Delavan seeking 14% water rate hike
The utility has gone without a major increase in 17 years by obtaining six simplified rate increases during that time of 3 percent or less, said Utilities Director Barbara Stebnitz.
The request would boost the average residential water bill from $374 annually to $427.
Although the Wisconsin Public Service Commission typically grants water utilities a 6 percent return on their infrastructure investment, to keep the increase low Delavan is seeking only a 0.5 percent return, she said.
A 6 percent rate of return would hike the average residential bill to $625 annually, according the application the utility filed Aug. 20.
The average Delavan residential customer uses 18,750 gallons or 2,500 cubic feet of water annually, she said.
If the requested rate is approved by the PSC, it would earn the utility an additional $220,800 in annual revenue but still leave it with a $437,700 negative cash flow from operational expenses and repaying long-term debt, according to the application.
“The sewer commission determined it would not go in for a 5 or 6 percent rate of return but the half of one percent return and use invested funds to lessen the impact on ratepayers,” Stebnitz.
Those invested funds come from Tax Incremental Finance District No. 4 and total $2.3 million, according to Stebnitz.
The utility wants to improve water pressure on the city’s east side by constructing a 500,000-gallon water tower next year and constructing a water main loop to connect the Mound Road and Highway 50 water mains. That would give the east side a backup water source if the Highway 50 main breaks, Stebnitz said.
The water tower hasn’t been designed, but the utility is taking soil samples near the Lowe’s Building Center on East Geneva Street as a possible location, she said.
The utility also needs higher rates to counteract slumping water sales. Industries, businesses and consumers all are cutting back on consumption, Stebnitz said.
“I don’t think the industries are as busy as before, there’s less tourism, more foreclosed homes and conservation is helping residential to use less water,” she said.
PSC staff will review the application and recommend how much revenue the utility would need to be financially viable and hold a public hearing before the commission acts on the rate request. Stebnitz expects the process to take about six months.
Last updated: 2:37 pm Thursday, December 13, 2012