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Germantown residents weigh in on potential 83% water rate increase

Germantown, WI – During an online public hearing Thursday afternoon, Sept. 9, 2021, residents in the Village of Germantown weighed in on the possibility of an 83% water rate increase currently being contemplated by the Public Service Commission (PSC).
The meeting was conducted virtually with utility representatives and commission staff present during the hearing.

Germantown

The meeting was moderated by Michael Newmark, Administrative Law Judge, PSC, who also swore in each resident before they were able to deliver their questions and comments to the Public Service Commission.

Newmark said there were 12 written comments that had been received at the time of the meeting, held 3 p.m. – 4 p.m.

Germantown Village Administrator Steve Kreklow offered to give background information on the driving factor behind the dramatic water rate increase.

“The Village submitted a rate application about a year, or a year and a half, ago. Due to the needs that we saw for additional funding to address aging infrastructure, the Village of Germantown has seen large periods of growth during the 70s 80s, and 90s. Much of the infrastructure put in place during those time periods have been coming near the end of its usefulness and we are experiencing increased failures of equipment and pipes, pumps, towers, etc, that need additional work.”

“The existing revenue stream is not adequate to fund the work that needs to be done,” said Kreklow, “The Village is in support of the recommendation.”

Kreklow confirmed the decision to move the public fire protection charge from the tax roll to utility customers was affirmed by the Village, “The Village Board made that decision and passed that resolution in 2021,” he said.

David Westphal was the first to address the PSC during the public hearing. “It seems that the increase in part is due to rising operational costs, largely in part due to infrastructure costs and repairs, and I completely understand how that goes.”

Westphal said, “I guess I’m just trying to figure out the payback period. How is the number decided for the increase. I would have expected a smaller increase over a longer duration.”

“The reason I’m concerned is because I’m on a board of directors at a nearby condo association,” said Westphal, “And they’re gonna be quite sticker-shocked when they see condo fees will maybe go up some $30 each month.”

A representative from the PSC responded. “We regulate all the utilities in Wisconsin that provide water, gas or electric service, and we treat all the utilities, whether they’re privately investor-owned or municipality-owned basically using a business model. So, you have your operating costs like labor and chemicals and electricity and supplies and all those things that you pay for every year. There are certain tax equivalents that a water utility pays and then, capital costs are spread over time using that business model.”

“We calculate depreciation expenses, and the length of time that’s spread over depends on the type of classes we’re looking at.  For example, something like the cost of the water holder would be spread over 50 years, water mains are probably spread over 85 years, and certain things like pumps or certain buildings might be spread over a shorter period of time. So, those costs are spread over many years and they last a long time, and the utility has built into its rate structure this depreciation expense to recover the cost of these assets, and also a return on these assets, and both of those go towards helping pay the debt on those assets and reinvesting in the utilities.”

Newmark said the PSC has to go through the procedures of reviewing the case and making a decision, and expects the timing of that process to take no longer than a month.

Gestina Howard of Germantown addressed the PSC.  “My husband and I recently moved back to Germantown in July of this year and right before we left in 2019 we saw increases in the water bill not because of our usage.

“We are concerned with a large rate increase, as well as understanding that range from 30% to 80% are the same numbers from media outlets as well as announcements from my apartment management. It seems very deceptive in the idea that we will have the same amount of need for new assets and depreciation management years down the line after the cost of water and power has been paid off… [The rate increase] has an impact for generations forever for our residents here in Germantown.”

Germantown resident Sarah Schuler addressed the PSC.  “I reviewed the 97-page cost analysis that was posted online and it stated there was a 4.9 percentage rate of return on investment based on the auditor’s recommendation. Using those calculations, what would be the return on investment if we had increased our rate 10% six years ago.

“So, why the lack of planning and the big ticket now. I have a brand new neighbor, and she said, ‘You know, I’m probably gonna have to get five to six water barrels to handle the increase in our water rates.’

Schuler said, “I don’t think 83% is the right number, I don’t think 50% is the right number, I don’t think 25% is the right number.

“That should have been something that was forecasted and budgeted and planned for instead of waiting until an 83% increase when we’re in a pandemic.”

Dan Kletti, also a board member for a condominium, attended the hearing by phone and said the hearing process, “seemed a bit backward.” “If I understand correctly, part of this increase would be for a water tower, and the water tower is almost complete,” said Kletti.

Kreklow said, “Should we have submitted an application earlier. Good question. But, we are here today and we’re trying to make the best of it. To make sure we’re able to provide safe and reliable water.”

Jim Schnoll of Richfield brought up his understanding that the “Village of Germantown and the Village of Richfield are in negotiations right now to supply Richfield with water.”

Click HERE for details on the water discussion between Germantown and Richfield

“There were no conversations with Richfield, there was no thought or plan of providing water sewer service to Richfield after construction plans had started,” said Kreklow. “Folks in Richfield have approached the Village of Germantown and asked if we would consider providing sewer and water service to them and that is something currently under consideration, although, you know, at this point, there’s no decision to go forward.”

Richfield Village administrator Jim Healy acknowledged at 4:15 p.m. Thursday, Sept. 9, 2021, the talks between Richfield and Germantown are still in progress.  Healy and Kreklow are meeting today, Friday, Sept. 9, 2021 to discuss the issue.

“It is something we would have had to have some conversations to see if it is feasible and if it would be economically beneficial to the ratepayers in the Village of Germantown,” said Kreklow.

NOTE: People can still submit written comments to the PSC through September 13 using the following address:

Public Service Commission of Wisconsin
4822 Madison Yards Way
North Tower – 6th Floor
Madison, Wisconsin 53705-9100

The PSC is expected to get back to the Village of Germantown with its decision within a couple of weeks from the Thursday public hearing.

   

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