PLEASANT PRAIRIE WATER UTILITY HISTORY
When the Town of Pleasant Prairie established a water utility, the utility drew ground water from large community wells. During the early 1980's, Radium was found in groundwater wells in areas of the Village at levels four times higher than allowed by the federal government. Radium is a naturally occurring, radioactive, metallic element that can cause cancer. The community began exploring possible solutions at a time when the protection of Great Lakes water was being pursued through the passage of the Great Lakes Charter and the Water Resources Act.

Given the circumstances at the time, in order to secure a safe supply of drinking water, Pleasant Prairie ultimately turned to the City of Kenosha Water Utility. Pleasant Prairie's water utility began to design and construct a new system to receive water from the Kenosha Water Utility based on recommendations from the Southeastern Wisconsin Regional Plan Commission's Master Plan for Sanitary Sewer and Water for the Kenosha Area.

A regional sewer and water utility would be governed by a regional board of directors whose sole focus would be to sell the most sewer and water for the lowest price. Well after construction of Pleasant Prairie's new water system began, the City of Kenosha Water Utility announced that it would not support a regional water utility and would continue to operate the Kenosha Water Utility independently in order to sell water service to surrounding communities.

TODAY'S PLEASANT PRAIRIE WATER UTILITY
Today, the Pleasant Prairie Water Utility purchases water at wholesale rates from the City of Kenosha Water Utility. Pleasant Prairie's utility has approximately 4,324 customers and serves approximately 12,000 people. Pockets of Kenosha Water Utility retail customers exist in the Village to this day, and certain properties in the Village still draw water from private wells.

Based on the creation of a regional utility, the water system was designed and constructed to provide 21 million gallons of water per day. Pleasant Prairie's utility pumps an average of 2.9 million gallons per day. The Village utility can store up to 10.8 million gallons of water in its water tanks and towers and maintains 118.98 miles of water main.

Anticipated 2012 expenses for Pleasant Prairie's Water Utility are $4,016,872. These expenses are covered by rates charged to the 4,324 utility customers based on water usage. Customers range from smaller residential users to commercial and industrial sites, the power plant, and public fire protection.

WATER RATE STUDY REQUESTED
The Village utility had been collecting a rate of return of just 0.51%, and had made the decision not to borrow funds to complete system maintenance or improvements. The Utility instead used the fund balance that resulted from the 0.51% rate of return to pay for significant ongoing repairs. As was expected, this resulted in a low fund balance for the Utility.

In response, during 2011, the Utility requested that the Public Service Commission conduct a rate study to assess its financial standing. The last Water Rate Study for the Pleasant Prairie Water Utility was conducted in 2003. Since that time, the only adjustments made to the rate structure have resulted in direct response to an increase in water rates charged to Pleasant Prairie's Utility by the Kenosha Water Utility.

PUBLIC SERVICE COMMISSION OF WISCONSIN
After conducting the rate study, the Public Service Commission (PSC) approved a rate increase for Pleasant Prairie's Water Utility. The PSC has been responsible for the regulation of public utilities in the State since 1907. More than 1,100 utilities fall under the PSC's jurisdiction. "The PSC works to ensure that, in the absence of competition, adequate and reasonably priced service is provided to utility customers." (psc.wi.gov/aboutUs) Prior to changing rates, utilities are required to obtain approval from the PSC.

Though the PSC allows a 7% rate of return, staff believes that a 2.5% rate of return would be sufficient to establish a fund balance to help pay for future rehabilitation of the system and to replace infrastructure as needed without having to borrow additional funds. A 2.5% rate of return is expected to build the fund balance by $350,000 per year. The Utility currently maintains close to $25,000,000 of water infrastructure that includes: water main, towers, tanks, hydrants, valves, and booster stations. Mike Pollocoff, Village Administrator, explained, "We agreed that the 2.5% rate of return is a prudent number that will allow us to set aside funds for future needs, such as rehabbing a water tower or replacing older water main. Our goal is not to borrow funds to complete the work, which would most likely end up costing more in the long run."

IMPACT ON WATER RATES
The result for Pleasant Prairie Water Utility customers will be an increase in the rate they pay for the monthly water service and for public fire protection. The average residential customer will see an increase of approximately 11% in the rate for water service and an 8% increase in the amount paid for public fire protection. An average residential water utility customer, whose portion of their monthly bill representing water utility service was $27.92, can expect to see an increase in this part of their bill to approximately $31.05 ($3.13).

Also included on the monthly bill are charges for the sewer utility, solid waste services (garbage collection, etc.), the clean water utility, and public fire protection (water availability). Mike Pollocoff added, "Though no one likes to see a rate increase, at this point, to avoid larger future costs, now is the prudent time to address the utility's needs, though, it was decided that it is unnecessary to take the full 7% rate of return allowed at this point."