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5.3. ERMUSR 08-12-2008J Elk River -^~ Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 August 6, 2008 To: Elk River Municipal Utilities Commission Jerry Takle John Dietz Jerry Gumphrey From: Bryan Adams Subject: Water Rates Phone: 763.441.2020 Fax: 763.441.8099 At our July 2008 meeting, John Dietz indicated he received a call from a concerned citizen about our water rates. This person felt our rates were too high. At the August 4th Elk River City Council meeting, this citizen along with another citizen again expressed that they felt our rates were to high especially for those who sprinkle their yards. Attached is the following information for your review. 1) Copy of e-mail from this concerned citizen. 2) Expanded water rate survey from 12 communities. 3) Well drawdown data for Elk River wells for 2007-2008. 4) Monthly pumpage and maximum daily pumpage graphs of Elk Rivers system for years 2007 & 2008. 5) 2008 Water Budget Summary and P & L Summary of operations for years (2002 through 2007) from our recent audit. 6) Copy of State of Minnesota law change chapter 363 requiring conservation rate structure. 7) DNR Water Appreciation Permit (note: paragraph 11 requires conservation). I offer the following comments about the above. #1 & #2) The survey the customer supplied is accurate as far as it went. If you look at our expanded survey, it reflects a different picture. The rate structures for these cities, show a large variation and Elk River looks more in line with other communities. The higher use meters that do lawn sprinkling pay proportionally more due to the inclining block rates. This is done by design. Minnesota legislative and our DNR permits require inclining block rate structure (see items 6 & 7 above). Utilities using a flat rate structure will be changing in the near future. #3 Well drawdown is becoming a larger concern. We are paying more attention to our aquifer levels to ensure we are not over pumping our wells. The reason for this concern is the large water withdraws in the summer due to lawn sprinkling. #4 The daily and monthly pumpage graphs reflect a large disparity between winter and summer usage again from lawn sprinkling. Of the 8 wells and 4 water towers on our system, 5 wells could be taken off line and 1 water tower is taken off line in the winter because they are only needed to support the sprinkling requirements. This represents approximately $6.5 million of infrastructure investments being utilized only 5-6 months of the year. Another reason our inclining block rate structure reflects the true cost of water. #5 The water department budget reflects little if any positive margins. If the $2.5 million budget, $2.18 million comes from water sales while approximately $650,000 is P & I on current debt. Our water rates are set to capture only the amount of money we need to meet our financial objectives. 4dams, Bryan From: Zehringer, Vance Sent: Thursday, July 31, 2008 10:40 AM To: Adams, Bryan Subject: FW: Water price in Elk River Bryan, heads up in case you want to be there -----Original Message----- From: STEPHANIE ZACZKOWSKI [mailto:mayorer@q.com] Sent: Thursday, July 31, 2008 9:52 AM To: Zehringer, Vance Subject: RE: Water price in Elk River Vance, Thanks for the boat ride. It was great! I have invited Mr. Russell to come to the council meeting on Monday and talk on open mike or during the discussion - if we put it on the agenda. Stephanie Subject: RE: Water price in Elk River Date: Thu, 31 Jul 2008 09:04:25 -0500 From: vzehringerCa~elkriverutilities.com To: mayorer(a~q.com This is the same party that Bryan has been dealing with, so I forwarded it to him for a response. We are presently in the piddle of a water rate study so it would be premature for me to respond. -----Original Message----- From: STEPHANIE ZACZKOWSKI [mailto:mayorer@q.com] Sent: Wednesday, July 30, 2008 2:30 PM To: Zehringer, Vance Subject: Water price in Elk River Vance, It would be good if you would