2005) including a 2005 purchased water
spreadsheet. The estimated 2005 cost is $274 982. I have provided as
Schedule 7, a revised spreadsheet, which attempts to normalize the
affects of 2005. I have assumed three primary elements will become
normal" and that the associated costs will come down. These
elements are the natural flow exchange from Initial Butte will become
Rhead, Re 1 7
United Water Idaho Inc.
available (4 200 af). Basin 63 incentive payments will come down to
$7.00 from the higher costs paid to Simplot and Trinity Springs in
2005. The Lucky Peak payments to the Bureau of Reclamation will
return to the minimum and all existing storage water will be held for
drought protection. The normal annual purchased raw water cost then
is $185,484 for the 13,454 af needed to operate Marden Water
Treatment Plant and Columbia Water Treatment Plant annually and to
meet peak summer demand.
The Company has provided several updates to the capital proforma
additions referred to as Exhibit 8 in the direct testimony filed by Scott
Rhead. Are you providing a final update of the expected additions?
Yes. The updated Exhibit 8 dated 4/22/2005 is attached as Schedule 8.
The total forecast in-service addition is $39,471,461 of which
$37 264 250 is in service as of 3/31/2005. Several large invoices were
processed in April and early May for payment. These invoices total
approximately $2 150 000.
Does this conclude your testimony?
Yes it does.
Rhead, Re
United Water Idaho Inc.
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-- ,--,----,.----.- ,,/'
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Plant Held for Future Use
CWTP Property
Unused Area
250 x 150
1 50 x 1 50
200 x 100
Total
500
4S 060 ,
AO,OOO
-4-22:-500
So, .; "V
CWTP Building
Total Area150 x 128 19,200
132x130 960
23,160
Unused Area
40 x 80 200
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c.:' Z:-81--acres
,-. '.:.';
, A
11.46 total acreage
-2-4:54-percent of total acreage
200 (Q) $11 O/sq, ft. $352 000
13.82 percent of total acreage
Exhibit No. 16
Case No. UWI-O4-
Rhead, United Water
Schedule 3
-.,-...,.."-----.....,,...
IDT'~1f ""-1 ' K,:'1"" jD'
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Exhibit No. 16
Case No.UWI-W-O4-
Kneao unlt~a vvater
Schedule 4 , Page 1 of 3
~e Appraisal L.
-.--...'
H~;iR: LEMOY~..J=, ," sOP
...;, ,
!.,S~::RA.':'; A ~,':Y~---I~ SRE;.j'J; ~TA~";C::FR A:;;:,~
~CCREDiTE:J RURAL APPRA!Sf,!DAHO CERTiFiED APPRA.lSER ACCREDITED .R'JR.':'L A.PPR.A.lSER
iDA,HO CE;:;OTIFIED APPRAiSER
SFAN RRr j'.jN
APPRAiSAL TRAINEE
Pursuant to your request for an estimate of market value of the unencumbered fee
simple title to the property known as the Bell Rapids water rights , more particularly described on
the following pages, I personally have inspected the records and other available information and
have made a careful and detailed analysis of all factors pertinent to the estimate of value.
The accompanying report of 65 pages contains the results of my investigation and
analysis.
I offered Greg Brown who is the Chairman of the Board of Bell Rapids Mutual Irrigation
Company an opportunity to accompany me on my inspection of this property by telephone on
August 30, 2004.
The water rights discussed in this appraisal report are held by Bell Rapids Mutual
Irrigation Company but are not being appraised as if there was only one owner. As of this
writing it is the intention of the State of Idaho, as I understand it, to negotiate for the purchase of
the water rights. However, some of the stock holders of Bell Rapids Mutual Irrigation Company
may wish to retain all or a portion of the rights that are appurtenant to the real estate they own,
Therefore this appraisal estimates a range of value so that if necessary the water rights may be
negotiated for individually. Therefore it is a specific assumption of this appraisal that there is no
discount for size of the water right considered in this analysis. A more in-depth discussion
regarding this assumption can be found in the Direct Sales Comparison Approach.
