MADISON — Monthly water bills for average residential customers of the village of Oliver will increase by nearly $37 or, 118%, according to a rate order issued Wednesday, May 12, by the Public Service Commission.
Average residential customers currently paying $30.88 monthly for 3,000 gallons of water will pay $67.35 under the new rates.
The village board is scheduled to meet May 25 and is expected to determine when the new rates will take effect, Village Clerk Julie Abraham said.
The village has four categories of residential customers, defined by the amount of water consumed, and rates for the varying categories will increase by 104%-158%.
Rates for the two commercial customer categories will increase by 141% or 156% and public authority customer rates will increase by 40%.
Rates are based on the cost of serving each customer category. However, an individual customer’s bill may not necessarily equal the overall percentage increase of the associated customer category. Instead, it will depend on the amount of water the customer used.
The PSC presented the proposed rates to the village prior to the April 21 public hearing and it had no objection.
The PSC has authorized a Public Fire Protection Charge on water bills, which is typically used to recover the cost of fire hydrant maintenance and the cost of water used to fight fires.
Last year, the total PFPC was $6,432. The village informed the PSC in December that the fire department couldn’t use the fire hydrants directly for firefighting and instead uses the hydrants to fill a truck with a 1,000-gallon tank which is transported to fires.
The PSC order eliminated the PFPC in the rate order and rolled recovery of the utility’s costs associated with firefighting into the overall rate structure.
The water utility had been operating in the red in recent years, due partly to the cost of repairing a water main break in 2018, Abraham said. The utility borrowed from the village’s general fund to cover the revenue shortfall.
Revenue from the new rates will allow the utility to repay the village’s general fund and meet ongoing operating costs, she said.
Without new rates, the PSC projected the utility would finish 2021 with an $11,670 income deficit. The new rates should boost revenue by $13,500 to $37,455, and after expenses of $35,625 yield a net income of $1,830, according the PSC.
The village hadn’t filed a rate case since 2013. Concerned about the utility operating in the red for a few years, the PSC, in September, asked the village to file a new rate case.
The rate request anticipated recovering the cost to finance replacement of all the water mains in the distribution system and the well pump.
“The pump was installed in 1957 and the few mains we have are also aging,” Abraham said.
However, the village decided to postpone replacing much of the water system’s infrastructure after learning the impact the estimated $800,000 project would have on rates, plus the expense of pulling the utility out of the red, Abraham said.
“That’s a lot of money for a system with only 47 hookups,” she said.
The village’s engineers and the PSC are meeting about the main and well pump project and Abraham said that will likely result in filing another rate case in the near future to recover the cost.