BWTR Basin Water (MM)

Basin Water Inc. (NASDAQ:BWTR), announced today that it has started up a new eight million gallon per day (mgd) arsenic removal facility to deliver safe, reliable drinking water for the Baldy Mesa Water District (BMWD) of Southern California. Based on the company�s proprietary high efficiency ion exchange technology, the new facility will treat five of the District�s eight groundwater wells to levels below the federally-mandated 10 part per billion (ppb) maximum contaminant level (MCL). Low waste rates made possible by Basin Water�s technology will reduce costs and add millions of gallons of additional drinking water for the District�s customers using the same resources. The new facility, which is expandable to 11 mgd, will be complemented by a second facility that will treat up to 3 mgd of water from the District�s remaining wells. The second facility is expected to come online late this summer and will be used primarily to handle peak demand for drinking water. The first facility, located at the District�s Avenal site, will be operated by Basin Water under a 10-year lease and services program that includes capital costs as well as operation and waste disposal. Under the agreement, Basin Water is guaranteeing compliance and operating costs for the term of the contract. According to Joseph Ogg, Operations Manager for the Baldy Mesa Water District, the cooperative model used in the design, construction and operation of the new treatment facility is a key to assuring a reliable supply of drinking water at some of the lowest lifecycle costs for the customers of the District. �In contrast with a �build and handoff� approach to drinking water treatment infrastructure, the Basin Water approach to providing reliable water supplies involves guaranteed performance and guaranteed costs � based on their technology and their operational expertise,� he said. �Baldy Mesa Water District has entered into a 10-year agreement with Basin Water for our Avenal facility under which the District pays a per acre-foot fee that includes both a lease and service component, with a minimum throughput of 5,000 acre-feet/year. This is the equivalent to 1.63 billion gallons per year. This agreement includes operation and maintenance of the ion exchange system, as well as transportation and disposal of waste and handling the multiple county, state and federal regulatory issues governing that waste. This specialized type of expertise does not exist within the District today and we would find it difficult and expensive to hire a person full-time to meet this need,� he added. The Baldy Mesa Water District, located in the high desert of Southern California, is an independent special district serving the residents of the city of Victorville and San Bernardino County in the Victor Valley. The District depends on groundwater for 100% of its water supply. This groundwater has naturally-occurring levels of arsenic ranging from 8 ppb to 16 ppb. New Federal regulations covering arsenic levels in drinking water have an MCL of 10 ppb. The new facility is removing arsenic to below 4 ppb and is flexible enough to allow the District to optimize costs versus water quality goals. A new building at the District�s Avenal site houses three separate treatment trains rated at 2,000 gpm each, for a total capacity of 6,000 gpm (8 mgd). The facility is expandable to 8,000 gpm (11 mgd) with the addition of a fourth train. Waste rates, a key feature in controlling costs and maximizing the use of the District�s natural resources, are in the 0.08% range � that is a 99.92% treated water recovery, compared with waste rates that could average in the 5% range for conventional arsenic treatment technologies. According to Orlando Carre�o, Vice President, Western Region of Basin Water, the Baldy Mesa Water District project is one of the first of its kind in removing arsenic from drinking water supplies via ion exchange. �Conventional ion exchange technology is not generally considered the solution of choice for removing arsenic from groundwater because of treatment reliability and high waste rates. The Baldy Mesa Water District reviewed many arsenic removal technologies available today prior to settling on Basin Water�s high efficiency ion exchange,� he said. �Because our technology was new, we had to prove its viability in the field for Baldy Mesa. This project involved a pilot-scale study that removed arsenic to non-detect levels and a demonstration facility that we ran for an entire year to prove the efficacy of our technology. The demonstration system, which went online in 2004, was the first arsenic removal system permitted in the State of California. We are excited about the opportunity this technology and our services offer the more than 3,000 communities in the United States who must treat their drinking water for arsenic,� he added. A second facility built by Basin Water at the District�s La Mesa facility is near completion and is expected to go online in September. This is a smaller facility (2,000 gpm/3 mgd) that will treat two of the District�s remaining wells and blend a third to reach the MCL levels required. For La Mesa, the District purchased the high efficiency ion exchange system outright from Basin Water. It will pay for water services under an operations & maintenance agreement based on acre-feet produced. This flexible approach to financing allows the District to make optimum use of its capital assets. According to Doug Matthews, Engineering Manager, for the District, the start up of the Avenal facility represents the successful culmination of a process that was set in motion in 2001 when the United States EPA lowered the MCL for arsenic in drinking water from 50 ppb to 10 ppb. �When the new regulations were first promulgated, a lot of us in the industry were concerned about meeting them, because there were no really good technological solutions. We�ve come a long way,� he said. �In the space of a few years.� �Basin Water has helped the Baldy Mesa Water District move from pilot-scale studies to full compliance without excessive capital outlay or investment of staff. Because we are working with a single company to build and operate our facility, we have established a clear line of responsibility for the performance of the facilities. We have also assured the future of our water treatment capability. The combination of optimized, versatile technology and a cooperative business model is a very effective approach for us,� he added. About Basin Water Basin Water, Inc. is a provider of reliable, long-term sources of water for many communities, which includes designing, building and implementing systems for the treatment of contaminated groundwater. Basin Water employs treatment technologies including its own proprietary, scalable ion-exchange wellhead treatment system which reduces groundwater contamination levels in an efficient, flexible and cost effective manner. Additional information may be found on the company's web site: www.basinwater.com. Forward Looking Statements This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, including expectations relating to future revenues and income, the company's ability to gain new business and control costs, involve risks and uncertainties, as well as assumptions that, if they prove incorrect or never materialize, could cause the results of the company to differ materially from those expressed or implied by such forward-looking statements. Actual results may differ materially from these expectations due to various risks and uncertainties, including: the company's limited operating history, significant operating losses associated with certain of the company's contracts, the company's ability to improve its business processes, the company's ability to consummate any acquisitions of water resource projects and convert non-potable water into drinking water supplies, the company's ability to identify and consummate acquisition opportunities that improve the company's revenues and profitability, significant fluctuations in its revenues from period to period, its ability to effectively manage its growth, the success of the company's strategic partners, its long sales cycles, market acceptance of its technology, the geographic concentration of its operations and customers, its ability to meet customer demands and compete technologically, the company's ability to protect its intellectual property, regulatory approvals of the company's systems, changes in governmental regulation that may affect the water industry, particularly with respect to environmental laws, the company's ability to attract and retain qualified personnel and management members and the company's ability to manage its capital to meet future liquidity needs and the timing of the company's stock repurchases, if any. More detailed information about these risks and uncertainties are contained in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended December 31, 2006 and Quarterly Report on Form 10Q for the quarter ended March 31, 2007. The company assumes no obligation to update these forward-looking statements to reflect any change in future events.