The Oak Creek Water and Sewer Utility says it's "willing to continue talks with Waukesha" about providing Lake Michigan water, but only if it can achieve fair cost sharing for its existing customers first.
The utility released a statement Tuesday morning regarding the Public Service Commission's decision that shifted costs-of-service from Franklin to Oak Creek. If the decision stands, it will result in an average quarterly increase for Oak Creek of $17.06, compared to an $8.14 increase for Franklin, according to Oak Creek Water and Sewer Utility figures.
Oak Creek is fighting the PSC's ruling, General Manager Steve Yttri said, but doesn't know when its appeal will be heard.
The PSC decision came one day after the Oak Creek and Waukesha common councils approved a letter of intent to move forward on a contract for Lake Michigan water.
The tentative agreement calls for Waukesha to spend $183 million to build a pipeline to Lake Michigan. 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 Waukesha 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.
But the recent PSC ruling creates "a financial disincentive for Oak Creek to provide service to another wholesale customer," the Oak Creek utility said in the statement.
Yttri said in an interview that while the Waukesha contract and Franklin cost-sharing are two separate issues, "they're intertwined because the Franklin situation sends a signal about how the PSC is going to judge wholesale service."
The PSC, for its part, has said it disagrees with Oak Creek's view of the ruling.
"The (PSC) commission believes that its modified decision allocates costs appropriately between retail and wholesale customers. Franklin is paying the correct amount, and Oak Creek is not subsidizing Franklin," according to Kristin Ruesch, PSC communications director.
Waukesha spent about a year and a half negotiating with Racine and Oak Creek for Lake Michigan water due to radium levels that put the city's water supply out of legal compliance. That forced Waukesha ito either treat or replace its water supply by 2018. The city's wells also face problems with declining water quality due to arsenic and saltwater and with a limited groundwater supply.