5.2. ERMUSR 01-15-2008 - Laserfiche WebLink

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The design of proposed 2008 2-Tier and 3-Tier rate structure is approximately cost neutral where both structures produce approximately the same revenue at $2,210,000 resulting in a 6% rate increase from 2007. The effect on individual water customers with high summer usage is much higher. The attached spreadsheet reflects usage pattern and resulting cost for selected high use customers. We are proposing the 3-Tier rate to be only $.50 higher than the second tier for the following reasons. Typically we have raised rates or changed rate structure to gradually increase rates and avoid large rate fluctuations. The concern I have is raising rates to fast and too far to promote conservation; the effected customer may explore other alternatives such as constructing their own well. The customers affected most have the resources to drill irrigation wells. As you may recall from last year's ISD 728 irrigation well issue, the Minnesota Department of Health controls the construction of new wells not the local government such as county or city. The DNR only gets involved if the water withdrawn exceeds one million gallons but nobody really monitors the withdraw quantity for the small wells. If we push too hard, a water user could drill their own well, circumventing our intended conservation measures and we would lose the associated revenue. The proposed 3-Tier structure hopefully provides a good balance.