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MEMORANDUM <br />DATE: August 17, 2009 <br />TO: Mayor and Councilmembers <br />FROM: Mike Mornson, City Manager <br />Roger Larson, Finance Director <br />ITEM: TIERED WATER RATES <br />Overview: <br />Minnesota Statutes, section 103G.291 was amended to include a requirement for public <br />water suppliers serving more than 1,000 people to adopt a water rate structure that <br />encourages conservation. <br />To comply with the law, effective 01/01/2010, Cities must implement a tiered system of <br />water rates that charges a higher rate per unit as water usage increases. The conservation <br />rates are for all user groups including residential, multi -family and commercial users of <br />water. <br />The implementation of a tiered system is being administered by the DNR. Their <br />recommendation includes that to encourage conservation of water, the cost should be <br />significant between tiers. <br />Currently, St. Anthony has a uniform rate structure where the cost per unit ($2.60 per <br />1,000 gallons) is the same regardless of the volume used. An example of tiered water <br />rates would be as follows: <br />0 — 15,000* <br />15,001 — 22,500 <br />22,501 — 30,000 <br />Over 30,000 Gallons <br />*Minimum bill = $7,500 Gallons <br />$2.60 per 1,000 Gallons <br />$2.86 per 1,000 — 10% increase <br />$3.22 per 1,000 —12.5% increase <br />$3.70 per 1,000 — 15% increase <br />To develop a tiered structure for St. Anthony, staff preformed an analysis of water <br />consumption for the past two years. The following is a breakdown of the average <br />residential water usage per quarter: <br />Gallons <br />0-7,500 <br />7,501 <br />— 15,000 <br />15,001 <br />— 22,500 <br />22,501 <br />— 30,000 <br />Over <br />30,000 <br />389 Minimum Bill <br />653 Tier I <br />593 Tier II <br />319 Tier III <br />229 Tier IV <br />2,183 <br />34 <br />j <br />