The water rates have been approved by the Public Service Commission. The new rates will be implemented on all water usage after December 31, 2018. Rate case information can be seen here.
The Public Service Commission of Wisconsin (PSC) is proposing approval of an overall increase in water rates of 20.24 percent for Lake Mills Light & Water. Under the proposed rates a typical residential customer’s month bill would increase approximately $4.82.
A public hearing on the proposed increase has been scheduled for December 4 at 10 a.m. at the Lake Mills Municipal Building. If approved, the new rates will go into effect in 2019.
“We’ve been working with the PSC since April to review our revenues and expenses and determine an appropriate and affordable rate;” said Director of Public Works Paul Hermanson. “We’ve been hit with a lot of directives over the past few years that demand our response and require capital.”
Hermanson was referring to several factors driving the need for a rate increase. For example, the replacement of lead service lines (LSL) and associate activities is requiring unprecedented capital. According to Wisconsin Department of Natural Resources (WDNR) rules, the city must replace lead service lines on the city-owned portion of the water service when a homeowner replaces their portion. Each replacement costs the utility approximately $4,000. To date the utility has replaced more than 125 city-owned services.
The utility is also working with the DNR to identify new and better ways to improve chemical additives that will reduce corrosion and prevent lead from service lines from leaching into the water.
Additionally, the utility is investigating the cause and mitigation of low levels of radium found in one of the wells. Although the levels have tested just over the maximum threshold once in the past couple of years, the DNR is requiring a series of tests to determine the cause of the radium and what can be done to lower the levels. Radium is naturally occurring, so completely eliminating it is not possible.
The new rate will provide an increase in annual revenues for the utility of approximately $242,000, according to information from the PSC. Total operating revenues for the utility will increase from $1.2 million in 2018 to an estimated $1.4 million in 2019. The PSC also requires all utilities to maintain a rate of return of about 5.3 percent on net assets. “While operating expenses are predicted to stay flat at $1.17 million in 2018 and 2019, increased activity in LSL replacement and radium remediation will adversely affect our annual expenses,” said Hermanson. “We’re constantly looking to reduce expenses and operate in the most efficient manner possible, but some things are just out of our control.”