PSC Water Rate Increase Expected in 2023

On February 21, 2022, the Water, Wastewater, Storm Water and Streets Committee reviewed a long-term cash flow analysis prepared by the Village’s financial advisors from Ehlers. The analysis showed a need to submit a conventional rate case application to the Wisconsin Public Service Commission (PSC). Ehlers projects the PSC will increase the Village’s water rates from $4.14 per 1,000 gallons to $5.90 per 1,000 gallons, and the quarterly service charge from $31.83 to $45.36, representing a 42.5% increase in the water-portion of the utility bill, or about a 17.0% increase to the total bill (no rate adjustment is needed for the sanitary sewer utility which remains in a strong financial position).

 

The Committee agreed to proceed with the rate case application in order to address the financial health of the water utility and to finance upcoming capital project needs, including the well #4 pump replacement, maintenance at well sites #3 and #5, and water main replacements needed in several areas of the Village. The rate increase is not related to funding infrastructure to serve new developments in the community; rather, new development activity has limited the need for additional rate increases.

It will be the Village’s first conventional rate case since 2010. Over that period, annual operating costs have increased and the Village has ramped up a capital improvement program to address aging infrastructure. The Village held off on any significant rate adjustments over that time by spending down cash reserves that were largely earned from the sale of cell tower leases.

 

The rate case application is expected to take 6-10 months, with new rates going into effect in the first quarter of 2023. The application will involve a public hearing process where members of the public will be invited to comment and ask questions about the rate application. Over the next several months, other factors could affect the rate case, including the availability of funds from the Bipartisan Infrastructure Bill. Updates on the rate case process will be reported in the Village’s newsletters and website.

Utility Bill Affordability

The Water Wastewater, Storm Water and Streets Committee also reviewed an affordability assessment of the Village’s utilities. The assessment looks at how affordable utility bills for water, sewer and storm water are for households of different income levels in Union Grove. The assessment assumes a quarterly bill with a consumption of 9,750 gallons of water.

The average annual bill amount of $957.74 accounts for 1.4% of the median household income in Union Grove ($67,405 per year). Industry standards recommend a percentage under 2.5% to be considered “affordable.” Using this standard, Union Grove utility bills will be considered affordable for household income levels $38,000 and higher using a five-year average of utility bills.