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Milwaukee Water Deal With Waukesha 'Prematurely Killed'

Milwaukee Common Council halts negotiations with Waukesha based on city's future service area; Waukesha expects water deal with Oak Creek or Racine in mid-August.

The Milwaukee Common Council has removed itself from negotiations as a potential water supplier of Lake Michigan water to Waukesha, city leaders say.

based on the city’s future water service area – set by officials with the Southeast Wisconsin Regional Planning Commission – because it includes properties in the Town of Waukesha, Town of Genesee, Town of Delafield and the City of Pewaukee. The Milwaukee Common Council decided Friday morning it will only negotiate with Waukesha for its current water service area.

“We are disappointed that Milwaukee prematurely killed this opportunity to negotiate a historic regional cooperation agreement with Waukesha,” said Interim City Administrator Steve Crandell in a prepared statement. “The DNR and SEWRPC have both made it clear that neither Milwaukee nor Waukesha has the authority to change the service area.

“In spite of this Milwaukee has refused to negotiate to provide water to the area we are obligated to serve under the state law that adopted the Great Lakes Compact. It is illegal, under state law, to restrict the service area by municipal boundaries.

"Waukesha communicated to Milwaukee that good faith negotiations could address many of their concerns. Unfortunately, with today’s vote, Milwaukee has chosen to push our two communities further apart, rather than bring us together.”

Milwaukeeans will lose the opportunity to save millions from their water bills by the loss of a water sale to Waukesha, Crandell said. Negotiations will continue with Oak Creek and Racine as Waukesha looks to those communities as potential water suppliers. Crandell estimated that a water sales agreement will be finalized with “competitive prices” with the Lake Michigan communities.

Milwaukee, in the city's Great Lakes water diversion application, was identified as being the least costly of all three Lake Michigan providers.

Even with a water sale agreement between Waukesha and Oak Creek or Racine, the city still needs approval from all Great Lakes states because it is just outside the Great Lakes basin where water flows naturally to Lake Michigan. It also would need to return the water to the Great Lakes, which it has proposed to do via Underwood Creek.

In addition to being under a June 2018 deadline to remove radium from the city’s water supplies, the has declining water quality and quantity in its eight deep wells and three shallow wells.

n to divert the water from Lake Michigan is currently pending with the Wisconsin Department of Natural Resources

the 'sha guy July 06, 2012 at 06:12 PM
Just curious? Why should Milwaukee rate payers be able to "save millions" off the backs of Waukesha water users. Isn't Lake Michigan a shared resource? Why should some communities be able to profit off of Waukesha? I would think charging a fair rate would be fine to allow for maintenance and upgrades, but for Waukesha to subsidize water sales in Milwaukee so they can "save millions" is absurd and foolish. This water deal is starting to sound more and more like a social welfare program than it does a water issue.
Sarah Millard (Editor) July 06, 2012 at 06:20 PM
It's a matter of economics...the fixed costs are always going to be there but by increasing the output of Lake Michigan water and selling it to Waukesha, the City of Milwaukee (or Oak Creek or Racine because all three communities stand to save millions from a deal with Waukesha) would find the savings because the fixed and production costs would be defrayed among a greater number of people.
the 'sha guy July 06, 2012 at 06:44 PM
They will be charging Waukesha a higher rate for the same resource and charging their residents less, correct? This simply appears to be water welfare. Charge Waukesha more to subsidize our own communities water needs. In other words, sell Lake Michigan out to the wealthy communities to support our social needs in the city. Think about it, does WE Energies charge less to customers who are closer to their power plants? They have a similar fixed costs for their infrastructure.
Shawn Reilly July 06, 2012 at 09:47 PM
Generally, the Milwaukee Water Utility has excess capacity. It is able to pump additional Lake Michigan water without incurring extra costs except for the cost of the energy to pump the water. Since the water is not being drawn from a deep well, the energy costs to withdraw the water from Lake Michigan are not (relatively) high. The energy costs moving the water from Milwaukee to Waukesha would be greater though. The further the water has to travel and the more elevation grade change (up elevation) there is, the more energy costs there are to move the water. The energy costs to move water from Racine or Kenosha to Waukesha would likely be higher than the energy costs to move water from Milwaukee.
Shawn Reilly July 06, 2012 at 09:56 PM
If the City of Milwaukee was interested in negotiating with the City of Waukesha, then the rates for the sale of the water would be determined by the Public Service Commission. (PSC). The PSC does approve higher rates for the sale of water by a utility when the sale occurs outside of that utilities service area. In addition, the City of Milwaukee would negotiate a one time lump sum payment (well that is what the City of Waukesha should agree to) that would go to the City's General Fund and not to the City of Milwaukee's Water Utility. One thing that I think people do not always recognize is that the City of Milwaukee Water utility (like the City of Waukesha Water utility) is regulated by the State of Wisconsin via the PSC. Once there is an Agreement in place and the water is flowing, then the PSC determines what is charged for the sale of water. Rate cases would determine the cost of water, not the City of Milwaukee.or City of Waukesha. Both the City's would argue for higher or lower rates but neither would "set" the rate.
the 'sha guy July 06, 2012 at 10:48 PM
A spade is a spade. This is water welfare for Milwaukee residents to the tune of 3 million plus per year and that number is only going to grow larger. The administrator even acknowledged that the Milwaukee residents would save millions of dollars (off the backs of Waukesha water users)
Steve Edlund July 07, 2012 at 02:49 AM
Since economics is important- a great lakes diversion is dead. According to the document "Waukesha Water Utility Great Lakes Water Supply Costs 2011 Dollars" submitted to the Public Service Commission with the current pending rate increase request, an Oak Creek Supply with return via Underwood Creek will cost $261 million. Return via Root River will cost $281 million. Return via Lake Michigan $315 million. Racine supply with return via Underwood Creek $312 million. Return via Root River, $332 million. Return via Lake Michigan, $425 million. Milwaukee with return via Underwood Creek $164 million. Waukesha will not be eligible for federal funding (up to $50 million) with the Oak Creek or Racine option. Lastly, If we pay another community for water, that's 3 million dollars more every year than local sources which are free. And yes Shawn, you are correct, Milwaukee wants an annual fee similar to the "Cleveland Agreement" which is a PILOT, Payment In Lieu Of Taxes which is money paid every year to Milwaukee's general fund for direct property tax relief. All for the privilege of doing business. Milwaukee has Waukesha at it's mercy. Waukesha will most likely not be eligible for any sort of general obligation notes with the limited customer base and revenue stream. In short, local sources are available, and cheaper. Therefore, the application does not meet the requirements of the Great Lakes Compact. Forward.

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