MADISON — Typical residential customers of the Milton Municipal Water Utility are set to pay 14 percent more for water next year, less than the utility initially sought, according to Wisconsin Public Service Commission documents.
Residential customers now paying $24.25 monthly for 4,000 gallons of water will pay $27.70 for the same volume when the new rates take effect Jan. 1. Both dollar amounts include the public fire protection charge, according to a rate order the PSC issued Monday.
The city will change from monthly to every-other-month utility billing next year, which will save $6,000 in annual postage cost, City Administrator Jerry Schuetz said. Sewer charges, which will increase by 2 percent on Jan. 1, are included on the water bills being mailed in March, he said.
The new rate increases for the utility's four categories of commercial customers range from 14-20 percent, 15-23 percent for the three industrial customer categories, 15-26 percent public authority customers, and 15-29 percent for ethanol plant customers. Increases vary based on the amount of usage and size of the service connection.
The utility had sought a 23-percent increase in overall revenue in a rate application filed in August. That request was based on a 5.75 percent return on infrastructure investment and would have yielded an estimated $297,262 in additional revenue over current rates.
The PSC trimmed the request to what it called a reasonable 5.25 percent return on equity, which lowered the utility's additional revenue next year to $149,723. Under the old rates, the utility would have earned a 2.73 percent rate of return.
The utility still should achieve a 2013 net income of $297,262 based on estimated revenues of $1.126 million and expenses of $829,463, according to the PSC order.
The reduced additional income will not affect utility operations, said Connie DeKemper, city finance manager, because it was based on the PSC's determination of lower interest costs.
PSC staff in October projected that lower interest rates than utility anticipated would be available to finance capital improvements the utility wants to build in 2015. Lower future financing costs allowed the PSC to lower the rates utility customers will pay, she said
The utility plans to replace aging water mains along Parkview Drive between Town Line and Madison streets, and loop a new water main to the new east side YMCA, Schuetz said.
The utility's net operating income has decreased from $283,921 in 2008 to an estimated $147,539 this year. Meanwhile, total operating expenses have increased from $634,347 in 2008 to an estimated $829,463 this year, according to a PSC staff report.
The city has stemmed some of the increase in employee health care costs by requiring utility employees to pay 10 percent of their insurance premiums, up from 0 percent in 2008. Nine non-union management employees no longer can take cash payouts for accumulated sick leave but instead must convert that to paid time off by retirement, Schuetz said.
Citywide, the changes have resulted in $100,000 in savings, of which $30,000 is attributed to the utility operations, Schuetz said.