Dear Shareholders,

It has been a busy year.

We had many unresolved issues facing us in 2015. Water Supply Our water supply at that time was coming from our main well #3. It was recovering from the previous summer usage, but slowly, and we were heading into a fourth year of drought.

Our well exploration efforts had not produced promising results, and we were finishing up the last exploration well, and found that it interfered with another already developed well down the road. Two wells out of 9 test wells were deemed to be worth holding on to, and one, near the Moose Lodge, was planned to be completed in late 2015.

This well #4, should add 50 gallons per minute to our water production. It will be operational in February of 2016. Well #5 is on hold for development at this time. Two alternative water sources were left, and we increased our efforts to investigate these. UWPA This option would be a connection at Hunters Dam in Avery that would pump surface water to our Treatment Plant.

The cost for this project was deemed to be prohibitive. CCWD Water Purchase Agreement This option was pursued aggressively, and by October, we had a signed agreement to purchase water from CCWD.

We are now able to buy one half of our water demand ( up to 100,000 gallons per day ) from CCWD at a reasonable rate, allowing our wells to recover enough to supply us for the summer months if necessary. A pathway is also in the agreement, that allows us to purchase 100% of our demand from CCWD if our main well stops producing.

Drought With our water supply in doubt in the Spring of 2015, I recommended that all outside watering be suspended until conditions improved. The Governor had set a cutback of water use to 25% of 2013 usage, and you shareholders responded with an amazing effort in some months reaching a whopping 40% + water savings over 2013.

This water savings made it possible for our wells to supply our demand through the summer months, and when we started buying water from CCWD in November and the drought restrictions were reduced. The rainy season for 2015/2016 is starting off well, with good precipitation including promising snowpack, but we will have to see what the next few months hold, before making a determination on drought restrictions for 2016.

Water is more precious than ever, and our field crews will continue an aggressive approach to leak detection, and waste. Infrastructure Improvements With our water supply problem somewhat under control, attention was turned to improving our aging infrastructure. Over the years, various projects were done to enlarge and relocate the old undersized water mains. There is still about a third + to do. In 2013 a Water Master Plan was prepared by Luhdorff and Scalmanini, our engineering firm to prioritize and determine the cost to upgrade our system, including installing water meters on every connection.

The Long Range Planning Committee is using this Master Plan to determine the best way to finance these upgrades. Water Consumption Numbers 2015 usage was the lowest in the 28 years that I have worked for this company.

I had to report our usage numbers to the State Water Resources Control Board and I noted to them how proud I was of your conservation efforts last year. You came through with fantastic water savings when we needed it, so thanks to everyone who conserved in 2015.

Total Usage 2015

37,293,000 gallons 2014 46,258,000 gallons = 19.3% savings

2013 56,114,000 gallons = 33.5% savings

David Hicks
General Manager
Blue Lake Springs Mutual Water Co.
P.O.Box 6015, Arnold, CA 95223
Ph: (209) 795-7025

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