November 7, 2007

The purpose of this Notice is to advise Water Users and other interested parties that water orders for 2008 Option Water are due to the District with partial payment by close of business on Thursday, November 15, 2007.

2008 SWP Water Supply. This information has not changed from the prior October 11 Notice. Notwithstanding some uncertainty regarding the impact of the Wanger decision on the 2008 SWP Water Supply, a preliminary estimate of these impacts is as follows:

--Projected Final 2008 Allocation–

POE* Hydrology before decision after decision Loss to District

25% Wet 80% 60% to 70% 20,000 to 40,000 acre-feet

50% Below Normal 75% 55% to 70% 10,000 to 40,000 acre-feet

75% Dry 55% 50% to 55% 0 to 10,000 acre-feet

90% Critically Dry 35% 25% to 30% 10,000 to 20,000 acre-feet

The expected December 1, 2007 initial SWP allocation for 2008 of 25% to 30% is based on the 90% POE.

Overall Water Supplies for 2008. This information has changed from the prior October 11 Notice. The District’s investment in water banking projects and local District wells will provide additional water supplies in 2008.

There is currently a 3 in 4 chance of a 50% or greater SWP allocation. At this allocation, the District anticipates demands of 185,000 acre-feet will be met from:

SWP allocation of 50% 100,000 acre-feet

banking projects (1) 70,000 acre-feet (1)

Overall allocation of 93% 185,000 acre-feet

All demands up to the Contract Amount of Water (CAW) are expected to be met at a 50% or greater SWP allocation. For demands over the CAW, some District well capacity and Kern County Water Agency entitlement (Agency 150 Water) may be available. However, it is not known if all demands over the CAW (about 7,000 acre-feet in 2007) can be met. At a 50% or greater SWP allocation, it is anticipated that conveyance capacity will not exist to convey purchased 2008 Option Water (see below).

There is currently a 9 in 10 chance of a 30% or greater SWP allocation. At this allocation, the District anticipates demands of 165,000 acre-feet will be met from:

SWP allocation of 30% 60,000 acre-feet

banking projects (1) 70,000 acre-feet (1)

Overall allocation of 75% 150,000 acre-feet

This leaves about a 15,000 acre-feet shortage of supply to meet demands. No District well capacity will exist to meet demands over the CAW. The availability of Agency 150 Water will be limited. At a 30% allocation, it is anticipated that conveyance capacity will exist to convey purchased 2008 Option Water (see below).

The banking project and District well supplies are more costly than SWP water.

2008 SWPCA Option Water Program. If the above allocations are not sufficient to meet your demands (keeping in mind there is a 1 in 10 chance of an SWP allocation less than 30%), you should consider applying for 2008 Option Water. Enclosed find "Water User Application for SWPCA 2008 Option Water". The Application includes a Program Description and Discussion with terms and conditions that are still subject to change. Attempts to date to obtain water at $180 per acre-foot (plus pumping) have been unsuccessful. Due to conveyance restrictions in the Delta and at Banks pumping plant as a result of the Wanger decision, such water will likely only be available if the SWP allocation is less than 45%. The Application and Initial Payment of $20 per acre-foot are due to the District on November 15. You will not have to make a purchase decision until early February (or possibly later). If you choose not to purchase any of this water, a portion of the Initial Payment is refundable. However, if you do not submit the Application and Initial Payment by November 15, it is unlikely you will have access to this water at a later time as any available water is expected to be completely sold to the initial applicants. Please review the Application for further details.

Further Questions. It is hoped a better estimate of 2008 banking project recovery will be available prior to November 15. If you have questions, please call Jerry Hootman (extension 25), Mark Gardner (extension 20), or Robert Kunde (extension 21).

Very truly yours,

Wm. A. Taube

Engineer-Manager