City wants 21% water rate hike
If you go
What: Wisconsin Public Service Commission hearing on a proposal to raise Janesville city water rates 21 percent.
When: 10 a.m. Wednesday
Where: Simultaneously in city council chambers, Janesville City Hall, 18 N. Jackson St., Janesville, and the Amnicon Falls Room, Wisconsin Public Service Commission Building, 610 N. Whitney Way, Madison.
MADISON Janesville Water Utility's long-delayed 21 percent rate increase is scheduled for simultaneously public hearings Wednesday in the Janesville City Council chambers and at the Wisconsin Public Service Commission offices in Madison.
The request is the utility's third in four years following a 3 percent increase last year. It also follows a new rate structure approved in 2009 designed to promote water conservation.
If the Public Service Commission acts on the rate request this month, the utility would implement the increase Jan. 1, when rate changes for garbage collection, wastewater and storm water fees also will change.
"It's easier on the billing office to have all the changes go in at once. There are fewer phone calls that way," said Mandy Price, the utility's senior accountant.
The city council authorized the water rate increase in January, but the city delayed filing the application until mid June to mitigate its impact and "a lack of department resources," Price said.
The utility's finances still are feeling the impact of the GM plant closing. Usage has declined citywide, although water use spiked for few months during the summer drought, Price said. Lowered consumption means lower revenue projections.
"It's difficult being in a declining trend. Where's the bottom? We thought we bottomed out nearly four years ago, but we're in a negative $3 million cash position," she said.
The city didn't want to raise water rates when GM closed and instead used utility cash reserves, Price said.
The utility also lost money during the past few years when it installed water mains and hydrants in a subdivision that was platted but later sold at a tax auction when lots didn't sell. The utility couldn't recover its installation costs through special assessments on the unsold lots, Price said.
The water utility's net operating income, which is income remaining after expenses, has shrunk from $954,022 in 2008 to an estimated $298,654 this year.
Total operating revenue reached $6.04 million in 2008 but fell below that mark for three years. It is estimated to rebound to $6.13 million this year, according to the utility's rate application. Meanwhile, operating expenses continued to rise from $5.09 million in 2008 to an estimated $6.13 million this year.
Without a rate increase, the utility would earn less than 1 percent on its infrastructure investment valued at $33 million, according to a Public Service Commission staff analysis.
The new rates would boost revenue by $1.95 million next year, increase the net operating income to $1.69 million and earn the utility a 5.35 percent return on its infrastructure investment, a figure the Public Service Commission deems adequate for financial viability.
A typical residential customer paying $27.87 per quarter for 13,500 gallons of water would pay $33.84 for the same volume under the new rates, an increase of less than 7 cents per day, according to the utility.