WATER UTILITY SUBMITS 15% RATE HIKE REQUEST

February 26, 2007

Madison-Madison Water Utility today submitted a rate increase request to the Public Service Commission of Wisconsin (PSCW) for review. The Utility is asking PSCW to authorize a 15% percent increase in water rates. The last water rate increase in Madison was a 7% increase granted at the end of 2005. If the requested increase were granted, it would reflect an annual average increase of 5% over the past five years.

The rate increase reflects an increased emphasis at the water utility to invest in aging infrastructure and system reliability. The revenues from the rate increase will be used to pay debt service on recent capital projects, including replacement of a well on Moorland Rd., construction of a water reservoir tank on Felland Rd., and over $7 million in water main replacement projects.

According to utility officials, in addition to capital projects, the rate increase is needed to cover increases in operating expenses. Since the last rate increase, electric power costs for pumping water have increased 15%, chlorine and fluoride costs for water treatment have increased 45%, water quality initiative (including sampling and monitoring) costs have increased 23%, health and other employee benefits have increased 20%, and the Utility has implemented a new unidirectional water main flushing program to better control water quality and reduce discolored water events, which added $345,000 to its annual budget.

"We are beginning to see the financial impacts of replacing and maintaining aging infrastructure, much of which was installed after World War II and is nearing the end of its useful life," said Water Utility General Manager David Denig-Chakroff. "Fortunately, our water rates are still a bargain when compared to other utilities in the state and around the country," Denig-Chakroff said.

According to PSCW records, the average water rate statewide is 42% percent higher than Madison's rate would be with the requested increase. Specifically, the average cost to purchase 18,750 gallons/quarter of water from a public utility in Wisconsin is $59.47. If this rate hike is approved by the PSCW, the cost to Madison residential customers to purchase 18,750 gallons will be about $41.98.

Madison also ranks well nationwide in terms of water rates. With the 15% requested increase, residential customer would expect, on average, to pay $79.27 for water service for each six-month billing period. Comparable water rates for other cities are as follows:

Stockton, CA $116.27
Louisville, KY $106.52
Norfolk, VA $160.35
Glendale, CA $122.52
Austin, TX $ 93.25
Rochester, NY $107.49
Huntington Beach, CA $148.78
Des Moines, IA $105.44
Spokane, WA $ 89.88
Lincoln, NE $ 65.79
St. Paul, MN $ 96.84
Portland, OR $100.94

The rate request will be reviewed by the PSCW over the next few months and, if approved, would begin being phased in around August of this year.

The utility bills customers twice a year for municipal services including water, sanitary sewer and storm sewer. The average six-month residential utility bill is $206.67. The water service portion of the bill averages $68.93, and the rate increase applies only to that portion of the bill. The rate hike will amount to about a $10.34 increase in the average residential water bill every six months.

Contact:
  • Robin Piper, 266-4656
  • Dave Denig-Chakroff, 266-4652