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Senator Senate John Marty State of Minnesota February 23, 2009 Mayor Klausing and Roseville City Council 2660 Civic Center Drive Roseville, MN 55113 RE: New Utility Billing Formula Dear Mayor Klausing and City Council Members: A recent letter to Roseville residents included with water bills mentions a state environmental law requiring municipalities across Minnesota to promote water conservation through rate structure and uses this law as justification for the new rate structure chosen by the city. However, the change in rates move the city further away from aconservation-based system than the old rates, in direct violation of the law's intent. In effect, the cost increases fall disproportionately on the shoulders of residential customers who conserve while wasteful consumers and larger commercial customers may actually see their bills decrease. The intent of Minnesota's new water conservation law is to protect our one of our most precious natural resources by increasing costs as usage goes up. The Department of Natural Resources says that is achieved by creating a billing system with multi-tiered rates with a 25% to 50% rate difference between each tier. In this area, Roseville's new structure fails on all accounts: 1. there are only two billing levels, 2. commercial customers are excluded from usage-based rates, and 3. the difference between the two tiers is nominal. Furthermore, small-volume consumers see only a nominal savings if they are in the lowest category because a disproportional amount of their bill is a flat fee, subverting the financial incentive to save water. In this case, the large fixed-rate makes small- users pay far more per 1000 gallons used than larger customers (please see attached chart). Under the new rate structure a residential customer in Roseville using 5000 gallons pays $7.40 per 1000 gallons of water. In contrast, a customer using 50,000 gallons pays only $2.55 per gallon. This directly violates the intent of the state law. As you can see in the attached chart, customers that use more than 50,000 gallons or more per billing period will actually see their-bills decrease under the new system. This is because the majority of the increases were applied to the flat rate instead of the usage-based rate. State Capitol, St. Paul, MN 55155-1606 (651) 296-5645 jmarty@senate.mn