[HollyMutual-Announce] System Status Update

[Mark Derbyshire]

All:

Since June 17th we have been providing service to most Holly Mutual
shareholders using only the Piedmont Well. As expected, running without
the Whitehall Well means we often exhaust the Piedmont Well's pumping
and storage tank capacities. For example, today we ran out of water
before 7:00 am. When this happens the Piedmont distribution pumps should
automatically turn off until the storage tank is again partially full.
Thus if you are scheduling your irrigation company to perform any work
requiring water pressure, we're suggesting you do this sometime around
2:00 pm or later, which provides a decent chance for the Piedmont Well
to recover from the morning irrigation demand.

Earlier this week we completed our leak diagnostic testing. The results
were a bit ambiguous, but rather conclusive that we have a major leak
under Whitehall Dr, as originally suspected. There might be a secondary
problem just south of Whitehall Dr, but that could simply be simply a
lack of a precise understanding of how the system was originally
installed. The bottom line is the only way we can restore the Whitehall
Well to operation is to deal with the leak. Past experience has shown
that chasing leaks under a road is expensive, and we have a reasonable
evidence that a long section of pipe under Whitehall Dr is badly
corroded. The board has been considering options to fix the leak and
minimize the chances for future leaks. We have consulted with CWW and
now have their recommendation for a minimally invasive repair that
should allow us to abandon the deteriorating pipe under Whitehall Dr,
and return the Whitehall Well to service.

I am sorry this has taken such a considerable amount of time to get to
this point. Because our early leak testing exposed the fact we had
largely inaccurate information about the pipeline configuration in this
area, the board had serious concerns that we could spend a lot of money
excavating and get nothing in return. The Holly Mutual System was
constructed 63+ years ago and by 1990 at the latest, virtually all of
the original construction plans were lost. We have searched through the
company's historical records, looked over the Denver Water installation
plans, and contacted the city of Cherry Hills Village and other
entities. Unfortunately these efforts only uncovered tiny clues.

In response we had a significant outpouring of support from our
shareholders, who dug through their historical files and found the
critical pieces to the puzzle. From these we constructed a much more
accurate map of our pipeline and valves. This proved valuable when we
recently installed a valve on Plateau Dr that allowed us to partially
restore the system to operation. Our previous understanding of the
pipeline location there was 200-250' from where it actually was. The
help from shareholders saved us the cost of excavating potentially
hundreds of feet of a trench. Thank you! During this process we also
discovered numerous cutoff valves we didn't know existed, including at
least one that was closed that should have been open. Without this
information we would not be able to even partially run the system.

To move forward we need more cost information from our excavator, and if
this proves reasonable, we will have to get the work scheduled. This
means we still have at least 1-2 weeks before we can restore full system
operation. Once we have this better lined up, the board will plan and
announce our first virtual shareholders meeting. We will given everyone
at least 30 days of notice for this.

Cheers,
Mark Derbyshire