MONROE - The Board of Public Works is reaffirming it wants a 17-percent increase in the city's water rate.
The board voted 4-1 Monday, Jan. 6 to send its same recommendation back to the Common Council for approval. Tyler Schultz voted against the measure.
The council had stopped the rate increase process on Dec. 17, with a 3-6 vote on a request for a public hearing with the PSC, and directed the Board of Public Works to consider a lower rate.
Board members reviewed two main options that could reduce the rate increase: Removing the water utility's annual $200,000 payment in lieu of taxes (PILOT) and reducing the city water mains 5-year replacement program by 50 percent, or by $444,000, annually.
City Administrator Phil Rath presented the projected rate changes for each option, outlined in a Jan. 6 memo from Ehlers, the city's financial advisors firm.
Removing the PILOT would reduce the increase to only 4 percent for 2014, but would not diminish the 17-percent increase proposed for 2016 or the 10-percent increase in 2018. Rath also pointed out that the city would have to find some way to make up the $200,000 shortfall in the city's general budget.
By reducing the water main replacement program, Ehlers projected the required rate increase would remain 17 percent for 2014, but would fall to 10 percent in 2016 and to 9 percent in 2018. The 2014 increase remains the same because there would be no change in operational expenses.
According to Ehlers, both options reduce the "return on rate base" to 3 to 5 percent of the infrastructure value, to be used as revenue for capital improvements and construction. The PSC recommends a level of 5.25 to 5.75 percent.
Reid Stangel, board chairman, said the proposed 17-percent rate increase covers only the existing projects on the utility's capital improvement plan, without saving for future projects.
"If we cut too much, we'll keep running behind, behind, behind," he said.
Water Utility Supervisor Mike Kennison said the proposed 17-percent increase is "making up for when we didn't get the extra increase in 2010."
The Common Council in 2010 rejected a full rate increase of 29 percent authorized by the PSC and opted for 16.1 percent instead.
Kennison recommended the city look at applying for "simplified rate increases" each year, which would allow for smaller rate increases and at less cost for the PSC process.
The PSC charged $1,200 for this water rate application process, Kennison said.
Rath noted that if the city doesn't act on the application soon, the city would have to start its application process over with a new "test year" as the basis for its calculations.
The Public Service Commission's preliminary review of the rate case confirmed the average 17-percent rate increase was needed, based on the water utility's proposed revenue requirement and cost of services. The utility's capital improvement plan for the next five years, totaling about $7.8 million, includes the plan to replace aging and under-sized water mains at a cost of about $800,000 per year and the water meter replacement project now about half completed.
The board voted 4-1 Monday, Jan. 6 to send its same recommendation back to the Common Council for approval. Tyler Schultz voted against the measure.
The council had stopped the rate increase process on Dec. 17, with a 3-6 vote on a request for a public hearing with the PSC, and directed the Board of Public Works to consider a lower rate.
Board members reviewed two main options that could reduce the rate increase: Removing the water utility's annual $200,000 payment in lieu of taxes (PILOT) and reducing the city water mains 5-year replacement program by 50 percent, or by $444,000, annually.
City Administrator Phil Rath presented the projected rate changes for each option, outlined in a Jan. 6 memo from Ehlers, the city's financial advisors firm.
Removing the PILOT would reduce the increase to only 4 percent for 2014, but would not diminish the 17-percent increase proposed for 2016 or the 10-percent increase in 2018. Rath also pointed out that the city would have to find some way to make up the $200,000 shortfall in the city's general budget.
By reducing the water main replacement program, Ehlers projected the required rate increase would remain 17 percent for 2014, but would fall to 10 percent in 2016 and to 9 percent in 2018. The 2014 increase remains the same because there would be no change in operational expenses.
According to Ehlers, both options reduce the "return on rate base" to 3 to 5 percent of the infrastructure value, to be used as revenue for capital improvements and construction. The PSC recommends a level of 5.25 to 5.75 percent.
Reid Stangel, board chairman, said the proposed 17-percent rate increase covers only the existing projects on the utility's capital improvement plan, without saving for future projects.
"If we cut too much, we'll keep running behind, behind, behind," he said.
Water Utility Supervisor Mike Kennison said the proposed 17-percent increase is "making up for when we didn't get the extra increase in 2010."
The Common Council in 2010 rejected a full rate increase of 29 percent authorized by the PSC and opted for 16.1 percent instead.
Kennison recommended the city look at applying for "simplified rate increases" each year, which would allow for smaller rate increases and at less cost for the PSC process.
The PSC charged $1,200 for this water rate application process, Kennison said.
Rath noted that if the city doesn't act on the application soon, the city would have to start its application process over with a new "test year" as the basis for its calculations.
The Public Service Commission's preliminary review of the rate case confirmed the average 17-percent rate increase was needed, based on the water utility's proposed revenue requirement and cost of services. The utility's capital improvement plan for the next five years, totaling about $7.8 million, includes the plan to replace aging and under-sized water mains at a cost of about $800,000 per year and the water meter replacement project now about half completed.