Darien residents to see jump in water bills

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Kevin Murphy/Special to The Gazette
Wednesday, February 5, 2014

MADISON--Water bills for Darien Water Works and Sewer System residential customers will increase by 30 percent, the first major rate hike since 2000, according to an order issued Tuesday by the Wisconsin Public Service Commission.

Average residential customers now paying $31.75 monthly in volume charges for 3,000 gallons of water will pay $41.36 for the same amount when new rates take effect, possibly next month, said Village Administrator Diana Dykstra.

The dollar amounts include the Public Fire Protection Charge billed to all customers for hydrant maintenance and water costs associated with firefighting expense the utility incurs.

“The board wanted the rates (implemented) as soon as possible,” Dykstra said Wednesday. “We have some catching up to do.”

The PSC rate order also bumps up the $10.36 monthly meter charge for most residential customers to $14.82.

Rates for commercial, industrial and public authority customers are to increase by 33 to 54 percent based on meter size and usage, according to the order.

The utility had recorded annual income deficits as high as $205,576 during the past four years and was estimated to have a $38,852 deficit this year without the new rates, according to PSC staff analysis.

Normal operating expenses had increased only 12 percent since 2000, according to staff analysis. However, borrowing several years ago for $2 million for a water tower and other improvements for two residential subdivisions that never developed hurt the utility's finances, Dykstra said.

“We were ready for about 200 homes to be built, but that didn't occur," she said. "The developments went bankrupt and we had no new water users to pay the cost of the improvements. The bank owns a lot of the lots and they are slowly beginning to sell, so hopefully there will be more revenue for the utility."

The utility had not filed a major rate application in so many years that when it applied for a 3 percent increase in May 2013, the PSC approved it conditional to the utility submitting a full rate request within the year.

The application indicated a 54 percent overall rate hike, “which was scary to us,” said Dykstra. That prompted the utility to cut its requested rate of return on its infrastructure investment to 2 percent in order to minimize rate impact on customers.

While the 2 percent return is less than the cost of financing debt, the return does cover operating expenses and keeps the utility financially viable, according to Tuesday's order.

The PSC advised the utility to evaluate its financial needs annually and seek rate increases every three to five years in order to avoid large rate spikes in the future.

The new rates are projected to increase annual revenue by $87,529 to $377,383. After estimated expenses of $328,706, the utility should finish the year with a net income of $48,677, according to the PSC order.

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