A pipeline to transport Lake Michigan water to and from Oak Creek will cost Waukesha $183 million to build, according to a water sales letter of intent approved Tuesday night by both the Oak Creek and Waukesha Common Council.
The letter effectively fills a missing piece of the city’s application to divert Great Lakes water past the Subcontinental Divide. The letter of intent outlines the terms for a future 40-year contract followed by four additional 10-year automatic renewals for a total of 80 years, according to a news release from the Waukesha Water Utility. However, even if the contract expires after 80 years, Oak Creek would not be able to discontinue water service to Waukesha without Waukesha’s approval.
The final contract between Waukesha and Oak Creek will not approved until Waukesha receives approval under the Great Lakes Compact, which needs to come from top governmental officials from Great Lakes states.
The original cost estimates for the pipeline to Oak Creek was $261 million, and with the pipeline cost projected to be $183 million, the effort to reduce radium levels in the city's water supply by 2018 could cost significantly less than previously thought under the Oak Creek alternative.
“This is a great example of the benefits of regional cooperation,” Waukesha Alderman Paul Ybarra said in a news release. “Waukesha will have a sustainable supply of healthy water and Oak Creek will benefit from increased revenues for both the water utility and the city.”
The capital costs of building the water supply line to Oak Creek is $8 million more than revised estimated costs of $175 million to Milwaukee. Milwaukee cost estimates were increased from the original $164 million estimate because for a $6 million infrastructure upgrade and a $5 million one-time payment to Milwaukee.
However, Waukesha and Milwaukee never started negotiations after Milwaukee decided it would negotiate for Waukesha’s current water service area and not for its future water service area.
Impact to Water Bills
The question in many residents’ minds is the impact to their Waukesha Water Utility bills. Water bills are estimated to increase from a $26 per month average in 2012 to $58.26 by 2022, according to a news release from the water utility. Water rates are subject to approval from the Public Service Commission, which recently approved the first of many water rate increases required for the project.
Water wholesale rates are planned to be $1.90 per 1,000 gallons of water for Oak Creek to provide seven million to 11 million gallons on a daily basis. Oak Creek, Caledonia and Franklin business owners and homeowners could see water rates decreased by 25 percent. The water sale to Waukesha will result in the City of Oak Creek receiving a $300,000 annual payment in lieu of taxes from its water utility – a payment that could increase to $1.2 million by 2030, according to the news release.
Alderman Terry Thieme, who serves on the Waukesha Water Commission, spoke about the need for the city to have a sustainable water source. The Great Lakes project is a necessity for Waukesha, he said.
“It is a costly project,” Thieme said during the Waukesha Common Council meeting. “Nobody enjoys spending this kind of project. … On the other hand, doing nothing is not an option. … This is the least costly option in terms of sustainability.”
Waukesha Still Needs Great Lakes Diversion Application Approval
Waukesha is looking for a Lake Michigan community to supply it with lake water. Waukesha will also have to build a pipeline to return the water to the Great Lakes.
Waukesha spent a year and a half in negotiations with Oak Creek and Racine over getting Lake Michigan water. The votes Tuesday represent a signifcant step, but Waukesha still faces a long climb to get Lake Michigan water, including approval from all Great Lakes states.
Waukesha is outside of the Great Lakes Basin but is in a community within a county that straddles the Great Lakes Basin, which requires Waukesha to return Lake Michigan water to the Great Lakes. It also requires approval by all Great Lakes states under the terms of the Great Lakes Compact.
The Waukesha Water Utility and the Waukesha Common Council met in closed session earlier this month to discuss the water sales contract, but information was not made public after that meeting.
The Oak Creek Water and Sewer Utility has said providing Waukesha with Lake Michigan water could result in a rate reduction of as much as 25 percent for Oak Creek residents.
Waukesha is forced to either treat or replace its water supply by 2018 because radium levels have put the city's water supply out of legal compliance. The city's wells also face problems with declining water quality due to arsenic and saltwater and with a limited groundwater supply.