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~G~ ~~K~u-~f' Public Copy Date: 2/23/09 Item: 15.a Water Rate Structure Attachment Conservation Rates Minnesota Statutes, section 103G.291, was amended in 2008 to include a requirement for public water suppliers serving more than 1,000 people to adopt a water rate structure that encourages conservation: Minnesota Statutes, section 103G.291, subd. 4. Conservation rate structure required. (a) For the purposes of this section, "conservation rate structure" means a rate structure that encourages conservation and may include increasing block rates, seasonal rates, time of use rates, individualized goal rates, or excess use rates. The rate structure must consider each residential unit as an individual user in multiple-family dwellings. (b) To encourage conservation, a public water supplier serving more than 1,000 people in the metropolitan area, as defined in section 473.121, subdivision 2, shall use a conservation rate structure by January 1, 2010. All remaining public water suppliers serving more than 1,000 people shall use a conservation rate structure by January 1, 2013. (c) A public water supplier without the proper measuring equipment to track the amount of water used by its users, as of the effective date of this act, is exempt from this subdivision and the conservation rate structure requirement under subdivision 3, paragraph (c). In addition, Minnesota Statues, section 103G.291, was further amended to read: Subd. 3. Water supply plans; demand reduction. (c) Public water suppliers serving more than 1,000 people must employ water use demand reduction measures, includine a conservation rate structure as defined in subdivision 4 paragraph (a unless exempted under subdivision 4 paragraph (c) before requesting approval from the commissioner of health under section 144.383, paragraph (a), to construct a public water supply well or requesting an increase in the authorized volume of appropriation. Demand reduction measures must include evaluation of conservation rate structures and a public education program that may include a toilet and showerhead retrofit program. Public water suppliers serving more than 1,000 residents will need to adopt a conservation rate structure before requesting well construction approval for a public water supply well or before requesting an increase in permitted volume for their water appropriation permit. Examples of Conservation Rates: Below are examples of rate structures that encourage conservation. Many variations and combinations of these examples are possible. NOTE: Rate structures often include a service charge (base rate) and a volume based charge. Service charges may cover fixed costs (capital improvements) and the volume charge is often for operation and maintenance costs. Volume charges usually use units of 1,000 gallons or 100 cubic feet (748 gallons). Increasing Block Rates: Cost per unit increases as water use increases within specified "blocks" or volumes. The increase in cost between each block should be significant enough (25% or more and 50% between the last two steps) to encourage conservation. Example: 0-6,000 gallons = $2.50/1000 gallons. 6,000-12,000 gallons = $3.15/1000 gallons. 12,000-24,000 gallons = $4.00/1000 gallons. Above 24,000 gallons = $6.00/1000 gallons. Seasonal Rates: The rate per unit increases in the summer to encourage the efficient use of water during peak demand periods caused by outdoor water uses. Seasonal rates can take the form of a surcharge added to the normal rate or a separate fee schedule for winter and summer periods. Example: Surcharge method - $1.00/1000 gallons is added on top of the regular fee schedule for all water use between May 1 and October 1. Page 1