Planned Port water rate increase to hit residents hard

Port Washington residents are in for a hit to their pocketbooks next year.

The Board of Public Works on Tuesday recommended that the city ask the Wisconsin Public Service Commission for a 40% to 45% water rate increase over the next two years, an increase required to pay for $18.3 million in improvements to the water plant.

The PSC will determine exactly how the 40% is split up over the two years, Tom Nennig of City Water, the city’s water consultant, said.

In August, officials said that a 40% increase could add $29 to the average resident’s bimonthly water bill.

But, officials warned, that 40% could get even higher depending on how the PSC looks at the matter. The agency typically seeks a 6% rate of return but the 40% increase is predicated on a 3% rate of return.

If it doesn’t accept the city’s proposed 3% rate of return, that 40% increase could potentially double, officials said.

Board Chairman Jason Wittek expressed concern at that, saying, “A 40% increase is not small. That’s well over what property taxes go up every year.

“I support the lower rate of return.”

Ald Mike Gasper, a member of the board, concurred, saying, “We’re doing that basically so we don’t have quite as much of an impact.”

Nennig said the city is doing everything it can to hold the line on the cost of improvements in an effort to minimize the rate increase, including seeking financing through the Safe Drinking Water Loan Program operated by the Department of Natural Resources that has a lower interest rate than most other financing.

Ald. John Sigwart, a member of the board, asked if this is the right time to seek bids for the work.

Nennig said the DNR still has to sign off on final plans for the work, something that’s expected by March, and bids will be sought after that.

“We can’t push the project back,” he said, because the city has to meet state deadlines on the project.

He also noted that there’s a significant amount of concrete work that has to be done, and  there was a shortage of cement last year, causing an increase in the cost.

Nennig warned that the 40% increase probably won’t be the last in store for ratepayers in coming years.

After the full 40% increase is in place for a year, he said, it’s recommended that the city seek so-called simple rate increases of 3% annually to ensure the utility remains in good financial health.

“This isn’t a one-time, we’re good for 20 years,” he said. “We’re going to have to look at this every year.”

The water rate increase isn’t the only utility increase the city is facing next year. The Common Council in November agreed to increase sewer rates by 7.2% effective Jan. 1, adding $6.46 to the bimonthly bill, and aldermen said those rates could also increase 5% to 7% the following year.

That money is needed to finance upgrades to the wastewater plant, including an emergency generator, phosphorus analyzer, blower replacement and other items.

The sewer and water rates are included in one bill, which in Port is issued by the city on a bimonthly basis.

But Tuesday, Nennig noted that the city is considering going from bimonthly to quarterly billing.

That, too, would require PSC approval, City Engineer Roger Strohm said.

The reason, Public Works Director Rob Vanden Noven said, is cost, noting that it will cost the city about $5,000 to send out each billing.

Next year, the city will eliminate its current bills, which are sent on postcards, and begin sending out bills in letter form so it can include all the information being required by the state, something it isn’t doing now.

Depending on the PSC decision, the change in billing and the water rate increase could take effect in mid-to-late 2023, Strohm said.

If the Common Council approved the board’s recommendation, application for the rate increase will be sent to the PSC by the end of the year.

That would mean the PSC could make a decision on the increase by mid-summer.

The work at the water plant is being required by the Department of Natural Resources, which abruptly decided to require the plant be upgraded to meet current codes and address deficiencies, primarily regarding backup power and needed changes to the clearwell, that had been grandfathered by the state in the past.

The work, which is expected to extend the life of the plant by 25 to 30 years, will include building a new 500,000-gallon above-ground water reservoir on the south side of the plant, installing an ultraviolet light disinfection system and an emergency generator.

It would also replace equipment that’s at the end of its life, officials said, noting much of the equipment is at least 50 years old and some is more than 70 years old.

The project includes building an addition to the current plant that will take up much of the grassy area just south of the existing facility.

Strohm said the city hasn’t received any pushback from residents about the proposed rate increase, but added that feedback would help the city make its case to the PSC for a 3% rate of return and the corresponding 40% rate increase.

“It would give us support with the PSC for 3%,” Strohm said. “It would help us say, this is hitting people in their pockets.”

Nennig agreed, saying, “We want to show the PSC we’re sympathetic to our customers. We don’t want to see our rates go up more than they have to, and we want to see a healthy water utility.”

Strohm suggested anyone who wants to make that case should do so in a letter or email to the Public Works Department.

There will be a public hearing on the proposed rate increase when the PSC considers it, Nennig noted.