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To remedy this financial uncertainty and disparity, the City adjusted its base fee to ensure that it had the necessary funds to replace the infrastructure when needed. And because the cost of providing water and sewer service to each home is relatively the same, the base fee was applied equally to all homes - as it was done in the past. Having transparency and equity was considered an important factor in ensuring that households realized true savings as they adjusted their consumption behavior. With this action the City was able to reduce the usage rate which now reflects only the direct cost of actually pumping water to the home. Desired Outcome #2 — Encourage Water Conservation As noted above, the 2009 Rate Structure was designed to encourage water conservation in such a way that would not only reflect the goals and strategies outlined in the Imagine Roseville 2025 initiative, but also to adhere to a new state law that required water service providers to encourage water conservation. It should be noted that the 2009 conservation-based rates are designed primarily to address excessive water usage. It is not unusual to see a 4 or 5 person household use 20-30,000 gallons per quarter for general use such as personal hygiene or cooking (as evidenced by the household's winter usage). In recognition of this, the 2009 rate structure was designed to encourage conservation without unduly penalizing households for basic water use. The new law did not mandate how each service provider should structure their rates, but it did offer examples that are commonly in use, such as using increasing block rates and seasonal rates. The new rate structure adopted by the Council employs both of those measures. In analyzing customer usage behaviors, it was evident that Roseville residents were already consuming less water than residents in many other communities. This was presumably due to the fact that relativel�y few residential properties in Roseville have irrigation systems, which is in contrast to some 2"d and 3r ring suburbs. It could also stem from having a relatively smaller population per household. Secause many Roseville residents have already implemented water conservation measures, it is conceivable that the new conservation-based rate structure may produce a relatively small amount of water reduction in Roseville. At this time, we cannot determine the effectiveness of the changes. We would need to observe consumption behavior over a longer period of time, perhaps 2 years or longer. Even then, it will be problematic in pinpointing the effectiveness of the change. For example, it will be difficult to ascertain whether a particular household curbed its summer usage because it was making a conscious effort to conserve water used for irrigation purposes, or because we simply had more rain. 2009 Rate Structure The 2009 rate structure for households with comparisons to 2008 is as follows: Water Base Rate — per quarter 11; :, 11' :, ,,� . . Residential $ 13.00 $ 27.75 Residential — Sr. Rate 7.90 18.00 Page 2 of 4