1. AWBA Quarterly Meeting June 20, 2012

2. Annual Report Requirements Accounting of AWBA transactions and proceedings for previous year All monies expended from Banking Fund All monies remaining in Banking Fund Amount of water stored Number of long-term storage credits distributed or extinguished Ten-Year Plan

3. 2011 Plan of Operation Initial Plan – 136,441 AF 135,441 AF storage - 1,000 AF Southside Replenishment Bank No Interstate storage Amended Plan - August 5,000 AF redirected from TDRP to NMIDD (Actual use 2,626) 15,000 AF redirected from Tucson AMA to Pinal AMA Pinal AMA GSF operator’s pay full cost Final Deliveries - 136,576 AF, includes 1,000 to SSRB

4. Agreements and Permits Groundwater Savings Facility Agreements Effective through December 2021 Master Water Storage Agreement Amended Agreement to Firm Future Supplies Exhibit C – reserves additional 25,894 AF credits (256,174 AF) Water Storage Permits Superstition Mtns., QCID, CAIDD, MSIDD

5. Indian Firming Program White Mountain Apache Tribe Water Rights Quantification - signed December 2010 Firming obligation 3,750 AF/yr during shortages Enforceability anticipated in 2014 Navajo Nation/ Hopi Tribe settlement discussions Bill introduced February 14, 2012 Southside Replenishment Bank AWBA required to deliver 15,000 AF 3,000 AF delivered since 2009

6. Water Supply and Demand Study Determine potential for use of existing and future AWBA credits for meeting firming requirements Colorado River System Simulation – AZ assumptions Period 2008 – 2138 (based on NAIWRS) Three Scenarios: 1997 Base – Conditions existing when goals established AWBA Base – Current River operations, 60 th percentile Maximum Firming – Worst case scenario using AWBA Base

7. Water Supply and Demand Study Study Identified: Number of shortages for each firming obligation Firming and shortage volumes Amount of credits remaining after firming period Initial Analysis AWBA Base – probability of shortage before 2022 is 6% Maximum Firming - 15.4 % chance of shortage in 2035 Insufficient credits for Pima County after 2057 Maximum Firming – deficit of 128KAF of credits for Indian firming by 2091

8. Credit Distribution What is AWBA’s Role in Recovery Planning Process 4-Cent Tax Credits Distributed to CAWCD “to the extent necessary” to meet demands of CAP M&I subcontractors during shortages or disruptions in operations of the Project Withdrawal Fee Credits Used at discretion of AWBA Commission Indian firming M&I firming Other water management objectives

9. Credit Distribution Workshop with Interested Parties Solicit input on distribution of credits during shortages Issues Raised by Participants What is meant by “to the extent necessary” Are recovered CAP credits considered Project water Is equity a consideration? Perception of other states, particularly Lower Basin Focus discussion first on 4-cent tax credits Identify which organization is responsible for various issues and developing potential policies Organized Inter-agency Workgroup

10. Conceptual IGA AWBA Potential Policies/Rules/Statutes Considering credit preservation when distributing AWBA credits Limiting the amount of credits to up to 20% of the shortage Use of AWBA credits for the purpose of accruing long-term storage credits Distribution of the credits within the AMA or County that is being benefited When to use 4¢ ad valorem tax credits vs. withdrawal fee credits

11. Conceptual IGA CAWCD Potential Policies/Rules/Statutes Meeting its CAP M&I subcontractors’ full orders during a shortage event using a combination of Project Water and AWBA credits Delivery of recovered credits as Project Water Creation of a credit recovery schedule Recovery agreements CAWCD may have with entities that will be recovering credits on behalf of CAWCD Managing the shortage and distribution of supplies

12. Conceptual IGA ADWR Potential Policies/Rules/Statutes Develop credit transfer form and fees Recovery for M&I firming Use of AWBA long-term storage credits Annual recovery reports long-term storage accounting Continuing Inter-agency Workgroup Discussions

13. 2012 Plan of Operation Projected Deliveries 119,002 AF deliveries for storage 1,000 AF Southside Replenishment Bank No Interstate storage