respond to Mr. Russell. Send me a copy so that I can understand the issues better too. Thanks, Stephanie Subject: FW: Water price in Elk River Date: Mon, 28 Jul 2008 15:24:29 -0600 From: Todd.RusseHCallancfeslr:corrr> To: mayorerCa~q.coa~x . What is the cost to the citizens of Elk River for Elk River Municipal Utilities to conserve water? And where is the extra money going? i Today if you get your water from Elk River Municipal Utilities you pay $1.50 for the first 9 units (9000 gallons of water) $3.50 for 10 to 15 units of water and $4.00 for all water above 15 units. This is ridiculous when you look at other communities around Elk River. If you use the data from the article "Worries over Water" from the July 23 issue of the Star News some people use 40000 gallons of water or 40 units. In Elk River that would cost about $134.00 compared to - Ramsey: $29.40 for 3 months (includes 15 units) or $9.80 for the first 5 units per month $1.98 for 15 to 25 units $2.02 for 25 to 50 units $2.04 for 50 to 100 units $2.06 for 100 to 150 units So in Ramsey that same 40 units would cost (120 units for 3 months would be 236.86 (which includes all other fee's not just the water)) $78.95 per month. Rogers: $1.42 per unit any amount So in Rogers 40 units would cost $56.80 Coon Rapids: $1.50 per unit, any amount So in Coon Rapids 40 units would cost $60.00 Otsego: $.0015 per gallon or $1.50 per unit So in Otsego 40 units would cost $60.00 Anoka: $.0102 per cubic ft or 1.36 per unit So in Anoka 40 units would cost $54.55 They state that the per day usage of water jumps from 1.5 million gallons in the winter to 7 million gallons in the summer. So for some rough calculations the people of Elk River pay Elk River Municipal Utilities $2,250 a day for water in the winter (1500 units times $1.5 per unit) and $22,875 a day in the summer (5500 units @$3.75 plus $2,250). If you look at the numbers they are collecting about $20,000 a day more in the summer. So in a 1 month time that is $620,000. Where is the extra money going??? If we paid $1.5 per unit (which I can not believe they are loosing money on our first 9 units) that same 7 million gallons a day would cost $10,500 per day or $315,000 per month. Again I ask where this extra money is going. Because Bryari Adams of Elk River Municipal Utilities believes there will be a water shortage in the next generation or two, the citizens of Elk River need to pay more for there water than the surrounding communities by in most cases more than double? Why is Elk River the only one that is charging this much for water? In the July 23 Star News Bryan Adams talks about how to conserve water, if I were to water the amount that he is saying i would not be saving water, but using more. When looking at the picture of the Mt. Simon & Hinckley Formations, it looks to me that most of the Twin City metro area pulls from the same water source, so is Elk River really going to make a difference? Todd Russell Systems Engineer LANDesk, an Avocent Company email: todd.russellna,landesk.com mobile: 763-486-5264 office: 763-390-7895 Elk River Municipal Utilities 2008 Water Rate Analysis Approximat e Monthly Water Bill Winter Summer Irrigation Winter Summer Community Rate Structure Residence_ Residence Meter Industrial Industrial 8 units 45 units 600 units 1080 units 1850 units Albertville Base $9.75/quar t $18.8 5 $107.25 $1,737.95 $3,148.70 $5,412.50 0-10, 000 $1.95 _ 10,000-20,000 $2.20 20,000-35,000 $2.40 35,000-50,000 $2.65 >50,000 $2.94 Becker Base $5.88 $21.56 $108.91 $1,568.84 $2,778.72 $4,803.82 0-3000 $1.96 3000-40,000 $2.28 40,000-100,000 $2.63 Big Lake Base $4.00 $18.80 $87.25 $1,114.00 $2,001.00 $ 3,426.50 flat rate $1.85 _ Cambridge Base $10.28 $35.28 $177.28 $2,397.28 $4,317.28 $7,397.28 0-6,000 $3.00 6,000-20,000 $3.50 >20,000 $4.00 Coon Rapids Base (Estimate) $7.00 $18.20 $70.00 $847.00 $1,519.00 $2,597.00 Flat Rate $1.40 Elk River Base $6.50 $18.50 $161.00 $2,381.00 $1,690.00 $3,640.00 0-9, 000 $1.50 9,000-15,000 $3.50 > 15, 000 $4.00 