“How will that impact our citizens in terms of costs?” was the question posed by Lake Mills City Council member Michelle Quednow at the brief Nov. 16 meeting. She was referring to the public works board’s recent recommendation to build a new wastewater treatment facility, which can only be funded through customer rate increases.

During the meeting, the council approved the 2022 utilities budgets, which has proposed revenues and expenditures for the water, electric and wastewater utilities. Wilke said the budget is presented as a resolution so the council members can be aware of what is expected of the utilities’ finances over the year.

The agenda item prompted some discussion on future utility rate increases.

City Manager Steve Wilke said generally a rate study will be conducted and a price increase will be recommended. He said the increase would be based on the costs of operations and new capital infrastructure as it relates to debt.

“I don’t know what the wastewater utility (rate) will look like yet, probably 3-4 (% rate increase),” Wilke said. “And we may let that slide another year just to wait and see what happens in the facilities report.”

The city manager said historically, this has been a situation where the public service commission would prefer an annual 3% rate increase per year than wait 3 to 4 years to conduct a study and then raise rates 10%. Quednow called that 10% increase at once a very unfortunate scenario.

“Knowing that there is going to be an increase, is there a possibility of a gradual (rate) increase over a period of time to supplement whatever money is needed instead of making any grand changes to (another) way,” she asked.

Quednow is in favor of the new wastewater treatment plant but wanted to know it’s final impact on all the residents.

Wilke said the large rate increase will likely be similar to 1989, “which was a shock to everyone.” Based on the rate hike, the city was able to go an extended period without changing its rates.

Wilke noted the wastewater utility rates are in a similar situation — low operation costs and high capital costs.

Wilke said the water utility will probably see a 4-7% increase; he added the city’s water rates have historically been low and only started increasing since the municipality undertook a number of capital improvements.

“Our operation costs are pretty low in water but capital costs are pretty high,” the city manager said. “That’s probably what will be the single-largest impact on our long-term water rates – how much we keep up on the capital costs.”

Wilke said the water utility is on course for a rate increase in the next year and he suspects a rate study will get underway in the next three to four months.

“I don’t think electric will see any for another year but I’m not going to guarantee on wastewater,” he said.

Director of Public Works Paul Hermanson said a cost-of-service study was recently completed for the electric utility in November. The study found the city could consider a 4% rate increase “but there’s no value in doing that now,” he said, adding the rate will likely be reviewed again next year.

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