MADISON – The village of Maiden Rock wants to increase its water rates for the first time since 1993 in order to finance a $1.16 million well, according to documents filed with the Public Service Commission.
A hole in the casing 70 feet down in the village’s only well can’t be repaired, and piping water from the nearest municipality, Bay City, would cost at least $4 million, making a new well cheaper by comparison, according to a report by SEH, Inc. the village’s consulting engineers.
Property next to the village’s water tower on County Road S is being acquired for the new well, said Village Clerk Shirley Gilles.
Although bacteria was found in the water system in 2018 and 2019, it was localized to the well itself and didn’t migrate into the rest of the system as it was successfully treated, she said.
“That hole has probably been there for years. The water is safe to drink, it always has been,” Gilles said.
A bigger concern, she said, is impact of the new well’s cost will have on the water utility’s 85 customers.
The village is eligible for a $750,000 Community Development Block Grant which doesn’t have to be repaid. It’s also finalizing terms on a low-interest, long-term loan from the Safe Drinking Water Loan Program, which could have a substantial portion of the principal forgiven.
Even though the village will have help with the project’s cost, it will have to pay the legal and engineering fees, acquire property, and obtain matching funding for the CDBG money.
“It’s a huge undertaking for a system of less than 100 users,” Gilles said.
In a Dec. 3 letter, the PSC said the utility may have to raise its water rates by 120 percent to finance the well construction, said Gilles. although the increase would depend on the actual cost of the well and the rate of return the utility seeks on its infrastructure investment.
An increase that size “isn’t going to be favorably received,” by customers who haven’t experienced a water rate increase in 27 years, Gilles said.
“Not many utilities can say that,” she added.
While SEH, Inc. filed the construction application with the PSC this fall, Ehlers Inc. submitted a rate application on Dec.17 which seeks just a 15.3% increase.
Gilles said she hasn’t seen the application but doubts the village will avoid having a larger rate increase when the PSC issues a final decision, which typically takes several months.
Without new rates, Ehlers projects the utility will finish 2021 with a $5,513 income deficit and that’s with only $1,676 in annual interest expense.
The utility has been operating in the red for some years with the village board subsidizing it from the General Fund, said Gilles. She didn’t know if the village board would forgive the utility’s debt to the village or if the new rate case would seek to funds to pay it off.
The PSC will hold a rate hearing simultaneously in Maiden Rock and Madison on the rate request before authorizing new raters.
Residential households currently pay $30.56 a month for 3,000 gallons of water.
The loan for the well is scheduled to close on June 23, 2021 and the village would like new rates issued by then, according to Ehlers.
The village doesn’t plan to abandon the existing well but reserve it for use when Well #2 needs maintenance or in emergency situations.
The new well would have nearly twice the output of Well #1, which SEH, Inc. admits, isn’t needed but wouldn’t cost much more than a well with a smaller output.
After obtaining approvals, construction of the new well is slated to begin in June and be completed in December, according to SEH, Inc.