MONROE - The Monroe Common Council sent a proposed 17 percent water rate increase back to the Board of Public Works Tuesday, Dec. 17, after allowing the rate application to go to the Wisconsin Public Services Commission in August.
On a vote of 3-6, the council voted down a resolution that would have accepted the proposed rate and sent a request to schedule a public hearing with the PSC. Reid Stangel, Charles Schuringa and Tom Miller voted in favor.
The rate would add about $8 per quarter, or $32 per year, to the average customer's water bill.
The city had hired Ehlers, its financial advising firm, to calculate the needed rate increase and to make the city's application to the PSC.
Council members learned the city's Capital Improvement Plan (CIP) for the utility may be a driving factor for the rate that some council members found too high.
The utility's CIP for the next five years totals about $7.8 million, according to Ehlers. It includes a plan to replace aging and undersized water mains at a cost of about $800,000 per year. The city is expecting to schedule many replacements during street repairs or construction to take advantage of street openings and prevent added costs.
But Alderman Michael Boyce said he would not vote for this much of a water rate increase, given the fact that the utility is paying the city about $200,000 annually as a payment in lieu of taxes (PILOT) and is paying the city interest on money it borrowed to fulfill the city's desire to replace water mains and hydrants during the 8-9th Street construction in 2011.
Boyce said he was trying to prevent a triple increase in property taxes, trash fees and water rates this year.
The PSC had completed its preliminary review of the rate case, showing the average 17 percent rate was consistent with its finding, based on the city utility's proposed revenue requirement and cost of services.
The proposed rate structure includes 5.25 percent of the infrastructure value, for revenue for capital improvements and construction. The PSC recommends a level of 5.25 to 5.75 percent. The utility is at 2.26 percent for 2013 and is expected to be 1.18 percent next year, without the increase.
Depending upon the utility's cash flow, the city has the potential for additional rate increases in 2016 and 2018, according to Greg Johnson, an advisor with Ehlers.
City Administrator Phil Rath said the city could approach water main replacement less aggressively, but that could also require future rates increases.
The last water utility rate increase came in 2010. The Common Council rejected a full rate increase of 29 percent, authorized by the PSC in February, and opted for 16.1 percent in March. According to Water Utility Supervisor Mike Kennison in 2010, relieving the utility of its $200,000 PILOT would have meant the utility needed only a 14 percent rate increase.
On a vote of 3-6, the council voted down a resolution that would have accepted the proposed rate and sent a request to schedule a public hearing with the PSC. Reid Stangel, Charles Schuringa and Tom Miller voted in favor.
The rate would add about $8 per quarter, or $32 per year, to the average customer's water bill.
The city had hired Ehlers, its financial advising firm, to calculate the needed rate increase and to make the city's application to the PSC.
Council members learned the city's Capital Improvement Plan (CIP) for the utility may be a driving factor for the rate that some council members found too high.
The utility's CIP for the next five years totals about $7.8 million, according to Ehlers. It includes a plan to replace aging and undersized water mains at a cost of about $800,000 per year. The city is expecting to schedule many replacements during street repairs or construction to take advantage of street openings and prevent added costs.
But Alderman Michael Boyce said he would not vote for this much of a water rate increase, given the fact that the utility is paying the city about $200,000 annually as a payment in lieu of taxes (PILOT) and is paying the city interest on money it borrowed to fulfill the city's desire to replace water mains and hydrants during the 8-9th Street construction in 2011.
Boyce said he was trying to prevent a triple increase in property taxes, trash fees and water rates this year.
The PSC had completed its preliminary review of the rate case, showing the average 17 percent rate was consistent with its finding, based on the city utility's proposed revenue requirement and cost of services.
The proposed rate structure includes 5.25 percent of the infrastructure value, for revenue for capital improvements and construction. The PSC recommends a level of 5.25 to 5.75 percent. The utility is at 2.26 percent for 2013 and is expected to be 1.18 percent next year, without the increase.
Depending upon the utility's cash flow, the city has the potential for additional rate increases in 2016 and 2018, according to Greg Johnson, an advisor with Ehlers.
City Administrator Phil Rath said the city could approach water main replacement less aggressively, but that could also require future rates increases.
The last water utility rate increase came in 2010. The Common Council rejected a full rate increase of 29 percent, authorized by the PSC in February, and opted for 16.1 percent in March. According to Water Utility Supervisor Mike Kennison in 2010, relieving the utility of its $200,000 PILOT would have meant the utility needed only a 14 percent rate increase.