2026.03.02 CC Packet - Laserfiche WebLink

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2026 Water and Sewer Rates Memo Page 2 of 4 WATER RATES Yearly water usage remains highly unpredictable. Total water pumped in 2024 declined compared to 2023 and 2022 and then slightly rebounded in 2025. These fluctuations highlight the need for an effective rate schedule that produces a stable revenue stream, regardless of annual consumption unpredictability. To meet our water budget needs, staff is recommending a 7% increase to the water base charge for all customers. This revenue will offset both annual depreciation and a portion of operating expenses. TRUE CONSERVATION RATES Water service rates are established using a conservation rate schedule, which seeks to reward low‐end users with the lowest rate while encouraging everyone to use water efficiently. All separately metered irrigation will be charged $9.25 per thousand gallons, up from $8.40 per thousand gallons. This revenue will offset a portion of operating expenses to help allow us to keep lower usage rates for low‐end water users. With the recommended rate schedule, all 4,432 residential accounts will experience an annual increase of $12.00 in their water bills due to the increase in the quarterly base charge. Of course, their quarterly bills will fluctuate based on water usage. For an average single‐family residential water user that means the proposed water rates would result in a yearly water bill of $296.00, versus $284.00 at the previous rates. MULTI‐FAMILY RESIDENTIAL RATES The city has 201 multi‐family accounts that contain 1,664 dwelling units. Prior to 2018 these accounts were billed the same as single‐family residential accounts. Analysis showed that these accounts used 45% less water since their irrigation is metered separately (and billed at the highest rate). Staff is recommending retaining just one rate level, which would be the volume rate usage tier for average residential water usage. Billing in this manner also ensures the city complies with State Statute 103G.291, Subdivision 4, which mandates that if a conservation rate is applied to multi‐family dwellings, the rate structure must consider each residential unit as an individual user. With the recommended rate schedule, multi‐family accounts will see an annual increase of $12.00 in their water bills due to the increase in the quarterly base charge. Of course, their quarterly bills will fluctuate based on water usage. COMMERCIAL AND INDUSTRIAL RATES Commercial and Industrial water users have different rates and usage levels compared to residential water users. Their rates and usage levels are determined based on Residential Equivalent Units (REUs), which measure how their usage compares to a typical household, ensuring that both categories are billed appropriately according to their water consumption. Commercial and Industrial water users will also see an increase in the base charge. The 130 accounts in this category will see an annual increase of $12.00 in their water bills due to the increase in the quarterly base charge. Of course, their quarterly bills will fluctuate based on water usage.