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Conservation Commission - 09/12/2017 APPROVED MINUTES EDEN PRAIRIE CONSERVATION COMMISSION MEETING TUESDAY, SEPTEMBER 12, 2017 7:00 PM—CITY CENTER Prairie Rooms A&B 8080 Mitchell Road COMMISSION MEMBERS: Lori Tritz (Chair), Amanda Anderson, Anna Anderson, Michael Bennett, Gena Gerard, Daniel Katzenberger, Kate Lohnes, Nate Pischke, Ashley Young CITY STAFF: Senior Planner Beth Novak-Krebs, Planning Division, Leslie Stovring, Engineering, Kristin Harley, Recording Secretary STUDENT MEMBERS: Abhishek Aravalli, Elizabeth Arnold, Hayden Bunn, Sophia Truempi I. CALL TO ORDER/ROLL CALL Vice-chair Young called the meeting to order at 7:00 p.m. Absent were commission members Lohnes, Pischke, and Tritz and student member Truempi. Grant Meyer of AE2S, Sue Kotchevar of the Finance Department, Robert Ellis, Director of Public Works, and Marisa Bayer, Eden Prairie Community Development Coordinator, joined the meeting. II. APPROVAL OF AGENDA MOTION: Anderson moved, seconded by Gerard to approve the agenda. Motion carried 5-0. III. APPROVAL OF MINUTES MOTION: Katzenberger moved, seconded by (Amanda) Anderson to approve the minutes. Motion carried 5-0. IV. PRESENTATION BY AE2S, PUBLIC WORKS,AND FINANCE ON UTILITY RATES Public Works Director Ellis introduced himself, Kotchevar, and Meyer, the consultant from AE2S. He invited the commission members' feedback and recommendations to the City Council on the subject of utility rates. Meyer presented a PowerPoint explaining the Conservation Commission Minutes September 12, 2017 Page 2 data on utility rates in Eden Prairie: background, what the rates fund, changes to the rates, successes, and future changes to the rate structure. Water utility operation, maintenance, and refurbishment/replacement included regulatory compliance, meter reading and invoicing, and customer service and administration. Residential accounts are billed quarterly: a constant based charge and a variable volumetric rate. He explained the various billing tiers for single family residential, commercial properties, and multi-family homes. Meyer displayed the water utility rates chart, an average 2017 residential quarterly bill for Eden Prairie, a 2017 AE2S Utility Rate Survey for the seven county metro area, the monthly water, sewer and storm drainage charge for residential user based on 6,000 gallons, and the history of the conservation rate approach. In 2011, Eden Prairie adopted a five-tier rate structure. A disadvantage of the current rates structure was that water conservation drove down the revenue stream to operate and maintain facilities. Meyer displayed the 2013 tier modifications and explained in 2013, tier one was changed to a limit of 2,400 gallons from 3,600 gallons. 62 percent of customers (single family residences) fell into that tier one change. (Anna) Anderson asked what was driving the lower usage, and Meyer replied much of it was low-flow utilities and fixtures, plus some conservation-minded change. Meyer noted water is an inelastic commodity and only a significant price change would drive a great behavioral shift. Kotchevar added weather was also a contributing factor. (Amanda) Anderson suggested applying current quartiles to prior rate usage would yield an apples- to-apples comparison, since there were more multi-family dwellings than in the past not reflected in these numbers. Meyer replied water demand as a whole across the city from 2006 to 2016 in a general trend downward, which included the fact of annual precipitation,but that as dropped in 2012 to correspond to an irrigation spike in the same year. Stovring reminded the commission members there was a drought in 2012. (Amanda) Anderson replied the information was helpful. Meyer presented water use trends, which included flow and population and non-irrigation usage by both single-family homes and apartments, which would accurately tie usage to population. The average water use per person per day decreased 25 percent over the past seven years. (Amanda) Anderson praised the presentation for including the non-irrigation flow numbers. (Anna) Anderson expressed skepticism that conservation drove the decrease in usage. Discussion followed on behavior and attitude changes versus the effects of appliance upgrading and low-flow fixtures. Gerard encouraged the commission members to get the word out about water treatment in Eden Prairie, i.e., to present the water treatment facility as a place for families to visit. Discussion followed on possible educational efforts, including a tour of the facility and partnering with the Outdoor Center. Conservation Commission Minutes September 12, 2017 Page 3 Meyer presented future efforts, including encouraging conservation, but included possible effects on the capital plan and on revenue stability. (Amanda) Anderson asked if there was modeling done on at what point Eden Prairie would go"in the red" in terms of funds. Ellis replied the city would likely not run out of funds. There will be a dry year eventually, and there is a long range plan for population and for capital expansion, and Eden Prairie will need large