MADISON — Average residential customers of the Monroe Municipal Water Utility can expect a $10.16 increase in their quarterly water bills when the Public Service Commission takes action on a rate request the utility filed last July.
Increases for multi-family, industrial, commercial and public entity customers are anticipated to range from 12.79% to 22.98%, depending on customer category and usage, according to PSC staff analysis.
The PSC held a public hearing June 16 by conference call to take comments on the 18.3% overall rate increase. While no one phoned in to comment, the PSC will take written comments through June 22.
The last major rate increase occurred in 2014, the utility received a 17% overall rate increase following a comprehensive rate filing. The PSC granted the utility a 3% overall rate increase last year in a simplified rate proceeding, but required it to submit a comprehensive request this time, Michael Kennison, utility supervisor said.
Four things are driving the water utility’s need for more revenue, Kennison said, including a well maintenance contract; repainting the “hospital water tower” on 5th St; replacing aging water mains and other deteriorating infrastructure; and funding a cross connection program for non-residential customers.
After spending $515,000 to repair two wells between 2010 and 2013, the utility entered into a 10-year preventative maintenance plan in 2016. The utility pays the contractor $24,000 per year with an annual increase capped at 5%. The contractor will rehabilitate the city’s five deep wells which range in depth from 1,000 to 2,000 feet. They all were in need of inspection and repairs estimated to cost $1.2 million. Those expenses and future ones will be performed by the contractor at no additional cost, according to Kennison.
The utility also contracted maintenance and repainting of the hospital water tower to provide a flat fixed annual fee that takes the guesswork out of budgeting for these expenses, according to Kennison.
The 500,000-gallon tower was built in the 1950s and was last repainted in the early 1990s when the lead paint was removed. The new contract provides for repainting the tower inside and out, adds a mixing system to prevent winter freeze up and maintain a good chlorine residual.
The contract was entered into last July.
Some of the utility’s water mains are 70 years old and funds are sought in the rate request to replace them on an ongoing basis.
A city council decision changes how commercial and other non-residential customers will pay for installation of cross-connection devices that prevent contamination from entering the water system. The cost had been recovered in a separate charge to those customers, but now will be added to non-residential customer rates.
Average residential customers currently paying $55.91 quarterly for 9,724 gallons of water would pay $66.07 for the same volume, according to PSC staff analysis.
The PSC is expected to issue a final order setting new rates sometime after the public comment period closes on June 22.
Without the new rates, the PSC projects the utility ending in 2020 with a $57,855 net operating income after total revenues of $1.866 million and expenses of $1.808 million. That would yield a .74% rate of return on the $7.832 million net value of its infrastructure.
The utility had sought a 5.3% rate of return but PSC staff trimmed that to 4.9%, its current benchmark for municipal utilities.
The new rates are estimated to boost annual revenue by $323,588 to $2.180 million and will increase net income to $381,443, earning the utility a 4.9% rate of return.
Written comments on the rate request can be mailed to: Docket 3820-WR-106 Comments, Public Service Commission, P.O. Box 7854, Madison WI 53707-7854.