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Spr ngsted MEMORANDUM TO: Mayor Bergeson City Council Members Gorden Heitke Al Rolek FROM: Patty Kettles DATE: March 31, 2008 SUBJECT: Revised Water Rate Structure Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2887 Tel: 651 - 223 -3000 Fax: 651 - 223 -3002 www.springsted.com Based on discussions following the submission of the Water and Wastewater Utility Rate Study, we have developed a revised water conservation rate structure. The revised structure includes separate blocks and rates for residential and non - residential customers. In addition, separate blocks were created for non - residential domestic /processed and irrigation use. The goal of the revised rate structure is to encourage conservation by reducing excessive irrigation use, while being mindful that much of the non - residential domestic water use is non - discretionary. The following assumptions were made in determining the revised rate structure: • Revenue requirements are $1,150,000. Revenue includes only charges for consumption and does not include the flat $10 per residential equivalent unit (REU), hook -up charges, or water meter sales. • Lino Lakes Public Service Department provided Springsted with 2006 water usage data by quarter for all non - residential accounts with one meter. In order to differentiate between domestic and irrigation use, it is assumed that all water consumed in quarters 3 and 4 that was above their maximum use in quarters 1 and 2 is for irrigation. • Non - residential users that currently have only one meter will install a second deduct meter to avoid paying residential rates. After reviewing the 2006 quarterly usage data for each non - residential account with one meter, if it was determined the customer does not use irrigation water, the revenue for these accounts were calculated using the non - residential domestic block rates. • For non - residential accounts that already have two meters, the data provided by Lino Lakes Public Service Department distinguished domestic and irrigation water consumption; therefore, no assumptions were required to differentiate between domestic and irrigation water use. • The rate structure would promote conservation, thereby decreasing excessive water use. o There would be a 20% reduction in residential water use (based on 2006 consumption data) for all water consumed over 40,000 /quarter. o There would be a 40% reduction in non - residential irrigation use over 40,000 gallons in quarters 3 and 4, the primary quarters irrigation would occur. • Irrigation of city parks was factored in at the irrigation rate blocks. Public Sector Advisors •