14. Monies CollectedMonies Expended Money Available AnnualCumulativeAnnualCumulative General Funds$0$11,101,000$0$11,101,000$0 MCWA Prepayments$26,000$4,631,000$26,000$4,631,000$0 State Indian Firming$0$2,338,000$0$2,338,000$0 Interstate - NV$1,000$109,346,000$0$109,088,000$258,000 Shortage Reparations - NV$0$3,000,000$0$3,000,000$0 Ad valorem Tax$0$246,747,000$13,826,000$123,076,000$123,672,000 Withdrawal Fees$3,118,000$39,240,000$2,839,000$39,074,000$166,000 TOTAL$3,145,000$416,403,000$16,691,000$292,308,000$124,096,000 Monies Collected and Expended (see page 16, Tables 1 and 2, of 2011 Annual Report)

15. Number and Location of Storage Credits (see page 17 and 18, Tables 3 and 4, of 2011 Annual Report) LTSC Accrued AnnualCumulative Phoenix AMA Intrastate 61,983 1,612,603 Interstate - 51,009 Subtotal 61,983 1,663,612 Pinal AMA Intrastate 30,948 944,769 Interstate - 439,851 Subtotal 30,948 1,384,620 Tucson AMA Intrastate 34,674 540,977 Interstate - 109,791 Subtotal 34,674 650,768 All AMAs Intrastate 127,605 3,098,349 Interstate - 600,651 Grand Total 127,605 3,699,000

16. Location and Objective Funding Source Goal (AF) Credits Accrued (AF) Percent Goal/Oblig. Achieved Estimated Remaining Costs ($ Million) Phoenix AMA M&I FirmingAd valorem tax1,566,0001,271,39281%$44 Groundwater Mgmt Withdrawal Fees 278,25399% Pinal AMA M&I FirmingAd valorem tax243,000181,37375%$5 Groundwater Mgmt Withdrawal Fees 381,796232% Tucson AMA M&I FirmingAd valorem tax864,000361,15042%$21 Groundwater Mgmt Withdrawal Fees 89,95252%$57 On-River M&I FirmingGeneral Fund420,000403,83096%$2.5 Use of AWBA Credits through 2011 (see page 20, Tables 5, of 2011 Annual Report – Part 1 M&I Firming)

17. Use of AWBA Credits through 2011 (see page 20, Tables 5, of 2011 Annual Report – Part 2 Indian Firming) Location and Objective Goal (AF) Obligation Non-Credit Goal/Oblig. Achieved Credits Accrued (AF) Percent Goal/Oblig. Achieved Estimated Remaining Costs ($ Million) GRIC Firming350,000 up to 15,000 AF/YR 00%$14 Future Settlements 200,000 up to 8,724 AF/YR 0N/A$18 Federal Assistance $3,000,000 34,102100%$0 Southside Replenishment Bank 15,000 AF Direct Delivery 3,00020%$1.8

18. Location and Objective Funding Source Goal Obligation (AF) Non-Credit Goal/Oblig. Achieved Credits Accrued (AF) Percent Goal/Oblig. Achieved Estimated Remaining Costs ($ Million) Interstate Water Banking - NV Contract with Nevada 1,250,000 600,65148%$152 Shortage Reparation – Nevada Gifts, Grants, Donations$8,000,000 $2,999,74882,37537%$5 Pinal Redirect Creditsn/a 14,125 Use of AWBA Credits through 2011 (see page 20, Tables 5, of 2011 Annual Report – Part 3 Interstate Obligation)

19. Ten-Year Plan (2013-2022) Evaluate Ability to Meet Goals and Obligations Evaluate Ability to Engage in Other Banking Activities Updated Annually Based on Current Priorities Tool for Developing Plan of Operation and guidelines for Future AWBA Activities