For Industrial -Ste ps will vary d ependent on winter usage Minneapolis Base (Estimate) $7.00 $36.60 $173.00 $2,227.00 $4,003.00 $6,852.00 Flat Rate $3.70 Otsego Base $3.00 $15.00 $70.50 $903.00 $1,623.00 $2,778.00 Flat Rate $1.50 Princeton Base $13.50 $47.90 $240.50 $3,237.50 $5,829.50 $9,987.50 0-8,000 $4.30 8,000-20,000 $4.80 > 20,000 $5.40 Rogers Base (Estimate) $7.00 $18.36 $70.90 $859.00 $1,540.60 $2,634.00 Flat rate $1.42 Ramsey Base $29.40 $29.40 $89.60 $1,221.70 $2,200.90 $3,771.70 0-15,000 in Above _ 15,000-25,000 $1.98 25,000-50,000 $2.02 50,000-100,000 $2.04 St. Cloud Base (Estimate) $7.00 $37.08 $176.20 $2,263.00 $4,067.80 $6,963.00 Flat rate $3.76 Zimmerman Base (Estimate) $7.00 $29.40 $133.00 $1,687.00 $3,031.00 $5,187.00 Flat Rate $2.80 In Elk Rivers' case ,because the high summer water usage from lawn sprinkling causes large expenses, the rate structure is designed to pass on these expenses to the lawn sprinkling custo mers. 2008 Minnesota legislative session, state law was inacted to require water utilities to utililize inclining block rates by the year 2010 (verify date). The DNR highly encourages inclining block rates . Wate rRrate Comparison 2008 Elk River Municipal Utilities Well Drawdown for years 2007 - 2008 Well # Lincoln Johnson Static Level Winter Static Level Summer Pumping Drawdown Puml 2007 2007 2008 2007 2008 Level 2 Flowing 26 28 52 3 10.5 36 42 75 4 5 6 Flowing 74 21.6 24.5 20 94.5 85 35.8 40 41 120 61 7 16.3 33 43.4 96 8 12.1 37 54.5 58 9 8 48 49.3 77.7 38.3 120.4 57.4 109.4 73.4 52.2 I 8 I 18 I 57 59 Conclusion We are pumping 10% +/- water in 2008 than in 2007 but static and pumping levels in 3 well are more in 2008. Lincoln and Johnson monitoring well reflect general lowering of ground water in the summer months. When the Winter static water levels decrease over time or the Summer static drawdown does not return to the winter static levels is a indication of serious aquifer degradation. Continue to monitor. 60 95 68 168 100 213 153 160 140 120 0 100 ~o 0 80 c 0 = 60 40 20 0 ^Seriesl ^ Series2 8 Maximum Daily Pumpage 2007 & 2008 6 o S ~o c~ 0 4 o_ ^Seriesl = 3 ~ ^Series2 2 1 0 ~a~Ja~ e~~J~~ ~~~r PQ~\ ~aJ >J~~ ,J\~ J~Jy~ e~~~c O`~o~~c ~~~~~t ~~~~~t ~ P ~~Q~' ~o ~e QQ tS ~J > ao 0 ~ ~~ P eQ~ O o, e~ c, ~ O ELK RIVER MUNICIPAL UTILITIES SUMMARY OF YEAR 2008 BUDGETS WATER BUDGET SUMMARY 2008 WATER REVENUE 2,585,837 WATER EXPENDITURES 2,378,401 WATER NET FOR CAPITAL 207,436 DEBT RETIREMENT 395,000 GROSS (187,564) CAPITAL PROJECTS 929,500 BONDING NET (1,117,064) DEPRECIATION 901,250 NET TO RESERVES (215,814) BUDGET SUMMARY2008 c., r~ ~o ~ ~ o ~ o r ~ °\ ~ ~ ~ 0 0 0 0 O M V ~ O O O O m 0 0 0 0 O ~ r C'~ GO N N N ~ O O O O O p a N O r O ~ ~ O V r O O O O O O ~ ~ N r a O O O O O O N N '_' l'J ~ r~ t~ O O cr 0 0 `7 ~O r N r~l 09 v9 69 N o0 -~ p~ ~~ p o ~ r a P ~! ~ O ~ ~ _ ~ O O O O O C C a a 0 O O ~ ~p C O ~O N N ~ O O O O O O O d' ~ ~` ~. a O O a ~ O '~t `D 0 0 0 0 0 O N ^ G r oo N O ~ ., O O O O O O O O .-- .-. 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W el Q W -- N O O O O O O O O O O O O O O M O O O O O U O O O oo O O O O co O vl 00 0 0 0 0 N ,--' 00' ~ V 'r a ^ ~ ~ 0 0 0 0 0 0 0 O O O C O O G O O O O O O O O O oo O O O O ~ O v~ 0o O O O O r~ N .--• oo ~ ~n Q v' a ^ ~ ~ rJ M oA ro c b U N ~ c ~n ~ ~, O C U ~ c c ' '~ ~ ~ ~ ,Q ~ N ~ 7 ~ ~ C U S L N ~ ~ t0 ~ cn 3 ro ~ °~ y a 3 E a N V ~ ~ u .~ wcai~.z~w Adams, Bryan rom: Bill Black [bblack@mmua.orgl Sent: Monday, August 04, 2008 1:44 PM To: Adams, Bryan Subject: Conservation rates Orrinibus Sut~>~lemental Oudget bill Session Laws Chapter 363 HF 1812 Rep. Carlson (DFL -Crystal) SF 3813 Sen. Cohen (DFL - St. Paul) CONSERVATION DATE REQUIREMENT Requires public water utilities serving more than 1,000 people that meter individual customers to implement conservation rate structures. Utilities in the 7-county metro area must implement rates by 2010. Utilities in all other counties must implement rates by 2013. A "conservation rate structure" is defined as a rate structure that encourages conservation which may include increasing block rates, seasonal rates, time of use rates, individualized goal rates or excess use rates. (Introduced as HF 3238 / SF 2973.) (Creates Minn. Stat. §103G.291, subd. 4.) Effective date: 07/01/08. 