MADISON - New Glarus Light & Water Works' water rates increased 25 percent this week, the seventh bump since 2005, but the first substantial rate hike since 2001.
On Jan. 25, the Public Service Commission authorized the new rate, which will increase the average residential customers' monthly bills from $19.39 to $24.25 for 3,000 gallons of water; adding the Public Fire Protection Charge increases the bill to $29.45, according to the PSC rate order.
The utility notified the PSC Friday that new rates would be possibly implemented by Monday, the date of the next meter reading. The order allows the utility to collect public fire protection costs associated with firefighting incurred by the utility, including hydrant maintenance, that had been collected on the property tax bill to also be collected on water bills.
Rates for other classes of residential, commercial, industrial and public authority customers will increase by 20 to 49.2 percent, depending on the customer class and usage, according to the order. The utility had not filed a comprehensive rate case since 2001 but received 3 percent increases in 2005, 2006, 2008, 2010 and 2014, which the PSC routinely grants to utilities to keep pace with inflation.
The new rates are projected to boost annual income by just over $112,000 to more than $559,000. After total estimated expenses of slightly less than $426,000, the utility would have a $133,180 net income and earn a 4 percent rate of return on the value of its infrastructure. Without the new rates PSC staff estimated the utility's net income would be $21,145, a .64 percent rate of return, which the agency considers inadequate to sustain a utility's long term financial viability.
Despite the five 3 percent rate bumps since 2005, the utility's net income fell from $100,256 in 2013 to $44,505 in 2016, as operating expenses, depreciation and payments in lieu of taxes continued to rise, according to PSC staff analysis. Meanwhile, utility revenue increased only from $433,330 in 2013 to $444,090 in 2016.
The PSC noted leaks in the water system were contributing to the utility's declining finances. In 2016, 33.6 million gallons of water was pumped and distributed representing an $89,000 expense, including depreciation, that went unbilled.
Utility staff told the PSC that leak detection measures undertaken and installation of new meters should reduce future leaks. The PSC still recommended the utility conduct a detailed water audit to identify and evaluate the measures it takes to reduce water loss. It also recently ordered the utility to stop replacing old meters for new devices as the utility had not received PSC approval.
In past years, the utility has been replacing aging meters for new automated ones at a pace of only a few dozen per year. However, the overall cost of switching out its 893 meters would exceed the $108,000 threshold which requires pre-approval from the PSC.
The PSC could have issued a rate order that prevented the utility from recovering the cost of the meter project from customers, but declined to do so. Instead, it will apparently just reprimand the utility for not following state law on prior approval for utility expenditures.
On Monday, Village Administrator Bryan Gadow said an application to replace the meters had been filed with the PSC and is waiting for more communication from the agency.
On Jan. 25, the Public Service Commission authorized the new rate, which will increase the average residential customers' monthly bills from $19.39 to $24.25 for 3,000 gallons of water; adding the Public Fire Protection Charge increases the bill to $29.45, according to the PSC rate order.
The utility notified the PSC Friday that new rates would be possibly implemented by Monday, the date of the next meter reading. The order allows the utility to collect public fire protection costs associated with firefighting incurred by the utility, including hydrant maintenance, that had been collected on the property tax bill to also be collected on water bills.
Rates for other classes of residential, commercial, industrial and public authority customers will increase by 20 to 49.2 percent, depending on the customer class and usage, according to the order. The utility had not filed a comprehensive rate case since 2001 but received 3 percent increases in 2005, 2006, 2008, 2010 and 2014, which the PSC routinely grants to utilities to keep pace with inflation.
The new rates are projected to boost annual income by just over $112,000 to more than $559,000. After total estimated expenses of slightly less than $426,000, the utility would have a $133,180 net income and earn a 4 percent rate of return on the value of its infrastructure. Without the new rates PSC staff estimated the utility's net income would be $21,145, a .64 percent rate of return, which the agency considers inadequate to sustain a utility's long term financial viability.
Despite the five 3 percent rate bumps since 2005, the utility's net income fell from $100,256 in 2013 to $44,505 in 2016, as operating expenses, depreciation and payments in lieu of taxes continued to rise, according to PSC staff analysis. Meanwhile, utility revenue increased only from $433,330 in 2013 to $444,090 in 2016.
The PSC noted leaks in the water system were contributing to the utility's declining finances. In 2016, 33.6 million gallons of water was pumped and distributed representing an $89,000 expense, including depreciation, that went unbilled.
Utility staff told the PSC that leak detection measures undertaken and installation of new meters should reduce future leaks. The PSC still recommended the utility conduct a detailed water audit to identify and evaluate the measures it takes to reduce water loss. It also recently ordered the utility to stop replacing old meters for new devices as the utility had not received PSC approval.
In past years, the utility has been replacing aging meters for new automated ones at a pace of only a few dozen per year. However, the overall cost of switching out its 893 meters would exceed the $108,000 threshold which requires pre-approval from the PSC.
The PSC could have issued a rate order that prevented the utility from recovering the cost of the meter project from customers, but declined to do so. Instead, it will apparently just reprimand the utility for not following state law on prior approval for utility expenditures.
On Monday, Village Administrator Bryan Gadow said an application to replace the meters had been filed with the PSC and is waiting for more communication from the agency.