Village of Germantown taxpayers may see 83% hike in water rates

September 9, 2021 – Germantown, WI – At 3 p.m. this afternoon, September 9, 2021, a public hearing will be held for residents in the Village of Germantown as the Public Service Commission weighs implementing an 83% water rate increase.

Steve Kreklow is the Village Administrator. Below are his answers to questions regarding 1) why a public hearing at 3 p.m. when most people are working 2) If the last increase was in 2010 who was not watching the store if it appears all the infrastructure now needs to be replaced at a cost of $46 million 3) If the PSC approves the rate increase will that be passed along to residents in the Village of Richfield which is trying to cut an inter-governmental agreement with Village of Germantown for purchase of water and sewer infrastructure to service its Northeast Corridor. 4) Finally – will public input even have an impact on the PSC decision.

Click HERE to participate in the 3 p.m. public hearing via phone or Zoom

JS is Judy Steffes – WashingtonCountyInsider.com and SK is Steve Kreklow, Village of Germantown.

JS – Where can I be in attendance for the 3 p.m. public hearing?

SK – So we are opening the village boardroom and we’ll have it on screen. But if you’re looking to, I think probably the best way for people to participate is through their zoom meeting.

JS – And why three o’clock?

SK – I don’t know. The Public Service Commission (PSC) sets the time, I think they do a lot of these, you know, they handle these rate applications across the state.

JS –  Do you think this is convenient for people in your community?

SK – I think there’s gonna be a lot of participation and people can submit comments in writing as well. But, you know, it’s the PSC sets their processes; that’s determined by the state and not really anything the village has any input over.

JS – So do you think this is convenient for people in your community?

SK – I guess for some people it probably is, for others it’s not. You know, generally the village holds our meetings and public hearings in the evening. And I think that’s better for most residents. I’m not sure why the PSE selects an afternoon meeting.

JS – The note in the release mentioned the 83% increase is needed for infrastructure, and that you haven’t had an increase since 2010. But if you would have done like a 3% increase in the last 10 years, that would still not equal the 83%.

SK – That’s correct. I think that the water utility has been short of funds for infrastructure replacement for some time. I think you’re also seeing that the infrastructure that was installed in the ’70s and ’80s and ’90s when the village was growing very rapidly. Much of it is now starting to near the end of its useful life and needs to be replaced. So the water utility does have an operating reserve, but it does not have a reserve for CAP that’s adequate for that level of capital replacement. So I think that’s why the PSE has determined that such as significant increase was necessary.

JS – Do all these have to be replaced at the same time.

SK  –  No, it’ll be replaced over a period of time. So to give you an idea, the total replacement cost of all of the assets we currently have in place is about $46 million. This rate increase will generate about $1.1 million a year that can be used to replace those capital assets.

JS – So it’ll be a little bit that gets replaced each year after this is paid off. Will people see a reduction in their water rate?

SK – I would say probably not. Because those assets don’t last forever, they have to be replaced. It’s kind of like your car. You can get your car paid off but there’s still maintenance that has to be done And then eventually you have to replace the car.

JS – But with my car, I include that in my budgeting process.

SK – Yes. So.

JS – So the village does not

SK – The village does not have the ability to implement these kinds of rates without PSC review.

JS – Right. I understand that, but for the maintenance and whatnot, in the budget each year for maintenance.

SK – And we do budget for capital replacement. To the extent that funds are available to do that. We can’t budget more for maintenance or replacement than we have revenue coming in, we can only have to live within the revenues that are available. And when those revenues aren’t adequate, that’s when the PSC takes a look at it and says, Yeah, you need to increase your revenues in order to maintain the infrastructure and provide people with safe drinking water.

JS – So did this surprise come upon you for 11 years, because they say the last rates increase dates back to 2010. Was nobody keeping an eye on it for maintaining it or watching it for the last 11 years?

SK – You know, we started the process back in 2018 and submitted an initial rate application. The PSC returned it to us at that point indicating they wanted to get some additional information from the village. So we resubmitted it in 2020. And it’s just coming forward now.

JS – Some businesses are claiming this is really going to be a super hardship. What’s your answer to them?

SK – Well, you know, based on the information we have Germantown water will be very competitive with surrounding communities in southeastern Wisconsin. According to Baker Tilly, they did an analysis when the rate application was submitted the rates, we were charging were in the bottom 10% across the state. So this moves us up in an area that’s more consistent with neighboring communities.

Click HERE for more information on the water/sewer discussions with Richfield

JS –  I was at the meeting in August 2021 in the Village of Richfield, and it looks like the village of Richfield is talking with Germantown about water and sewer. Would this 83% increase affect that deal?

SK –  If there were to be an agreement reached with the Village of Richfield, then we would have to get a PFC approval for how that was structured and what the rates would be. But yes, the Village of Richfield with paid similar rates, or users in the Village of Richfield would pay similar rates to the users in the village of Germantown in this plan.

JS –  This infrastructure plan… does that include a new water tower to service Richfield?

SK – No. We are constructing a new water tower in the Holy Hill Road area. That was planned and is under construction right now to service that area of Germantown. That water tower is being funded 50% through tax increment district (TIF) funds and then 50% through water utility funds. That water tower was planned and construction design was underway before we had any conversations with Richfield. And it has yet to be determined whether or not there was to be an agreement with Richfield.

JS – Do you know how many emails or questions you have already.

SK – Last I saw, which was last evening, there were 11 comments posted to the PSC. I have gotten one voicemail. I’ve gotten probably about half a dozen emails and I know that our utility billing clerk has gotten some calls.

So there are some residents who are, you know, obviously, it’s on a percentage basis. It’s, you know, 80% is a big number that pops out and it works out for most people – it’s about a $15 to $20 per quarter increase. I think when people hear that they’re kind of relieved that it’s not going to be you know, while it certainly is, it’s not insignificant, it’s not overwhelming, either.

JS – Does this only affect the Village of Germantown or does it also include the town?

SK – Correct, it only affects water utility users

JS – Will public comments and input today actually have an effect on the process, or is the PSC mind made up?

SK – They’re there to serve the public. They also place a priority on, you know, making sure utilities have the funding to provide safe and consistent, you know, drinking water, that there’s an adequate supply of water to respond to fires, that that kind of thing. They do take the public input into account, but I think they also place a priority on public safety.

 Bullet points:  Population of Germantown –  About 20,000

The way the process works, the PSC will be taking input at the hearing today. People can still submit written comments to them through September 13. they’ll get back to the Village of Germantown with its decision within a couple of weeks from today.