ground storage reservoir to meet future demands. Probably what would happen would be that Eden Prairie may need three wells instead of five (to add to the current 15), in addition to the large storage reservoir needing only 3 million gallons instead of 5 million. Discussion followed on a possible increase on the lowest tier rate. Ellis noted there would be an increase in the base rate. Meyer said the city was looking at 10-year models. (Amanda) Anderson asked for and received confirmation that Eden Prairie was not funding anything else than water delivery and capital project from its water revenue. Young asked if the water service was also funded by subsidies, and Ellis replied it was funded by revenue and grants. Discussion followed on the catastrophic fund structure and the sustainability of the aquifer. Meyer presented the fixed and variable costs for 2018: 82 percent of the expense was fixed, leaving 22 percent of revenue that is fixed. This illustrated how less water usage negatively impacted 78 percent of the revenue but only yielded an 18 percent decrease in expenses. The size of the job of water delivery, piping, electricity, pumping, and treatment would not decrease with a decrease in water usage. He displayed where Eden Prairie fell in terms of Minneapolis/St. Paul fixed water charges only according to the 2017 AE2S rate survey data ($4.62 per account in 2017, compared to the average of $5.70, or to $5.15 in only the administrative services budget). Capital considerations included water supply, the ground storage reservoir, and the existing water treatment plant. Katzenberger asked if the ground storage was gravity fed, and Ellis replied the water was pumped. Katzenberger suggested making the system able to generate and store electricity. Revenue considerations included affordability, projected revenue generation, and the use of available tools to balance revenue needs and anticipated conservation effects. (Amanda) Anderson asked if new climate models were being considered, with wet years possibly being the "new normal." Meyer replied there probably would not be, as he would have more confidence in a 10-year rate model project than a 10-year precipitation projection, and other organizations had the time and money to develop such complex models. However, it was possible that such wet years were the "new normal." Katzenberger asked if there was any modeling done with a month-by-month formula- based tier one (base) charge that would generate a certain revenue goal, say, one million dollars revenue per month. Ellis replied it would probably be an annual rather than a month-by-month formula. There were flexible rate studies, and using a usage-revenue- yield expenditure model based on the previous year, an increase of 5 percent(up from 3 percent) was being planned. Meyer added an annual basis was standard. Katzenberger asked if"smart" meters were being considered, and Meyer replied some utility Conservation Commission Minutes September 12, 2017 Page 4 companies experimented with compares one household's average water usage to that of the neighbors', with variable success and some negative feedback from customers. Discussion and direction included base charge increases to enhance revenue stability, a possible simplified two-tier volumetric structure, a possible new tier definition (reducing the tier one volume), a possible refinement of tier one to also include an adjustment to rates associated with indoor water use only (non-irrigation), capital, continuing to promote sustainability with full cost recover and prudent reserve funding, and other possibilities. Meyer explained increasing the base rate allowed for a smaller increase in the volumetric rate. Ellis added this would reduce volatility of water revenue by having a base charge of five or six dollars. Meyer noted some kind of rates increase was inevitable. Bennett asked for the expected life of the water treatment plant and the pipes. Ellis replied the pipes would last 75-plus years; Meyer interjected it could be up to 80 years. Ellis stated the pumps would have a much shorter life, and pump replacement was routine, and one well pump was replaced every year. The concrete could last 75-100 years. There were no major capital replacements needed yet. Maintenance on the water treatment plant included painting and similar projects, not structural. The largest project in next five years would be replacing one of the high-service pumps. Bennett asked for and received confirmation that Eden Prairie had no lead pipes that Ellis knew of. (Amanda) Anderson added she could not know the materials in her pipes to the street, which she owned. Ellis replied most of community was new enough to not to have had lead pipes installed in homes; cities the age of Eden Prairie would see that in commercial or school buildings with the old lead boilers and water softeners. Discussion followed on the time frame in which lead pipes were installed. Young asked what effect the water softening service performed by Eden Prairie for its citizens had on the pipes, and Ellis replied it was beneficial, since treated water is better for the