Conservatively Speaking

State Senator Mary Lazich (R-New Berlin) represents parts of four counties: Milwaukee, Waukesha, Racine, and Walworth. Her Senate District 28 includes New Berlin, Franklin, Greendale, Hales Corners, Muskego, Waterford, Big Bend, the town of Vernon and parts of Greenfield, East Troy, and Mukwonago. Senator Lazich has been in the Legislature for more than a decade. She considers herself a tireless crusader for lower taxes, reduced spending and smaller government.

Soaking the suburbs

With unemployment still high in the metropolitan Milwaukee area and continued filings for foreclosures, it seems inconceivable that customers in Milwaukee and surrounding suburbs could be subject to water rate increases.  It is especially inconceivable that increases of 30, 40 and 50 percent are even being proposed.  

How many individuals and companies forced to pay water bills are receiving income increases of comparable amounts? Individuals I represent are losing jobs, experiencing pay and work hour reductions, and losing their homes. However, the Wisconsin Public Service Commission (PSC) is considering approving water rates at levels that could severely impact businesses, large and small, potentially killing jobs.

Milwaukee Water Works (MWW) asked for water rate increases in addition to a 3.8 percent increase that went into effect September 1, 2009.  In response to MWW, PSC staff developed an initial set of proposed rate increases. After the percentages were roundly criticized, PSC staff put forth a revised rate schedule.

First and foremost, the rate increases are ridiculously high. The numbers, supported by MWW, seem to suggest a gross abuse of rate payers by a monopoly operation.  How else does one explain these eye-popping percentage increases calculated by the Milwaukee Journal Sentinel:

52.7 percent, County Institutions Grounds in Wauwatosa

47.3 percent, Mequon

38.9 percent, New Berlin

23.1 percent, West Allis

20.4 percent, Menomonee Falls

These rate increases soar well beyond the current rate of inflation of 1.1 percent. How can we responsibly, morally, or ethically demand consumers pay these kinds of increases?  Combine the thought of rate increases with so many rate payers unemployed, under-employed, or losing their homes.

The same people being threatened with exorbitant rate increases are the same people asked to be more conscious by conserving water. They listened and complied, and are about to be punished for the crime of being good stewards.

The revised rate increases are unfair to all involved communities.  Consider New Berlin. Desperate for water, the City of New Berlin literally begged Milwaukee for help and entered into water sale negotiations during December 2007. Subsequently, New Berlin made a good faith, one-time payment of $1.5 million to extend Milwaukee water service from the eastern part of New Berlin to the central part of the city. The $1.5 million payment had nothing to do with the cost of water service.  The written agreement stipulates the $1.5 million go to Milwaukee's general fund, not the water utility. In essence, New Berlin is subsidizing Milwaukee programs and services.  As part of the agreement, the city of New Berlin further agreed that it would not offer economic incentives to any business to move from the city of Milwaukee to the city of New Berlin. Apparently it was not quite good enough.  Milwaukee now wants to soak New Berlin even further by convincing the PSC to grant water rate increases that come as an absolute shock to rate payers.

The nonpartisan Legislative Fiscal Bureau (LFB) writes about the rates in its 2009 informational paper, Taxation and Regulation of Public Utilities:

“In what has traditionally been a monopoly market, the rate-setting process attempts to establish prices at levels that would occur naturally under competitive market forces. While a utility's natural interest is to set prices at levels that maximize profits, the regulatory process provides a balance so that services are provided at prices that are reasonable both to ratepayers and to utility owners.”

Unfortunately for consumers, the PSC policy is not being followed.
Strong consideration must be given to eliminating, or at least downsizing the rate increases to the rate of inflation.  Massive water rate increases will hurt businesses making them less competitive resulting in job losses, a prospect that our area and the entire state simply cannot afford.  Foregoing rate increases may give us a competitive acknowledgement we desperately need to strengthen our local economy. Consideration must also be given to those paying the bills and their ability to pay, especially during these troubled economic times. 

PSC staff is quick to say only a portion of the New Berlin bill will go up 38.9%.  Rate increases of this magnitude are grossly unfair and unreasonable and need to be scaled back dramatically.  I turn to the PSC with a plea and expectation that it exercise the task necessary to control this monopoly. Consumers believe there must be a payment structure that does not equate to highway robbery.

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