1346 FILLMORE STREET
PHONE (208) 733-0874
Q. BOX 5225 TWIN FALLS, IDAHO 83303-5225
FAX (208~ 733-84i~
S1:.b,N
':;f)an~klnGYIl!1'eai!V,corrl
Exhibit No. 16
r""'ro.n.1\.11"\
:DAH,:) CERTiFiED ,APPRJl.lSER
September 8, 2004
Clive J. Strong
State of Idaho, Idaho Attorney General's Office
O. Box 83720
Boise, Idaho 83720-0010
Dear Mr. Strong:
CF.A:G BRPlT
h~~!~lnU!,~!~nQ,';(,;:~1 "r1::,t
HENRi
henri~l,"m'Jynp.rf',allv.r,:Gm l:anjO(irefi:J,r;...t.h~oll/~.nel
Rhead, United Water
Schedule 4, Page 2 of 3
Per agreement with Clive Strong I have assumed that this water right is completely
useable and have not investigated its historic use or partial lack of use thereof.
In my opinion, the market value of the subject property as of, August 30,2004 was:
$250 TO $300 PER Acre Foot Annual Volume
Respectfully submitted
) I
, ".
-r. /
'""") , .-~ '\...._.".'
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Henri' LeMoyne ARA, SRPA, ASA
Idaho Certified Appraiser #9
Exhibit No. 16
Case No. UWI-W-O4-
Rhead United Water
Schedule 4, Page 3 of 3
'VATER RIGHT PURCHASE AND SALE AGREEMENT
TillS WATER RIGHT PURCHASE AND SALE AGREEMENT ("Agreement"
entered into effective this 30th day of May 2002 ("Effective Date ) by and between Southwest
Inc., an Idaho corporation whose address is, c/o Gene Stunz, P.O. Box 2562, Nyssa, Oregon
97913 , and Duane and Laura Pancheri, husband and wife, whose address is 19010 South Canada
Road, Melba, Idaho 83614 ("Sellers ), and United Water Idaho, Inc., or its assigns, whose
address is 8248 West Victory Road, Boise, Idaho 83707 ("Buyer ), In consideration of the sums
to be paid by Buyer to Sellers, and the mutual covenants herein contained, the parties hereby
agree as follows:
RECIT ALS
Sellers own water rights to divert surface water within the Snake River Basin, which
water rights are represented by license numbers 02-2341 , 02-2358 and 02-2420 and
Snake River Basin Adjudication ("SRBA") claim numbers A02-02341 , A02-02358 and
A02-02420 ("Water Rights ) in the records of the Idaho Department of Water Resources
Department"), and which water rights, in combination, authorize diversion of surface
water for iITigation at a rate of 35.21 cubic feet per second ("cfs ) and a volume of
247.acre-feet per year.
The Water Rights are appurtenant to and beneficially used on 2 055 acres of land owned
by Sellers and described in Exhibits A. B. C and D
Sellers desire to sell and Buyer desires to purchase the Water Rights and to exchange the
point of diversion and place of use thereof for Buyer s purposes and use ("Exchange
Sellers and Buyer aclmowledge the Exchange will require fonnal application to and
approval by the Department.
Sellers and Buyer signed a letter of intent to enter a purchase and sale agreement in
accordance with the tenns stated herein.
AGREEMENT
NOW THEREFORE in consideration of the foregoing recitals, and the covenants and
conditions set forth below, Sellers agree to sell, and Buyer agrees to purchase the Water Rights.
Purchase Price One Million Two Hundred Forty-Eight Thousand Four Hundred Twelve.f
"'
and 50/100 DOLLARS ($1 248 50), payable as follows: I, 2- "'8/~
-=
/.5 S-
--
~ z,4/,5" ,If,F-
a, Purchase Price at Closing. Ninety percent (90%) of the Purchase Price, or One
Million One Hundred Twenty-Three Thousand Five Hundred Seventy-One and
25/100 DOLLARS ($1 123 571.25), shall be due and payable to Sellers at Closing.
Of this amount, Eight Hundred Fifty-Three Thousand Four Hundred Seventy-Six and,
75/100 DOLLARS ($853 476.75) shall be payable to Southwest, Inc., and Two
Hundred Seventy Thousand Ninety-Four and 50/1 00 DOLLARS shall be payable to
Duane and Laura Pancheri.
