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�� Discussion on Water Conservation Rates In January, 2009 the City instituted a new water conservation-based rate structure designed to encourage � water conservation in conjunction with the goals and strategies outlined in the City's Imagine Roseville �� 2025 initiative, as well as a new State Law that required water service providers to encourage water conservation. This law has since been amended and the City is no longer required to have conservation rates as long as they can demonstrate that aggregate water use has declined due to other measures. -_ The City created a 2-tiered rate structure that was designed to target excessive water usage as opposed to the water used for everyday household needs. It is not unusual to see a 4 or 5 person household use 30,000 gallons or more per quarter for general use such as personal hygiene, washing clothes and dishes, cooking, � etc. This is evidenced by evaluating a household's wintertime usage. In recognition of this, the rate � structure was designed to encourage conservation without unduly penalizing larger households for `normal' water use. The current water rate structure is as follows: 2012 Usage Cate or Rate SF Residential; U to 30,000 als./ tr $ 2.15 SF Residential; Over 30,000 alsJ tr — winter rate * 2.40 SF Residential; Over 30,000 gals./qtr — summer rate ** 2.65 Non-SF Rcsidential — winter rate 2.80 Non-SF Residential — summer rate ** $ 3.10 In an effort to gain a broad perspective on citywide household use, the following chart depicts the � percentage of single-family homes that fall into the current water rate categories based on usage over the � last 12 months and the 2-tiered rate structure. CURRENT % of SF Homes: % of SF Homes: Water Rate Tier Winter Summer 0— 30,000 allons er uarter 90 % 85 % Over 30,000 er uarter 10 % 15 % Total 100 % 100 % As this table indicates, under the current water rate structure, 10-15% of single-family homes are impacted by the higher rates. The Public Works, Environment, and Transportation Commission recently discussed the City's water rate structure and conservation rates. The Commission is recommending that the City move to a 3-tier system to incorporate the following breakpoints: Tier Descri tion 1 0— 16,000 allons er uarter 2 16,000 — 24,000 gallons er uarter 3 Over 24,000 gallons per quarter The threshold of 16,000 gallons between tiers 1 and 2 is based on the current average usage in a single- � family home. The Commission further recommends that the rate structure be revenue neutral so that usage rates at tiers 2 and 3 are sufficient to partially offset usage rates at the first tier. City Staff is comfortable in moving to a 3-tiered system, however the aggregate data continues to suggest that single-family homeowners are already successfully employing a variety of water conservation approaches. Page 2 of 6