Village will increase water rates

Aug. 23, 2007

A proposal to increase water rates in Fox Point by 4.9 percent was approved recently by the Village Board.

John Mayer, who serves as rate consultant for the Fox Point Water Utility, said the primary reason behind the increase is to stay on par with capital improvements for the village's water main relay program.

Standard increases in operating expenses also play into the equation.

"Every couple of years, we'll have to raise rates, and that's what we're doing," Mayer said. "The utility needs to generate roughly $250,000 to $350,000 per year from water revenues for local water main reconstruction. It makes no sense to put down new roads over water main that is known to have problems and be in need of replacement."

The rate increase remains tentative until it is approved by the Public Service Commission of Wisconsin. It is anticipated the governing body will make a decision later this year or early in 2008.

According to figures from 2006, the utility incurred construction costs of $324,473. The majority - $281,812 - went toward infrastructure projects within the village. The remaining $42,661 went toward upgrades at the North Shore water filtration plant in Glendale.

If the PSCW approves the 4.9 percent rate hike, the utility will take in additional revenues of $59,400. The average Fox Point homeowner would pay a quarterly fee of $82.10, up $3.64 from the current rate of $78.46.

The utility previously raised rates by 7.6 percent, or $87,665, in February 2006.

Even with routine rate increases, Mayer said the utility has struggled in the past to finance water main relay projects. Last year, $345,000 was borrowed to cover a shortfall. Since 1992, a total of $2,609,213 has been borrowed.

"The utility needs to make every attempt to increase bottom-line net income in order to get to the point of being able to cash finance annual water main relays," Mayer said.

Mayer said the utility will likely recommend future rate increases.

"Will the increases ever stop? Likely not," he said. "But hopefully they will be small in magnitude like this one."

Estimated figures call for the village to shell out about $36,000 over the next five years for maintenance projects at the North Shore plant. The utility's portion of village construction projects will vary from $250,000 to $372,000 over the next seven years.

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