Exhibit No. 16
Case No. UWI-W-O4-
Rhead, United Water
Schedule 5
U~I ~Ol "UU:) .L;); 4~ t'AA. lUO J'IO ll'Nt;" I UK1\ HUH bAT 1 u~
STATE OF IDAHO
WATER DISTRICT #63
LEE SISCO
6616 OVERLAND RD., BOISE, IDAHO 83709
PHONE 378-0246 FAX 378-1274
FAX TRANSMTIT AL
TO:tfu),L
COMPANY AGENCY NAME:
TI'ENTI ON:SC-&f! ;(At:~ q1
DATE:TIME:
NO. OF PAGES:
APR-26-2005 TUE 14:28 TEL: 208 - 362 - 3858 NAME: UNITED WATER
I(g UUl
Exhibit No. 16
Case No, UWI-O4-
Rhead, United Water
Schedule 6, Page 1 of 2P.
V~, ~u, ~VV~ ~u. ~~ rAA ~VO ~ L~ 14 1'\jJ!." IUK1\. UUUWU1Ul'~OO3
2004 Boise River Flow Augmentation for USSR
Stored Flow United Stored Fiow United
Middleton Water Total Middleton Water Total
Date CFS CFS CFS Date CFS CFS CFS
9F~r 21-Jun-04 46.97.9-Aug-04 332 : 46.378.
22 -Jun-04 269 46.315 1 Q-Aug...Q4 360 46.406.
23-J un.260 46.306 11-Aug-04 319 46.365.
24-Juo-04 222 46,268 12-Aug-O4 311 46.357.
25-J u n..()4 319 46.365 13-Aug-04 301 46.347.
26-Jun-04 289 46.335 14-Aug..04 303 46.349.
27-Jun-04 244 46.290 15-Aug-04 318 46.364.
2B-J un-04 329 46.21 375 16-Aug-04 333 46.379,
29-Jun-Q4 356 46.402 17 -Aug-04 478 46.524,
3O-Jun-Q4 441 46.487 18..Aug-04 470 46.516.
JuHJ4 255 46.301 G:Mf::::.-19..Aug-O4 332 46.378.
Jul-04 277 46.323
3-Jul-319 46.365
4-Jul...04 267 46.313
5-Jul-Q4 290 46.336
6-J u t..O4 350 46.396
7 -Jul-O4 291 46.337
r,
U?
1Ja-f
C,t8-Jul-O4 251 46.297
Jul-04 226 46.272
O-Jul-04 269 46.315 Cv"I,.)
11-Jul..04 332 46.378 ....".::J
12-JuJ-04 302 46_348 f6v r t; fL~ f) fl.,-( $ .
13-Jui-04 286 46.332 v0o .-v
& ()
14-Jul44 274 46.320
15-Jul-04 269 46.315
~~L-
16-Jul-04 288 46.334 (X4
17-Jul-O4 266 46.21 312
18-Jul-O4 286 46.332 0'00
19-Jul-O4 300 46.346
20-Ju~346 46.392
21-Ju 1-04 323 46,369
22-Jul-O4 322 46.368
23-Jul-O4 338 46,384
24-Jul-Q4 316 46,362
25-J u 1-04 327 46.373
26-Jul-O4 327 46.373
27..Jul-312 46,358
28-Jul-04 283 46.329
29-J ul-291 46.337
3o-Jul-O4 289 46.335
31-Jul-04 288 46.334
Aug..04 276 46.322
Aug-04 281 46.327
3.Aug-04 300 46.346
Aug-O4 323 46.369
Aug-356 46.402
6..Aug-04 305 46.351
7 -Aug-04 304 46.350 Total (CFS)773
Aug-04 309 46.355 T otal(Acre-feet)5.499 ~9_
Exhibit No. 16
Case No. UWI-O4-
Rhead, United Water
APR - 26 - 2005 TUE 14: 28 TEL: 208-362-3858
Schedule 6, Page 2 of 2
NAME: UNITED WATER
SEE CASE FILE FOR
PRE AD SHE E T S