Wednesday, May 13, 2015

Expenditure on water treatment and distribution in Minneapolis

by Kangkang Tong

Drinking water in Minneapolis is treated and distributed by the Minneapolis Water Treatment & Distribution Services (MWTDS). The service region of the MWTDS covers Minneapolis City and seven other cities, including New Hope, Crystal, Hilltop, Columbia Heights, Golden Valley, Edina, the MSP airport, as shown in Figure 1[1]. The water system in Minneapolis region has about 1,000 miles of mains, distributing 57 million gallons of water per day to 500,000 users[2]. The residential water use in Minneapolis accounts for up to 40% of the total water supply, while the commercial/industrial water use in the city of Minneapolis accounts for 38% of the total water supply2. The rest of the 22% water is supplied to suburban areas.

Figure 1. The areas covered by The Minneapolis Water Treatment & Distribution Services2
General operation budget for water supply and distribution is majorly funded by the Water Treatment and Distribution Services Fund. The revenue sources include sales/charges in Minneapolis and the revenue from the other seven suburban areas[3]. Water charges includes two parts: one is a charge for one unit water used (see Table 1[4],[5]) and the other is the fixed charge based on the total water and sewer amount in a family use or generated per month (Table 24,5). The collected money is spent on the operation, system maintenance, and capital improvement of the water treatment and distribution system6.
The total expenditure on water treatment and distribution is shown in Figure 2[6]. The total expenses of water treatment and distribution were $83 million in 2009, and slightly decreased from 2009 to 2011. In recent two years, the expense is raising, with a budget of $90 million in 2015. The expenses of water treatment and distribution are majorly for operation and capital investment, and a small amount of money is used to pay for debts. The operation expense takes about 60% of the total expenditure on water. Capital investment is another major expense, accounting for 20% to 30% of the total expenses.

Figure 2 The expense on water treatment and distribution in Minneapolis (in 1,000 $). The ‘bg” means budget expense and the “fr” means the forecasted expenditure.
The total expenses on water treatment and distribution was budgeted $55 million in St Paul in 2015[7], which is 60% of Minneapolis’s budget for water treatment and distribution ($91 million in 2015). The amount of water supply does not change as much as the budget change, which proves that the water supply is not a superior good in the Twin Cities, when the physical amount is the measurement of demand.
Recommendations for Minneapolis water treatment and distribution are 1) water unit use rate should be changed based on the total use amount per month; and 2) the water fee for residential use, industrial use, and commercial/business should be distinguished.

Table 1. The water rate in Minneapolis and St. Paul (per billing unit: 100 cubic feet or 748 gallons)[8],[9]
Minneapolis
St. Paul
Year
Water charge Per Unit
Outside City Water
Water charge Per Unit**
Summer
Winter
2015
$3.37
$3.52
$2.52
$2.62
2014
$3.32
$3.47
2013
$3.29
$3.44
*Tax is combined MN State sales; City Sales; Transit; and Twins.
Residential properties are not charged sales taxes
**For the cities of Saint Paul, Falcon Heights, Lauderdale, Maplewood and West Saint Paul.
All other customers pay 20 percent more
.
Table 2. Water Fixed Charges 2015 in Minneapolis and St. Paul
Minneapolis water fixed charge in 2015
Meter Size
5/8"
1"
1-1/2"
2"
3"
4"
6"
8"
10"
12"
Fixed Charge
$3/month
$7.5/month
$15/month
$24/month
$48/moth
$75/month
$150/month
$240/moth
$345/month
$990/month
St. Paul Water Service Base Fees*
Meter Size
 Smaller than 1"
 1"
 1 1/2" (Residential)
 1 1/2" (Commercial)
 2"
 3"
 4"
 6"
 8"
 10"
Fee per billing period
 $12/quarter
 $30/quarter
 $60/quarter
 $20/month
 $32/month
 $64/month
 $100/month
 $200/month
 $320/month
 $460/month
*: For the cities of Saint Paul, Falcon Heights, Lauderdale, Maplewood and West Saint Paul.
All other customers pay 20 percent more
.




[1] Public Work. Who gets Minneapolis tap water? Minneapolis City Government. Mar 7, 2012. http://www.minneapolismn.gov/publicworks/water/water_suburbs_whogetsourwater
[2] Public Work. Minneapolis Water Facts. Minneapolis City Government. Feb 20, 2015. http://www.minneapolismn.gov/publicworks/water/water_waterfacts
[3] Finance Department. Section E. Fiscal Plan. City of Minneapolis. Dec 2014. http://www.minneapolismn.gov/finance/budget/2015adopted
[4] Public Work. Rate. Minneapolis City Government. Jan 9, 2015. http://www.ci.minneapolis.mn.us/utilitybilling/utility-billing_rates
[5] St. Paul Regional Water Service. Explanation of Water Charges. City of St. Paul. 2014 http://www.stpaul.gov/index.aspx?NID=5040
[6] Finance Department. Water Fund-(2011, 2012, 2013, 2014, and 2015). City of Minneapolis.
[7] Board of Water Commissioners. Budget 2015.City of St. Paul. July 08. 2014 http://mn-stpaul.civicplus.com/DocumentCenter/View/74970
[8] Public Work. Rate. Minneapolis City Government. Jan 9, 2015. http://www.ci.minneapolis.mn.us/utilitybilling/utility-billing_rates
[9] St. Paul Regional Water Service. Explanation of Water Charges. City of St. Paul. 2014 http://www.stpaul.gov/index.aspx?NID=5040

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