The process to increase water rates received approval from the Manawa Common Council at its Sept. 27 meeting.
The rate increase was recommended by city auditor Mike Lensmire. “The current water rates are not generating enough cash flow to meet the loan requirements,” he explained.
“We have to do something – that’s for sure,” said council president Bob Lieberman.
Lensmire presented three options to the council:
? Keep rates the same.
? Increase by 44 percent to meet the 6.5 percent rate of return suggested by the Wisconsin Public Service Commission (PSC).
? Increase by 34 percent for a 5.2 percent rate of return.
The last scenario would give the utility about $200,000 cash flow for the next four years, which is the bare minimum requirement. Lensmire noted this should be sufficient until the 2003 bond issue drops in 2016 and another bond balloons to larger payments.
The council was concerned that other factors may come into play; for instance, another expansion by Sturm Foods.
Then consumption would increase and there would be more revenue, and also more expenses, Lensmire said. With any substantial changes, the rates would need to be revisited, he noted.
With the council’s approval, Lensmire will begin the application process. The WPS will need about 90 days to do further studies to determine how to make the rate changes. For instance, they may raise industrial rates more than residential rates. If they raise the rates evenly, most home owners would pay about $15-$16 more per quarter by January 2011.