MADISON — The Brodhead Water & Light Commission is seeking its first increase in water rates since 2015, as collecting the Public Fire Protection charge shifts from property tax bills to water bills.
The PFP funds fire hydrant maintenance and other water utility costs associated with fire fighting. In Brodhead, the PFP amounts to about $240,000 annually, said Mayor Tom Simpson.
“We’re one of the few (municipalities) that hasn’t done it, and we probably should have 20 years ago,” Simpson said.
Even with the new rates, Brodhead’s water bills should remain among the lowest in the area, Simpson added.
If the Public Service Commission approves the rates that Brodhead requested last week, monthly water bills for average residential customers would increase by 37.6% or $5.70, to $21.55, according to PSC data.
Commercial and other customer categories would increase by a similar percentage.
Moving the PFP to water bills theoretically could lower property tax bills but that remains to be seen.
Switching the PFP to water bills is the main driver behind the need to increase rates, said Ed Hoff, superintendent of the Water & Light Commission.
“We’ll need more revenue to fund that,” he said.
Otherwise, the water utility has functioned well without an increase whatsoever in about 10 years. Hoff attributes that to good management and the utility has benefited from some good luck, too.
“There’s been no major water main breaks, and no borrowing for (replacing mains) during street reconstruction. However, there’s plans to reconstruct some streets in 2025 and into the future,” he said.
Hoff acknowledges that there’s been little growth in the number of customers in recent years, which lessen to finance borrowing for infrastructure expense.
Collecting the PFP on water bills allows the commission to charge every water customer, the fee including churches, schools and other tax-exempt property owners. That spreads the cost a little wider as everyone pays their share.
Other than a posting by a local Facebook group, there hasn’t been much publicity about the PFP switch, Hoff said, but the city plans to publicize it soon.
The PFP switch, approved by the city council in July, is being timed to when the PSC is expected to authorize new rates, which Hoff anticipates by the end of the year.
The water utility’s financial position has eroded after nearly 10 years without a rate increase.
According to the rate application filed Thursday: (Jan. 23)
This year, the utility projects earning $609,829 and expenses of $681,829 leaving an income deficit of $72,688. However, finances aren’t that dire as the PSC requires utilities to estimate its depreciation expense, a non-cash item, which totals $157,946.
The new rates are expected to increase annual revenue by $190,276, less the anticipated income deficit of $72,688, and expenses of $681,829, should yield a net income of $270,944 and a 6.3% rate of return on its $1.866 million value of its infrastructure.