2008 Session Laws Chapter 363 ARTICLE 5 -ENVIRONMENT AND NATURAL RESOURCES Sec. 20. Minnesota Statutes 2007 Supplement, section 103G.291, subdivision 3, is amended to read: Subd. 3. Water supply plans; demand reduction. (a) Every public water supplier serving more than 1,000 people must submit a water supply plan to the commissioner for approval by January 1, 1996. In accordance with guidelines developed by the commissioner, the plan must address projected demands, adequacy of the water supply system and planned improvements, existing and future water sources, natural resource impacts or limitations, emergency preparedness, water conservation, supply and demand reduction measures, and allocation priorities that are consistent with section 103G.261. Public water suppliers must update their plan and, upon notification, submit it to the commissioner for approval every ten years. (b) The water supply plan in paragraph (a) is required for all communities in the metropolitan area, as defined in section 473.121, with a municipal water supply system and is a required element of the local comprehensive plan required under section 473.859. Water supply plans or updates submitted after December 31, 2008, must be consistent with the metropolitan area master water supply plan required under section 473.1565, subdivision 1, paragraph (a), clause (2). (c) Public water suppliers serving more than 1,000 people must employ water ..se demand reduction measures, including 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. (d) Public water suppliers serving more than 1,000 people must submit records that indicate the number of connections and amount of use by customer category and volume of water unaccounted for with the annual report of water use required under section 1O3G.281, subdivision 3. (e) For the purposes of this s~~isen section, "public water supplier" means an entity that owns, manages, or operates a public water supply, as defined in section 144.382, subdivision 4. Sec. 21. Minnesota Statutes 2006, section 1O3G.291, is amended by adding a subdivision to read: 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 peoQle 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 Qeople shall use a conservation rate structure by January 1, 2013. (c) A public water supplier without the roper measuring equipment to track the amount of water used b~ 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). William Black Minnesota Municipal Utilities Association Ojf. i63-559-1230 or 800-422-0919 Cel! 651-398-2098 bblack~mmua. or,~ Minnesota AMENDED WATER APPROPRIATION PERMIT Department of Natural Resources THIS AMENDED PERMIT SUPERSEDES THE ORIGINAL PERMIT AND ALL PREVIOUS AMENDMENTS IN THE MATTER OF THE APPLICATION FOR APPROPRIATION OF WATERS OF THE STATE, PERMISSION IS HEREBY GRANTED TO PERMITTEE Authorized Agent Elk River Municipal Utilities General Manager Address 13069 Orono Parkway, Elk River, Minnesota 55330 Phone: (763) 441-2020 To appropriate from: 12 municipal water supply wells, manifolded together Please see Attachment A Purpose. Public Water Supply Use Code (211) Property described as City Property in Sections 23, 25, 26, 28, 32, 33, 34, and 35 in Township 33 North, Range 26 West, and NW'/a SW'/4 Section 1, Township 32 North, Range 26 West. Mississippi River (St. Cloud) Watershed (17) Authorized Signature Title Date ~ / r~ u ~ f ~~v / T J 7 Jale E Homuth Regional Hydrologist ` ~ This permit is granted subject to the following CONDITIONS' 1. QUANTITY: The Permittee is authorized to appropriate water at a rate not to exceed ~ Z,rJ00 gallons per minute. The total amount of water appropriated shall not exceed ~ ,srJD _ million gallons per year LIMITATIONS: (a) Any violation of the terms and provisions