May 5, 2024 – West Bend, WI – As the West Bend School District discusses a multi-million-dollar referendum on the November 2024 ballot, and We Energies sends another rate increase to the Public Service Commission, the City of West Bend on Monday, May 6, 2024, will review a request for an immediate increase in water and sewer rates.
DATE: May 1, 2024
TO: Board of Public Works
FROM: Ruth Mueller, Utility Director
SUBJECT: Sewer Utility Rate Review
In accordance with the City of West Bend Sewer Use Ordinance, Baker Tilly recently completed a comprehensive rate study for the Sewer Utility to determine the adequacy of the current rates.
The study concluded that a rate increase is necessary to meet both operational and capital needs. The key factors contributing to the need for this increase are outlined below:
• Sand Filter Rehabilitation Project: Compliance with Wisconsin Department of Natural Resources (DNR) regulations requires a substantial investment of $6.43 million in the Sand Filter Rehabilitation Project for Phosphorus Removal. The Sewer Utility has followed the DNR established nine-year compliance schedule which includes investigating options for phosphorus removal, economic impact, and pilot studies. This project serves as the primary driving force behind the proposed rate increase and has been discussed and on the horizon for over 15 years.
• Maintain and Upgrade Aging Plant: The Wastewater Treatment Plant was constructed in 1980, designed with a 25-year life. Major repairs and replacements have taken place in recent years to maintain operational efficiency and compliance standards.
• Infrastructure Maintenance: Ongoing maintenance and upgrades to aging infrastructure include recent sewer main replacement projects on Laurel Drive South and Pennsylvania Avenue. Upcoming projects include Maplewynde Road, Butternut Street and Hawthorn
Drive sewer main replacements.
• Operating Costs: Anticipated increases in operating costs, attributed to inflation, health insurance expenses and labor/benefits, further contribute to the need for a rate adjustment.
• City Hall Administrative and General Costs: City Hall costs due to additional operational and health care costs have increased dramatically over the past few years.
The information provided by Baker Tilly gives options for the following rates of return (ROR) – 0%, 2% and 4%.
Assuming the rate change occurs in 2024, the two-step projected rate increases are as follows:
Water Utility DATE: May 1, 2024
TO: Board of Public Works
FROM: Ruth Mueller, Utility Director
SUBJECT: Water Utility Rate Review Baker Tilly recently completed a financial forecast for the Water Utility to determine the adequacy of the current rates.
The forecast has determined that a rate increase of 21.85% is necessary to meet both operational and capital needs.
This memo outlines the key factors contributing to the need for this increase:
• Construction of a Water Treatment Facility: A critical project to address PFAS contamination requires an investment of $7.2 million in the construction of a Water Treatment Facility. This project is the primary driving force behind the proposed rate increase.
• Construction of Well #5 Well House.
• Infrastructure Maintenance: Costs associated with maintaining and upgrading aging infrastructure, such as watermain replacement projects, which include watermains, services and hydrants, are essential to ensure system reliability. Recent projects include Laurel Drive South, Pennsylvania Avenue and Main Street Reconstruction (Downtown). Upcoming projects include Maplewynde Road, Butternut Street and Hawthorn Drive.
• Operating Costs: Anticipated increases in operating costs, driven by factors such as inflation, increased regulatory requirements, well rehabilitation, and labor/benefits.
• City Hall Administrative and General Costs: City Hall administrative and general costs due to operational and health care costs have increased dramatically over the past few years.
The Water Utility received a grant in the form of principal forgiveness in the amount of $3.5 million to aid in the funding of the Water Treatment Facility. Of this amount, $2.73 million is allocated to test year 2024, as indicated in the financial forecast.
Without this grant amount, the proposed rate increase would have been 26.89%.
The last rate increase occurred on April 1, 2021, with an increase of 9.5%. Prior to that increase, rates were increased by 9% in April 2011.
We expect that this proposed rate increase will be implemented in the next 4 – 6 months, pending review and approval of the Public Service Commission.
At this time, we are requesting authorization to file the Rate Increase Application with the Public Service Commission.
The Board of Public Works meeting begins at 6:25 p.m. on Monday, May 6, 2024, in the council chambers at City Hall, 1115 S. Main Street. The meeting is open to the public.
