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Water Utility 17 Conservation Rate Water utilities have traditionally relied on increased capacity to meet their Structure growing needs for additional water resulting from population growth and economic development. However, utilities are increasingly looking to conservation as an alternative strategy. This change in philosophy is the result of several factors including: • Growing competition for limited water supplies; • Increasing cost and difficulties in developing new water supplies; • Increasing cost of capacity expansion; • Increasing cost of water treatment and testing; • Statutory requirements for increased water supply permits; • Growing public support for the conservation of our natural resources. The City is required to complete a water emergency and conservation plan every 10 years. Included in this plan, the City must explain current water use trends and how they will address conservation in the future. The current average use per resident in the City is 86 gallons per day (gpd). The City's goal is to achieve an average consumption per user of 75 gpd. A conservation rate structure is projected to help the City achieve this goal. A conservation rate structure provides a financial incentive for users to reduce demands based upon the general economic theory that demand for a commodity decreases as its price increases. Water conservation rates generally involve one of the types listed below: • Increasing block rates where the marginal cost of water to the user increases in blocks of usually two or more steps as water use increases. • Flat rate where the cost of water is the same regardless of consumption. • Seasonal pricing where the cost of water consumed during the season of peak demand is charged at a higher rate than water consumed in the off -peak season. The City currently tracks consumption patterns for the following eight types of users: residential, commercial, industrial, institutional, prison, church, school, and irrigation. The total annual consumption by user type for 2006 is shown in the chart below. • Fasidential • Commercial ❑ Industrial ❑ Institutional • Fhison ❑ Church ▪ Sol-xxil ❑ Irrigation City of Lino Lakes, Minnesota. Water and Sewer Study