Oak Creek Water Utility: Rates will not increase due to project

Oak Creek — Late last month, residents in Oak Creek, Franklin and Caledonia received an unwelcome letter regarding their water bill.

In a notice sent Jan. 27 to residents, the Public Service Commission of Wisconsin reported that proposed major improvements at the Oak Creek Water and Sewer Utility could potentially result in a 33 percent rate increase.

In response, dozens of water customers condemned the proposed rate hike during a public hearing held at the Oak Creek Public Library on Feb. 16. But the incensed audience soon received a different story from Oak Creek officials: There will be no rate increase.

"We planned this project without a rate increase," said Water and Sewer Utility General Manager Mike Sullivan. Despite that, "the PSC has calculated what (we) could ask for as a maximum rate increase."

"The project will be funded through Safe Drinking Water Loan Program funds with a low-interest rate of 1.78 percent," Sullivan added. "… In addition, we have existing debt that will be paid off for previous projects."

The proposal

Improvements to Oak Creek's water treatment plant won't be cheap, but they're desperately needed, Sullivan said.

The $29.5 million project includes a new chlorine contact tank, a pumping station and an electrical storage room at the plant, 9325 Fifth Ave.

The city's current chlorine contact tank, which helps disinfect incoming water, has not complied with current standards set by the Department of Natural Resources since 2007, Sullivan said.

The DNR has previously suggested that the tank "had potential for leakage into the tank from groundwater that could bring pathogens and other microorganisms into the water storage that is then delivered to our customers," Sullivan said.

"We asked DNR to give us a little time because this is a very expensive project to try and fix ... and they agreed to give us 10 years to accomplish this project and to put ourselves in a financial position to be able to do it without a rate increase," he added.

Franklin's objections

But residents from the neighboring city of Franklin, which receives about 40 percent of Oak Creek's water supply, voiced doubts about the proposed facility improvements.

Water rates have been points of contention between the Oak Creek plant and the nearby cities it serves for the past few years.

"Franklin is questioning the planning, the need, the timing and the cost of this proposed project," said Franklin City Attorney Jesse Wesolowski at the public hearing.

The Oak Creek water treatment plant "claims that this is due to a DNR requirement, but I have heard no testimony that this absolutely has to happen within 10 years."

On behalf of Franklin residents, Wesolowski also criticized the city's plan for building an "oversized" facility.

"The Oak Creek water facility is a national-award winner for years, dating back to the '90s," he said. "It's the highest-quality water around — how do you improve on that? Well, you could double up, triple up on everything, but is it adding to the cost of services without proportionately increasing the value of available quantities? Franklin says 'no.'"

Water for Waukesha?

Other opponents water facility proposals focused on what they perceived as a presumptive move to partner with Waukesha, a city that has spent years searching for a new water source.

Oak Creek officials signed off on a letter of intent to be a seller to Waukesha in 2012, although no significant decisions regarding a partnership have been made.

Former Franklin Mayor Tom Taylor, who attended the meeting solely as a resident, implied that Oak Creek officials were "setting a dangerous precedent" by "putting the cart before the horse."

"It's public information that the city of Oak Creek and the city of Waukesha have been in meaningful discussions for some time to transfer water from the Great Lakes," Taylor said. "I believe this whole (proposal) is connected to Waukesha to improve its infrastructure."

"If you find that there's any connection with the rate increase that's being proposed by Oak Creek and the proposal of water to Waukesha, you should deny this proposal," he advised.

Oak Creek Mayor Scaffidi, who also attended solely as a resident, vehemently shot down the theory that the proposed improvements to the water treatment facility were connected to Waukesha at all.

"This issue has nothing to do with Waukesha water," Scaffidi said. "We don't decide if Waukesha gets water. That's not up to us. .. That's a decision made by the Great Lakes governors. If it happens, it happens."

"We tend to think regionally and larger than just our city in Oak Creek, but whatever happens in that case, we'll worry about that at a future date. That's not why we're here."

Limited time

When it comes to improving the Oak Creek water treatment plant, time is money, Sullivan said.

The 1.78 percent interest in loan funds will not stay that low forever, and the DNR needs to see the city's construction contracts by March 30, he said.

"Timing is critical to get this done before interest rates go up," Sullivan said.

Scaffidi agreed.

"I understand the angst and the concern (about potential rate increases) ... but when our utility director of one of the best utilities in the country says we can do this without a rate increase, no one (should) ignore that opinion."

The Public Service Commission will consult the public comments in determining whether or not to approve the Oak Creek utility project.