of this permit and any appropriation of the waters of the state in excess of that authorized hereon shall constitute a violation of Minnesota Statutes, Chapter 103. (b) This permit shall not be construed as establishing any priority of appropriation of waters of the state. (c) This permit is permissive only. No liability shall be imposed upon or incurred by the State of Minnesota or any of its employees, on account of the granting hereof or on account of any damage to any person or property resulting from any act or omission of the Permittee relating to any matter hereunder. This permit shall not be construed as estopping or limiting any legal claims or right of action of any person other than the state against the Permittee, for any damage or injury resulting from any such act or omission, or as estopping or limiting any legal claim or right of action of the state against the Permittee, for violation of or failure to comply with the provisions of the permit or applicable provisions of law. (d) In all cases where the doing by the Permittee of anything authorized by this permit shall involve the taking, using, or damaging of any property, rights or interests of any other person or persons, or of any publicly owned lands or improvements thereon or interests therein, the Permittee, before proceeding therewith, shall obtain the written consent of all persons, agencies, or authorities concerned, and shall acquire all property, rights, and interests necessary therefore. (e) This permit shall not release the Permittee from any other permit requirements or liability or obligation imposed by Minnesota Statutes, Federal Law, or local ordinances relating thereto and shall remain in force subject to all conditions and limitations now or hereafter Imposed by law. (f) Unless explicitly specified, this permit does not authorize any alterations of the beds or banks of any public (protected) waters or wetlands. A separate permit must be obtained from the Department of Natural Resources prior to any such alteration. PERMITTEE'S RESPONSIBILITIES: (a) FLOW METER. The Permittee shall equip each installation for appropriating or using water with a flow meter, unless another method of measuring the quantity of water appropriated to within ten (10) percent of actual amount withdrawn is approved by the Department. (b) REPORTS. Monthly records of the amount of water appropriated or used shall be recorded for each installation. Such readings and the total amount of water appropriated or used shall be reported annually to the Director of DNR Waters, on or before February 15 of the following year, upon forms supplied by the Division. Any processing fee required by law or rule shall be submitted with the records whether or not any water was appropriated during the year. Failure to report shall be sufficient cause for terminating the permit 30 days following written notice. (c) TRANSFER OR ASSIGNMENT. Any transfer or assignment of rights, or sale of property involved hereunder shall be reported within 90 days thereafter to the Director of DNR Waters. Such notice shall be made by the transferee (i.e ,new owner) and shall state the intention to continue the appropriation as stated in the permit. This permit shall not be transferred or assigned except with the written consent of the Commissioner. (over, please) (d) MODIFICATION. The Permittee must notify the Commissioner in writing of any proposed changes to the existing permit. This permit shall not be modified withor~' °~rst obtaining the written permission from the Commissioner. 4. COMMISSIONER'S AUTHORITY: (a) The Commissioner may inspect any installation utilized for the appropriation or use of water. The Permittee shall grant access to the site at all reasonable times and shall supply such information concerning such installation as the Commissioner may require. (b) The Commissioner may, as he/she deems necessary, require the Permittee to install gages and/or observation wells to monitor the impact of the Permittee's appropriation on the water resource and require the Permittee to pay necessary costs of installation and maintenance. (c) The Commissioner may restrict, suspend, amend, or cancel this permit in accordance with applicable laws and rules for any cause for the protection of public interests, or for violation of the provisions of this permit. 