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Ce <br />gada <br />51.5 Little Canada Road. Little Canada, MN 551 17 -1600 <br />(65 1) 766 -4029 / FAX: (651) 766 -4048 <br />ww- w.ei.little- canada,inn.us <br />February 28, 2003 <br />Mr. Bernie R. Bullert, General Manager <br />St. Paul Regional Water Services <br />400 Commerce Building <br />8 4th Street E <br />St. Paul, MN 55101 -1007 <br />Dear Mr. Bullert: <br />MAYOR <br />Michael 1. Fahey <br />COUNCIL <br />Jim LaValle <br />Matt Anderson <br />Rick Montour <br />Bi11 r3lesener <br />ADMINISTRATOR <br />Joel R. Hanson <br />Thank you for meeting with me to discuss the possibility of Little Canada joining in a <br />permanent partnership with SPRWS whereby your organization would own and operate <br />the water system serving our residents. We are interested in continuing to explore this <br />option with a final decision to be reached within this calendar year. Based on the concept <br />you have outlined, we believe it has possibilities. <br />However, the purpose of this letter is to address the interim situation until a decision is <br />reached on a permanent relationship. Specifically, we believe the rate being charged to <br />Little Canada should be lowered to 74.5% of the St. Paul residential rate. The basis for <br />our request is as follows: <br />• It is my understanding that is the offer you have made to the City of <br />Roseville (another wholesale customer) for the renewal of their contract is <br />at 74.5% of the St. Paul rate. Roseville's current rate, according to my <br />sources is lower than this percentage and I'm aware they are seeking a <br />lower cost than that offer. <br />• SPRWS has been basing its rate structure on flat, per unit charges without <br />volume discounts for the past number of years. The rationale for this <br />philosophy is that larger volume users do not lower the cost of production <br />given the size of your operation. Therefore, Little Canada's per unit <br />charge to purchase water from SPRWS should be the same as other similar <br />users. <br />• Little Canada's current rate structure with SPRWS has averaged 87% of <br />the St. Paul rate versus the 74.5% offer to Roseville! This results in <br />inequitable treatment of our customers when you consider the previous <br />bullet point. (The savings to us would be about $86,000 based on 2002 <br />purchases.) <br />- 1 4 - <br />