West Allis — West Allis joined a consortium of communities fighting a large proposed water rate hike by Milwaukee that would cost West Allis $600,000 to $720,000 a year, said Michael Lewis, public works director.
Joining the coalition will cost West Allis $40,000, and officials hope that if they can't get the proposed increase dumped entirely, that it might be cut in half.
West Allis, like many other communities, buys its water from Milwaukee, and many of the communities are banding together to fight the proposed increase.
"The other communities have jumped on this," Lewis said last week to the public works committee.
Milwaukee will argue its case for a water rate increase that would be 25 to 30 percent for West Allis this summer.
The battle will be intense, Michael said. In contrast to the last time the communities fought Milwaukee's proposed increase in 2009-2011, this time Milwaukee will be ready for opposition.
"They have nationwide consultants helping them this time," Michael said.
What is particularly galling for the communities is that the Water Works gives millions to the city of Milwaukee every year to do with as it wants, and it gave a one-time transfer of its $3 million surplus to Milwaukee.
The yearly contributions are payments in lieu of taxes given by the Water Works because it is a nontaxable entity, so it doesn't pay property taxes, said Carrie Lewis, superintendent of the Milwaukee Water Works. Last year's Water Works payment to the city was $12 million, Lewis said.
The one-time transfer of the surplus was part of the Water Works' last rate increase request to the Wisconsin Public Service Commission, she said.
Approval of the rate increase won't increase how much the utility gives to Milwaukee, she said.
But suburban leaders see the Water Works as a revenue stream for the city of Milwaukee, and Michael predicted similar fights every three our four years.
"Milwaukee's not going to walk away from this," he said. But the coalition will fight hard.
"We're trying to do whatever we can to make clear what's Milwaukee's is Milwaukee's and what's ours is ours and that the two don't get blended," he said.
In its request to raise water rates, the Milwaukee Water Works is hitting its wholesale water customers, such as West Allis, much harder than its retail customers, such as Greenfield and Milwaukee. While the West Allis rate could go up 25 to 30 percent, the increase for Greenfield and other retail customers would be far less, Carrie said.
That's because the Milwaukee Water Works argues that it should be able to make a profit on wholesale customers, while the return on the Water Works investment for retail customers is limited by state statutes, said Greenfield Mayor Michael Neitzke.
Carrie, however, objects that the Water Works would not be making a profit if the PSC approves a rate increase. "The additional money will be for infrastructure," she said.
Greenfield has not joined the wholesale customers in their fight. Carrie said it would be against its interests because if the wholesale water communities beat the rate increase, retail water customers will see their rates rise. The money for infrastructure has to come from somewhere, she said.
The Milwaukee Water Works has already won PSC approval for a smaller 3 percent increase across the board that will go into effect June 1.
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