Waukesha, Oak Creek Resolve Water Compensation Concerns

Waukesha will move forward with a water deal with Oak Creek after language was changed in the letter of intent that satisfies some of Oak Creek’s concerns about compensation.

An Oct. 3 ruling by the Public Service Commission (PSC), the regulating body for utilities in Wisconsin, delayed the water deal between the two cities. The ruling came one day after Oak Creek and Waukesha both agreed to proceed with a water deal, followed an appeal by Oak Creek in which the city asked the commission to reconsider parts of a decision regarding a rate increase originally requested in May 2011.

Oak Creek is selling water to Franklin, but the PSC approved a greater rate increase for Oak Creek residents than it allowed for an increased charged to Franklin customers. Oak Creek Water Utility officials were concerned that the ruling would force Oak Creek to subsidize Waukesha water rates in the future.

However, changes to the letter of intent states that “the agreement shall provide for a wholesale water rate, approved by the PSC, to allow Oak Creek, at its discretion to fully recover its total cost (not marginal costs) to provide wholesale water to its wholesale customers.”

The Waukesha Common Council unanimously approved the change during its meeting Tuesday, effectively allowing the two communities to move forward. Oak Creek already has approved the changes, according to City Administrator Ed Henschel.

“Oak Creek and Franklin have resolved this matter, but Oak Creek has requested a change to the letter of intent with Waukesha,” Henschel said in a memo to the Common Council.

Waukesha is planning a $183 million pipeline to Oak Creek to address problems with its declining water quality and water supply.

Waukesha spent a year-and-a-half in negotiations with Oak Creek and Racine over getting Lake Michigan water. Waukesha still faces a long climb to get Lake Michigan water, including gaining 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.

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.