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Maggie An From: Nick Anhut <NAnhut@ehlers-inc.com> Sent: Tuesday, February 11, 2025 9:09 AM To: Maggie Jin Subject: RE: Utility Rate Study Inquiry Hello Maggie, Thank you and I hope you were able to get some good insights and networking out of the Seminar. Our standard approach to a study is to reach an agreement on the City's preferred scope and establish an hourly rate with a not -to -exceed total cost. We track our time and bill periodically only for actual hours spent on the analysis. To the extent the study's scope is completed in less hours than anticipated, the final cost will come in lower. Below are a couple of options for the City to consider with a potential utility rate study and some general estimates on the associated costs. Base Study: The base level analysis will look at current operating revenue and expenses along with the City's forecasted capital costs for each fund to provide a 10-year cash flow projection will use the existing rate structure to suggest general increases (or decreases) needed to deliver minimum reserve requirements. The financial model will incorporate a review of summary usage data (by tier for water), and be able to insert general development growth assumptions (if any) to shape the projections. The base study would not include analysis necessary to evaluate revisions to the City's current rate structures. Quotes for each fund: • Water Fund - $10,000 • Sewer Fund - $10,000 • Storm Water Fund - $6,000 Fixed /Variable Cost Analysis & Rate Restructure: An optional add -on for the Base Study of each fund will perform the analysis necessary to come up with recommendations on allocating the fixed and variable costs of the water and sewer systems and rate structure redesign options for the City's consideration. For the water fund, it would also include reviewing current tier breaks by customer type to ensure the first tier remains affordable for winter (indoor) usage and upper tiers meet conservation needs in the summer (outdoor) in compliance with Minnesota Statutes, 103G.291 overall. The analysis would require analyzing 12 months of account -specific water consumption. • Water Fund - $8,500 • Sewer Fund - $5,000 • Storm Water Fund — N/A Other Considerations: Looking specifically at the 2025 fee schedule, here are a couple of other potential add-ons to consider: • Wayzata & Long Lake Sewer Billing — It appears there are some Orono properties that are billed for sewer by these cities. Are we understanding that correctly? If so, are they also providing the service? Is there an agreement that should be reviewed and evaluated? o Sewer Fund - $4,000 • Minnetonka Beach — It appears there is a bulk water rate for this city. Is there an agreement that should be reviewed? If so, another option is to provide a wholesale water rate analysis to determine if what is being billed to Minnetonka Beach is appropriate for the demand placed on the system. o Wholesale Water Rate Analysis - $5,000 I will apologize for laying out so many different considerations, but we find that every community's goals and needs are different. There can be instances when a simple analysis to confirm cashflow projections is all that is needed, and others 208