Water plant fix could mean ‘huge’ rate increase

Port Washington water utility customers could be facing as much as a 45% increase in water rates by 2024 to pay for $15.3 million in needed improvements to the water plant, the Board of Public Works learned Tuesday.

That increase is “huge,” Tom Nennig, president of City Water, a consultant for the project, told the board. “That is a major impact for a lot of people.”

There are some steps the city could take to mitigate the increase, Nennig said, such as implementing a 3% rate increase next year or capping the utility’s annual payment in lieu of taxes to the city. 

It could also reduce the Public Service Commission’s recommended 5% rate of return to the current 3.6%, Nennig said, but that might only reduce the rate increase to 30%. The city would probably have to file for annual 3% increases after that to get the rate of return to 5%.

“It helps to minimize the hit,” Nennig said.

Those numbers may change, he added.

“It’s preliminary,” Nennig emphasized.

But no matter what, he said, the work must be done to meet current state codes and address deficiencies, primarily regarding backup power and needed changes to the clearwell, that have been identified by the state Department of Natural Resources.

The DNR had grandfathered the city’s water plant on these issues in the past, Nennig said, but recently decided to end this practice and require plants like Port’s to update their facilities.

The DNR is requiring the work be done by the end of the year, but if the city is making progress it will likely get an extension until the end of 2024.

Members of the board last month heard a report from City Water and Short Elliott Hendrickson Inc. about their options, and this month received a report outlining their preferred option. 

The work, which will extend the life of the plant by 25 to 30 years, will include constructing a new basin and equipment building at the south end of the plant, adding an ultraviolet disinfection system and improving the overall electrical system, as well as adding a backup generator.

The work itself is estimated to cost $12.9 million, Nennig said, but when design, engineering, administrative and other fees bring the total to $15.3 million.

  Other communities have been required by the DNR to do similar work, Nennig said, and the cost and proposed rate increases have been similar. South Milwaukee, he said, did a $7.8 million project in 2017 that required an almost 34% increase in rates, and other communities are in the process.

Board Chairman Jason Wittek asked how much the proposed 45% rate increase would cost the average homeowner, something Water Supt. Leo Duffrin said is difficult to ascertain.

Public Works Director Rob Vanden Noven noted that residents’ water bills reflect the cost of both sewer and water. Because of this, he said, bills will likely only increase by 22.5% if the rate increase is 45% or 15% if the increase is 30%.

Wittek said the city may also benefit from proposed federal infrastructure funding that could offset some of the estimated cost of the work.  

Given the cost, Ald. Mike Gasper, a member of the board, questioned whether it might make more sense to build a new plant.

Miles Jensen of SEH said that’s not likely even after the plant reaches the extended end of life.

“There’s a lot of value in the treatment plant,” he said. “Replacing equipment is easy. Building a whole new plant is going to be close to $50 million. I don’t see the need for that.”

Board member Phil Bruno, noting that the city is also making improvements to the wastewater plant, asked if it would make sense to combine the work into one project.

The board unanimously recommended the city hire SEH and City Water to provide engineering and design work for the work at a maximum cost of $914,000.

“We need to keep moving on this work,” Vanden Noven said. 

The Common Council is expected to act on the recommendation when it meets Tuesday, June 15.