T A R I F F    S C H E D U L E


WATER CONSERVATION

APPLICABILITY:

           All customers served by the Company's Casa Grande System.

PURPOSE:

           Pursuant to the provisions of the Management Plans for the First and Second Management Periods for the Pinal Active Management Area (adopted in accordance with the Groundwater Code, A.R.S. Section 45-401, et seq.), the Company is required to implement a water conservation program in its Casa Grande System which is in the Pinal Active Management Area. By agreement dated July 16, 1991, the Arizona Department of Water Resources and the Company agreed to a water conservation program which incorporates a maximum gallons per capita per day ("GPCD") rate for the Casa Grande System.

           The Arizona Corporation Commission, the Arizona Department of Water Resources, and the Company recognize that the GPCD rate adopted for the Company's Casa Grande System can only be achieved through conservation by the Company's Casa Grande System customers. The purpose of this Tariff Schedule is to implement the required GPCD rate and the water conservation program and other measures necessary to achieve compliance with the GPCD rate.

SPECIAL PROVISIONS:

           1.   This Tariff Schedule incorporates and is subject to the terms and conditions of the Stipulation and Order on Review in that certain matter entitled "In the Matter of the Management Plans for the First and Second Management Periods for the Pinal Active Management Area," entered into by Arizona Water Company and the Arizona Department of Water Resources on July 16, 1991, and the terms and conditions of the "Water Management Program--Arizona Water Company/Casa Grande System" included therein.

           2.   The total annual GPCD rate as required in the First Management Plan, and the portion of the Second Management Plan covering calendar years 1992 through 1999 for the Pinal Active Management Area, adopted by the Arizona Department of Water Resources shall be 281 GPCD for the Company's Casa Grande System customers starting with calendar year 1993 and continuing through 1999.

           3.   The Company's water conservation programs described in the "Water Management Program--Arizona Water Company/Casa Grande System," reference to which should be made for all pertinent purposes, implemented as set forth therein, shall remain in effect until at least January 1, 2000.