MADISON — The village of Oliver is seeking to more than double its water rate to put the utility back in the black and finance a water main project, according to an application filed Thursday, Sept. 3 with the Public Service Commission.
In December, the PSC asked the village to file a rate case because its water utility had incurred a $10,325 loss during the past two years and had less than the 90 days cash on hand that the agency desires for utilities.
“In the Utility’s current financial state, the Utility may lack funds for routine maintenance, may have or may begin having difficulty meeting debt service requirements, or may be left with limited options for dealing with an emergency situation should one occur.” according to a Dec. 12 letter the PSC sent Village President Gary Abraham.
Village Clerk Julie Abraham said Friday that the village had received two 3% rate increases in the seven years she has been with the village but couldn’t remember the last time a comprehensive rate case had been filed.
The last comprehensive case wasn’t readily available Friday from PSC records.
If the rate request is approved as submitted, residential customers currently paying $29.88 monthly for 3,000 gallons of water could pay $71.11 for the same volume.
Abraham wouldn’t speculate on how residents would respond to the requested increase saying that, “We’ll see when the public hearing is held.”
The village is eligible for financing through the state Safe Drinking Water Loan to fund replacing water mains next year along Highway 105, State Street, and a portion of Chicago Avenue.
Construction is expected to begin next spring and cost estimates will be developed before then, she said.
Utility annual revenue has averaged approximately $24,000 the past few years, which is about equal to its annual operating costs. Depreciation expense and payments in lieu of taxes have pushed the utility into the red in recent years, according to the application.
The village has used cash from its general fund to keep the water utility afloat during the past two years, Abraham said.
Without the rate increase, the utility will incur a $20,341 income deficit next year after total expenses of $44,206 are subtracted from revenue of $23,955, according to the application.
The new rates are projected to increase annual revenue to $56,410, earn the utility a net income of $36,069 and a 4.9% rate of return on the value of its infrastructure investment, the PSC’s current benchmark for municipal utilities.
Before that happens, PSC staff will review the rate request, recommend an amount of revenue it deems the utility needs to remain financially viable and hold a public hearing simultaneously in Oliver and Madison before authorizing new rates.
The process can take six months or possibly longer due to delays the pandemic can cause, Abraham said.