Milwaukee Mayor Barrett Pitches Waukesha Council On Water

Full text of his letter, below:

October 16, 2012

Dear Waukesha Common Council Members:

As you continue closed session discussions regarding the proposed water purchase from Oak Creek, I would like to provide you with some relevant information. I am providing these figures to help you assess whether the benefits you derive from expanding your service area outweigh the additional cost you will incur to provide your residents with high quality water.

If the $1.90 per thousand gallon wholesale rate contemplated in the Oak Creek deal were to be approved, it would add 30% to the typical household’s water bill, adding $90-95 per year. The rate of $1.90 is 64% higher than the $1.16 rate Milwaukee Water Works is currently charging West Allis, our most comparable wholesale customer. Citywide, the additional cost would be approximately $1.9 million per year.

Waukesha ratepayers have no guarantee that Oak Creek will not raise its costs, or that it will not ask to pass costs onto you as a wholesale customer as it has for Franklin residents. There is also no guarantee the Public Service Commission (PSC) will approve the $1.90 rate proposed in the Letter of Intent. In fact, Franklin’s 2011 wholesale rate is much higher at $2.16 per thousand gallons and is likely to increase further based on the recent PSC decisions.

The $183 million capital infrastructure cost contemplated in the Letter of Intent also exceeds what we have estimated it would cost to hook up to Milwaukee’s system by approximately $13 million. That would amount to an additional cost of $1 million per year or $19 million over a 20-year revenue bond at today’s historically low rates. Revenue bond rates are highly likely to increase in coming years.

The Milwaukee Water Works provides predictable and sustainable costs to customers in fifteen communities, Milwaukee County institutions, and nearly every water-intensive industry in the region. Our customers benefit from the fact that our rate base is spread far and wide.

They also benefit from the security of knowing we have two treatment plants that produce water for our customers and do not need major plant expansions to increase our output of high-quality water. The peace of mind our back-up infrastructure provides to residents and businesses who need to be able to rely on our water is unquantifiable.

Based on our communications with the Southeast Wisconsin Regional Planning Commission (SEWRPC) and the DNR, it is clear that the City of Waukesha could ask for the proposed sewer and water service areas to be amended. Now that your ability to use Oak Creek as a supplier faces uncertainty, this would be a good time for you to re- evaluate your decision not to seek such an amendment.

The City of Milwaukee continues to be interested in negotiating the sale of water to the City of Waukesha’s current water service area. The Milwaukee Water Works could provide your residents with a healthy and sustainable supply of drinking water at a rate that our competitors cannot even come close to matching.

Taking action to revise the proposed service area now is likely to relieve you from the expense and time spent on challenges to your diversion request down the road. For the sake of your ratepayers and your timeline, I ask that you reconsider your position on the service area so that we can commence negotiations to serve Waukesha city residents with high quality water at the lowest possible cost.

Sincerely,

Tom Barrett Mayor