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Mr. Neal Beets, City Manager City of Roseville -- December 30, 2002 4) On page 6, the study cites Roseville using depreciation to represent its capital improvement program. It is our opinion, because of oseville's main break rate (which is higher than in Saint Paul), that the capital needs program is understated by this method, making a comparison between Saint Paul's two offers incorrect. Saint Paul's acquisition offer includes a capital program for pro-active main replacement long -term, which will reduce breaks and save costs of street repairs, employee overtime, and means less inconvenience to your customers. I believe your depreciation amount is about 1 0,000 /year and we indicated an investment level of probably 00,000/gear (however, we may not be referencing the right information as this difference doesn't seem to be accounted for in the study), 5) On page 26, the study mentions that other costs of city operations are included in the cost of water for Roseville. From our analysis, this cost appears to be in the vicinity of 20 percent of the water rates to the Roseville cu s tome- (as explained in our letter of offer dated Jul} 19, 2001 where we compared the actual casts of the two offers for the consumer) . Again, we are making an analysis here based on our interpretation of your documents and may be missing something. 6) On Table 1 -5, the left-hand column is identified incorrectly. Those are {'retail's outside of City of Saint Paul rates not "wholesale" outside of City of Saint Paul rates, The error is carried to page 17. 7) The mention of Board representation under Option No. 2 is missing, 8) On page 22, Table v1 -10 shows the prernium rates for 2005 -2009. Those were in Saint Paul t s offer to provide revenue to cover water main improvements and other infrastructure improvements where Roseville' s system i s not maintained to Saint Paul a s standard. The actual operation dollar amount should be at 100 percent Saint Paul rates and used accordingly. As was offered to the other suburbs} it would be Roseville's option to do the capital improvements needed on your own and be charged Saint Paul rates immediately. (we probably failed to mare this clear.) It is our hope you would look at how these questions and concerns affect the difference between our two offers. If we need to discuss these items further, please let us know,,