5. PUBLIC RECORD: All data, facts, plans, maps, applications, annual water use reports, and any additional information submitted as part of this permit, and this permit itself are paR of the public record and are available for public inspection at the offices of DNR Waters. The information contained therein may be used by the Division as it deems necessary. The submission of false data, statements, reports, or any such additional information, at any time shall be deemed as just grounds for revocation of this permit. 6. WETLAND CONSERVATION ACT: Where the work authorized by this permit involves the draining or filling of wetlands not subject to DNR regulations, the permittee shall not initiate any appropriation under this permit until the permittee has obtained official approval from the responsible governmental unit as required by the Minnesota Wetland Conservation Act. 7. WELL SEALING: The permittee shall notify the Minnesota Department of Health prior to sealing, abandoning, removing, covering, plugging or filling the well(s) from which the authorized appropriation was made. The well(s) must be sealed by a licensed well driller and in accordance wish the procedures required under Minnesota Statutes 1031 and Minnesota Rules 4725 as administered by the Minnesota Department of Health. 8. INTERFERENCE: If notified by the Department that well interference Is suspected and probable from your appropriation, based on confirmation of a formal v/ell interference complains, all appropriation authorized by this permit must cease immediately until the interference is resolved. The permittee may be required to obtain domestic well information within a radius of one and one half miles of the production well should well interference problems develop. 9. WATER USE RECORDS: Public water suppliers serving more than 1,000 people must maintain records of the number of service connections, the volume of use by cus category, and the volume of unaccounted for water and submit this information with the annual water use report. 10. NEW WELLS: This permit shall authorize the installation and use of up to flue additional wells as described in the Elk River Water Supply Plan, dated September 2006, provided appropriate permits from the Minnesota Department of Health are first obtained. Prior to connecting these wells to the water supply system, the permittee must forward the DNR a copy of the well record, pump tests and the completed well notification form (copy attached)- Use of the new well requires compliance with Condition No. 11 below. 11. EMERGENCY AND CONSERVATION PLAN COMPLIANCE The permittee shall comply with all agreements relating to monitoring, conservation, well location, education and other agreements,as described in the permittee's approved Emergency and Conservation Plan. Failure to carry out the measures described in that plan may be cause for termination of this permit. 12. OBSERVATION WELL REQUIREMENT: The permittee shall install or acquire at least one non-production well that is cased into the Mt. Simon Hinckley aquifer for use as an observation well Water levels in these wells should be measured at least monthly. Such measurements and any other well monitoring information agreed to in the approved Emergency and Conservation Plan must be forwarded to the Observation Well Data Manager, DNR Waters, 500 Lafayette Road, St. Paul, MN 55155-4032, by the end of each calendar year. c: City of Elk River Sherburne County SWCD, Bill Bronder DNR Waters, laurel Reeves DNR Area Hydrologist, Roger Stradal DNR Conservation Officer, Mitch Sladek Minnesota Department of Health, Bruce Olsen Central Office Appropriation Permits Central Office SWUDS