What was the City’s issue or challenge?
It was an age-old issue. Where does the money come from and how can we use it best? The Racine Water Utility served both wholesale and retail customers, and though uses were different, charges were not. With upcoming capital improvement projects needed to connect new development, Racine needed a water and sewer rate structure that shielded existing ratepayers from subsidizing the new infrastructure.
How did R/M assist Racine in solving the problem?
Initially R/M performed a water and sewer rate analysis to ensure the City’s user charges for its retail and wholesale customers were fair to all customer classes. As the City provides service to nine entities (wholesale and retail), this study resulted in a separate rate charge for wholesale customers.
While retail customers saw a lower cost, these wholesales customers charges increased. We completed a Wisconsin Public Service Commission Rate Case for the Racine Water Utility that was the first case in Wisconsin to apply a higher rate of return for wholesale customers. This led us in providing expert witness testimony on behalf of the City in order to defend a complaint brought to the Wisconsin Public Service Commission. We were successful on all counts.
How has Racine benefited from consistent water and sewer rates?
Because of annual rate reviews, Racine has been able to maintain very low sewer rates, despite an $80 million dollar wastewater treatment system expansion. Racine also was able to solve equity issues for existing customers as well as secure additional capacity for future customers. The success of the water and sewer rates by our team and the City led to development of an intermunicipal agreement between all entities. This complex and historic deal includes one of the nation’s largest revenue sharing agreements.