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Water rates put on ice

MADISON — The Wisconsin Public Service Commission has approved water rates for Janesville residential customers that basically freeze the cost of water for average users who don't increase their usage.

Residents paying $30.78 for 2,100 cubic feet of water per quarter under the old rates will be charged $30.81 for the same volume under the new rates that went into effect Oct. 13. Rates for large-volume residential customers—those using between 4,000 and 9,000 cubic feet—will increase from 2 to 23 percent, depending on the amount used.

The city is among the first in the state to use an inclining rate structure that encourages water conservation by charging a higher unit cost as usage increases. Clean Wisconsin, an environmental organization, intervened in the rate request and asked the utility to apply for the inclining rate design. The utility agreed.

Under the new rates, residential customers pay 95 cents per 100 cubic feet for the first 1,500 gallons used per quarter, $1.26 per 100 cubic feet for the next 2,500 cubic feet, and $1.65 per 100 cubic feet for more than 4,000 cubic feet.

Each cubic foot of water equals 7.48 gallons, and 2,500 cubic feet—the amount used by the typical Janesville resident per quarter—equals 18,700, gallons, Utility Director Dan Lynch said.

"This is what we've been saying all along—that if you're an average residential customer, you won't see much of an impact from this rate case. The PSC is trying to get people to be more conscientious about their use of water," he said.

The inclining rate structure applies only to the utility's residential customers. A declining rates structure that lowers unit costs as volume increases still applies to commercial, industrial and governmental customers.

Increases for commercial customers range from 14 to 19 percent, and rates for large industrial customers will increase 21 percent.

"This is a new design, and I'm not sure if the PSC has found a completely equitable way to do that for other customer classes," Lynch said.

Overall rates increase 15 percent in the PSC's order. That should boost the utility's revenue by $870,539 to $6.9 million next year. The rates also allow the utility to earn a 5.35 percent rate of return on its investment in infrastructure.

"They pretty much gave us what we asked for," Lynch said.

The last rate increase became effective in January 2008, but GM's departure from Janesville helped prompt the rate application this year, Lynch said.

"We lost a very big customer, and our intention was to ask for a low rate of return as it lowers the magnitude of a rate increase, and we wanted to cushion the ratepayers to some extent from the loss of GM," said Lynch.

Lynch doesn't expect to file a rate increase in 2010. A rate filing in 2011 depends on the economy and weather. Water sales increase with home construction and drought, he said.