At this afternoon’s Kenosha Board of Water Commissioners meeting, the commission voted to apply to the Wisconsin Public Service Commission (PSC) for a water rate adjustment.  The current authorized rateof return is 6%.  There has not been a full water rate adjustment for the water system since 2004.  There were cost-of-living adjustments in 2008 and 2009.

The rate of return for the water system for 2011 was 2.64%, and the bond coverage was 2.11.  These numbers indicate that the water system is in need of an overall water rate adjustment.

Ed St. Peter, the general manager of the Kenosha Water Utility, explained that there were four items that have gone up in cost which represent the main reasons for the rate increase request:

• Chemicals – 133% increase since 2004 ($109,000);
• Electricity – 60% increase ($299,000);
• Fuel – 96% increase; and
• Property Taxes on Kenosha water utility buildings – went up $668,000 (from $1.5 million in 2004 to $2.2 million in 2011) .

St. Peter said that these are fixed costs.  “There’s nothing we can do.  I believe the utility runs as efficiently as possible.  We have one operator at each (at both the water and the sewer).  Most others have more than one operator.”

Alderperson G. John Ruffolo confirmed St. Peter’s comments.  “We have the responsibility to provide clean, drinkable, safe water to our customers.”

St. Peter also recommended that the sewer rates also be adjusted, but the committee voted 4 to 2 to only apply for the water rate adjustment at this time.  These rates have not been adjusted since 2007.  The rate of return for the sewer system for 2011 was 3.48%, and the bond coverage was 1.79.  These numbers indicate that the sewer system is also in need of an overall sewer rate adjustment.

Attached to the general manager’s request was a report of 2010 sewer and water rate comparisons of average annual costs per household showed that Kenosha was 325 out of 337 on this list.  The average total annual water charges was $206.22, and the average total annual sewer charges were $209.53, for a total of $415.75.  This list showed that 96% of other communities in Wisconsin have higher rates than Kenosha.  Lake Geneva and Madison are at three times Kenosha’s rates.  “Even with the proposed increases, Kenosha’s rankings would still be above 90% of all Wisconsin water utilities,” said St. Peter.

St. Peter was questioned as to the number of water main breaks that occurred last year.  There are 150 to 200 breaks per year.  The repairs for each one cost between $8,000 and $10,000.  “These expenditures add no value.  All we’re doing is fixing leaks.”

St. Peter explained that the Public Service Commission does a revenue analysis first, then an analysis on the customers’ needs.  This would start in a month or two, and it could take between three and six months to complete.  Once these analyses are complete, the results will then be brought back to the commission for action.

St. Peter said that his preference would have been to have applied for an increase for both the water and sewer rates, but “one is better than none.  Water really needs it.  The water utility borrowed $5 million from the sewer utility for capital projects.”

Ruffolo said, “As much as I hate to raise rates, there was an issue that happened in Florida.  They went to a privatized system, which was never maintained.  Now, they are facing 50% to 60% rate increases.  I hope we never get into that sort of a situation.”

The vote was 4 to 2 with Alderpersons Bostrom and Ruffolo voting against.