15% Increase in Water Rates for Neillsville Approved at City Council Meeting
Friday, June 28th, 2013 -- 8:43 AM
-Neillsville residents will see an increase in their water bill when they receive their first statement in 2014 due to a decision made during the Neillsville City Council Meeting on Tuesday.A water rate study was recently complete by the auditors of CliftonLarsenAllen and in assessing Neillsville?s water needs made several key assumptions which included some projects the city needs to have done in the very near future.
The assumptions were that Neillsville?s water consumption remains the same as the last 4 quarters, a 2% increase in operating expenses, payroll and benefits, chemicals increase to $18,000 and a cost of living increase of 3.5%.
More assumptions include an annual well rehabilitation cost that continues about $20,000 per year, water tower repainting at $180,000, replacement mains and hydrants at $212,000 over the next 5 years, replacing meters over the next 7 years at $32,000 and a debt service requirement of $104,000 for 2013-2015 regarding the SCADA system.
The council was then given three scenarios one where the city would continue to operate with no change, another where the rate is increased by 15%, and another where the rate is increase by 25%, which is what the Public Service Commission would like to see based on the rate of return. If there is no change, the city would have an operating income of -$37,810 dollars and a rate of return at -1.92%.
If the city would choose the 25% increase, they would have an operating income of $108,487 and a rate of return at 5.50%. That rate is considered ideal by the Public Service Commission and that increase would allow the city to have all of its projects completed and still end up with 5.50% rate of return.
The final ?middle of the road? option would be the 15% increase. This would give the city an operating income of $49,312 and a rate or return at 2.50%. This would still allow the city to get its projects completed with a rate of return the city, being the size that it is, can function on. In fact, the city currently, as of 2012, has an operating income of $53,811 and a rate of return at 2.99%.
The council did choose option 3 and it will be submitted to the Public Service Commission. However, the commission could come back to Neillsville and force them to take option 2, the 25% increase.
Feel free to contact us with questions and/or comments.