20. AWBA – Ten-Year Plan (2013 to 2022) (see page 25, Tables 7, of 2011 Annual Report – Part 1 of 3) YEAR CAP Water Available for AWBA (AF) CAP M&I Firming (4-cent tax) Water Management (Withdrawal Fees) Appropriation from General Fund Delivery (AF) Credits (AF) Delivery (AF) Credits (AF) Delivery (AF) Credits (AF) Pre-Plann/a 1,899,944 534,674 403,830 201382,80043,94240,8664,3723,13600 201478,40042,20739,2534,1292,91000 201572,40041,74238,8203,8812,67900 201666,50037,34034,7273,7532,56000 2017155,700125,403116,6253,6852,49700 2018154,200124,495115,7803,6692,48200 2019152,800121,141112,6613,6402,45500 2020151,300115,316107,2443,6112,42900 2021149,900115,417107,3383,5832,40200 2022148,400115,017106,9663,5552,37700 TOTAL 2,720,224 560,601 403,830

21. AWBA – Ten-Year Plan (2013 to 2022) (see page 25, Tables 7, of 2011 Annual Report – Part 2 of 3) YEAR Shortage ReparationsIndian ($8 Million)Settlement Delivery (AF)Credits (AF)Delivery (AF)Credits (AF) Pre-Plan 82,651 244,408 20139,4148,75525,07223,317 20148,8458,22623,15021,529 20155,4995,11421,27819,788 20165,2874,91720,11918,711 20170021,66820,152 20180021,66020,143 20190021,53720,029 20200021,41519,916 20210021,29519,804 20220021,17519,693 TOTAL 109,663 447,490

22. AWBA – Ten-Year Plan (2013 to 2022) (see page 25, Tables 7, of 2011 Annual Report – Part 3 of 3) YEAR Water Available (AF) AWBA Capacity Available (AF) Credits (AF) ICUA (AF) Remaining Credits (AF) Pre-Plan 600,651 20130248,00000600,651 20140264,50900600,651 20150270,95900600,651 20160276,54200600,651 20174,944191,2864,5980605,249 20184,377192,2194,0700609,319 20196,483195,7256,02920,000595,348 202010,958201,70010,19130,000575,539 20219,605200,6058,93340,000544,471 20228,652200,2528,04640,000512,517 TOTAL 642,518130,000

23. AWBA % of Goals Achieved through 2022 (see page 26, Tables 8, of 2011 Annual Report – Part 1 M&I Firming) Location and ObjectiveFunding Source Goal (AF) Credits Accrued (AF) Percent Goal/Oblig. Achieved Phoenix AMA M&I FirmingAd valorem tax1,566,0002,138,563137% Groundwater MgmtWithdrawal Fees 118,855 Pinal AMA M&I FirmingAd valorem tax243,000220,57591% Groundwater MgmtWithdrawal Fees 216,058180% Tucson AMA M&I FirmingAd valorem tax864,000482,66556% Groundwater MgmtWithdrawal Fees 121,35170% On-River M&I FirmingGeneral Fund420,000403,83096%

24. AWBA % of Goals Achieved through 2022 (see page 26, Tables 8, of 2011 Annual Report – Part 2 Indian Firming) Location and Objective Goal (AF) Obligation Non-Credit Goal/Oblig. Achieved Credits Accrued (AF) Percent Goal/Oblig. Achieved GRIC Firming350,000 up to 15,000 AF/YR 350,000100% Future Settlements200,000 up to 8,724 AF/YR 200,000100% Federal Assistance $3,000,000 34,102100% Southside Replenishment Bank 15,000 AF Direct Delivery 14,00093%

25. AWBA % of Goals Achieved through 2022 (see page 26, Tables 8, of 2011 Annual Report – Part 3 Interstate Obligation) Location and Objective Funding Source Goal Obligation (AF) Non-Credit Goal/Oblig. Achieved Credits Accrued (AF) Percent Goal/Oblig. Achieved Interstate Water Banking - Nevada Contract with Nevada 1,250,000 642,51851% Shortage Reparations- Nevada Gifts, Grants, Donations$8,000,000 109,663100% Pinal Redirect Creditsn/a 14,125

26. Conclusions There may not be sufficient excess CAP water to meet the state’s obligation to Nevada. Funding becomes a limiting factor in both Pinal and Pima Counties. The magnitude of carryover funds in Maricopa County could become an issue in future years. Absent future appropriations, withdrawal fees will become the principle source of funding for Indian firming.