City seeks water rate hike

Utility says rising operation costs cut into rate of return
By: 

Water rates could go up this fall for Shawano customers if the city gets approval from the state for another increase.

The city’s Water and Sewer Utility plans to file an application for a 3 percent increase with the Public Service Commission next month.

If approved, the increased rates would go into effect on Oct. 31.

Assistant City Administrator and Public Works Coordinator Eddie Sheppard said the increase is needed to keep up with the rising costs of operation the utility is facing.

Those inflationary costs, he said, have resulted in a drop of the rate of return approved by the PSC when the utility last requested a rate increase in 2014. New rates reflecting a 13 percent increase went into effect in February 2015.

Since then, however, the utility’s rate of return has fallen from the 4.9 percent approved by the PSC to 4.1 percent, a drop of about $42,000 in revenue for the utility that would be recouped if the proposed rate increase is approved.

“If water usage stays the same, it will result in about a $42,000 revenue increase through all the different water classes,” Sheppard said.

The requested rate increase will not need a public hearing.

The PSC allows utilities to submit a simplified rate case if certain criteria are met.

Under those criteria, the utility’s rate of return needs to be below what the PSC approved, current water rates would have to have been in effect for at least one year and it would have to be less than five years since the utility submitted a conventional rate case.

Sheppard said the utility meets all of those criteria.

The average residential customer would see their monthly rate for water usage go up from $17.75 to $18.31, including the monthly $8.50 meter fee.

However, that amount does not include the monthly fire protection fee, which would also go up 3 percent. The fire protection charge reimburses the utility for hydrant maintenance and other firefighting costs the utility incurs.

That means the actual rate average residential customers will see on their bill, currently $24.85 with the fire protection fee included, will increase to $25.62.

The average residential customer uses 500 cubic feet of water per month, or about 3,750 gallons.

Increases for other classes of customers, figuring only water use and not including the fire protection fee, are estimated as follows:

Multi-family water usage rates would go from $89.15 to $91.92, while the average commercial rate would rise from $51 to $52.66. The average industrial rate would go from $411.70 to $424.36.

Sheppard cautioned, however, that those are estimates based on the utility’s own year-end reporting but the final numbers would be decided by the PSC.

“We submit this application to them, they review it and they come back with their actual per cubic foot usage charge,” he said. “So we don’t actually know what they would do with that yet.”

The proposed application for the rate increase was forwarded Tuesday to the city’s finance committee. It ultimately will go the Common Council for review before the application is submitted.