distribution system than hard water, which causes build up in pipes. Also, residents did not need to use a water softener which adds less salt to the treated water that goes into the Mississippi River. (Salt is not removed from treated water.) Ellis added this was a"best kept secret." Discussion followed on communicating the fact that Eden Prairie residents should not use and did not need water softeners and salt. Katzenberger suggested putting "softened water" on the water bill for tier one customers. Discussion followed on the proposed increase to the tier one charge. Katzenberger stated he would not personally notice an increase in the base charge. (Anna) Anderson concurred that a base charge increase was reasonable. Stovring suggested that elderly residents and others on a fixed income would notice such an increase, and it could economically impact them more than other residents. Katzenberger suggested redefining tiers one and two to increase those in tier two by lowering the threshold of tier one to 6,000 gallons. (Amanda) Anderson concurred this "combined" solution by reducing the volatility by increasing administrative costs for those not on a fixed income (and low Conservation Commission Minutes September 12, 2017 Page 5 water usage threshold). She added their goal was also to create surge pricing during the summer for those who water lawns. Taking a cue from health care, 401(k)s, and pension plans: consumer-driven decision-making works, and (Amanda) Anderson urged the commission to come up with a way to allow condominium owners to control their pricing by putting in those "smart" meters and eliminate an indiscriminate water usage flat rate. She added this would create an incentive for citizens to realize it makes more sense conservation-wise to live closer together in fewer buildings. Discussion followed on the difference in consumption between the older residential stock versus newer housing with low flow appliances. Gerard urged the commission members not to impose a regressive base rate structure for low income residents, which would also disincentivize conservation. (Amanda) Anderson concurred, but also agreed water delivery is inelastic, and the decline in usage over the last seven years was not due to a behavior change. (Anna) Anderson agreed. Stovring added it was fixtures, appliances, and to some degree the costs of irrigation and rebates. Discussion followed on possible incentives for behavior changes, especially for the economically disadvantaged. V. REPORTS A. REPORTS FROM STAFF 1. INTRODUCTIONS BY STUDENT MEMBERS, COMMISSION MEMBERS,AND STAFF Novak-Krebs suggested having longer introductions at the next meeting with Tritz and the other commission members and all of the student members present. 2. REVIEW SUSTAINABLE EDEN PRAIRIE AWARD NOMINATIONS Bayer introduced herself and summarized the evolution of the award. Bayer introduced the nominee narratives and photos for each nomination category—energy, landscape, waste, and water. Discussion followed on the merits of each nomination and the Commissioners recommended recognizing six nominees to City Staff. Bennet suggested the commission encourage a residential category and a business category for all four nomination categories. [Gerard left at 8:34 p.m.] City staff will decide the final winners and they will be recognized at the November 14, 2017 City Council meeting. Conservation Commission Minutes September 12, 2017 Page 6 3. ENERGY ACTION PLAN Bayer distributed the final copy of the executive summary and the goals. "Public, Nonprofit and Service Organizations" was substituted for the word"institutions." The commission members were being given the opportunity to review this before it goes before the City Council for adoption. Bennet had a change: he noted "to reduce greenhouse gases" should be a byproduct of reducing energy use, not a"goal" as stated in the plan. He warned the use of the word "goal" could trigger negative connotations, and added he did not get this as a goal from the meetings. Bayer replied this was the citywide goal that aligned with Hennepin County and added she would bring this up to Partners in Energy to identify less confusing language. Discussion followed on crafting more accurate language. MOTION: Katzenberger moved, seconded by Young to recommend the plan with a change in wording to remove "our goal is..." from the paragraph identifying greenhouse gas emissions and de-emphasize the city wide goal and recognize the reduction of greenhouse gas emissions is the result of the other goals. Motion carried 4-0. 4. EDEN PRAIRIE HOME ENERGY SURVEY Bayer distributed the latest draft based on comments from the commission members and the Communications Division. Bennet asked for and received confirmation that a respondent could enter any number to question two. B. REPORTS FROM CHAIR C. REPORTS FROM COMMISSION D. REPORTS FROM STUDENTS VI. OTHER BUSINESS VII. UPCOMING EVENTS VIII. NEXT MEETING IX. ADJOURNMENT Conservation Commission Minutes September 12, 2017 Page 7 MOTION: Young moved, seconded by Katzenberger to adjourn the meeting. Motion carried 5-0. The meeting was adjourned at 9:36 p.m.