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Regulators to hold hearing on new Madison water rate hike; pipe replacement, debt blamed

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Water main replacement

Contractors with S&L Underground install a section of water pipe along Packers Avenue in 2020. The Madison Water Utility is seeking an 18% revenue increase to pay down debt and fund an ongoing project to replace about 400 miles of aging and brittle water mains.

Customers will have a chance to weigh in next month on Madison Water Utility’s request for an 18% revenue increase in the face of steadily declining sales. 

The Public Service Commission, which regulates monopoly utilities, will hold an online public hearing on Wednesday on the utility’s third proposed rate increase since 2019.

If approved, the plan would add about $5 to the average monthly residential water bill while lowering bills for the poorest families. 

The utility says it needs more money to pay down nearly $245 million in debt while funding an ongoing project to replace some 400 miles of aging cast iron water mains without additional borrowing. 

Over the past decade, the utility has replaced nearly 93 miles of pipe at a cost of $78.3 million, according to testimony by chief engineer Adam Wiedenhoeft. But there are still more than 300 miles of pipe that are either too small or susceptible to breaks. 

More than 2,300 water main breaks over the past decade — primarily of cast iron pipe installed in the 1940s and 50s — cost nearly $10.3 million to repair and resulted in the loss of more than 200 million gallons of water, according to the utility.  

The system, developed jointly by Dane County and the city of Madison and known as a “clean beach corridor,” effectively walls off a section of Lake Mendota.

Under the proposed rates, the average household would pay almost $35 a month for water, more than double the bill in 2015, according to application materials filed Tuesday.

But the utility is proposing a customer assistance program that would provide bill credits to about 5,540 households earning less than half the median income. A family of three making less than $27,900 would get a $12 monthly offset; a family of three making up to $46,400 would receive $8 a month.

The subsidies, which would be the first such means-tested program in Wisconsin, would cost about $650,000 a year, adding about 76 cents to each customers’ monthly bill, according to the application.

If approved, this would be the third double-digit increase since 2019, when regulators authorized a nearly 31% rate hike while ordering the utility to come up with a plan to improve its finances. The PSC authorized a 13% increase in 2020. 

Water sales have declined by more than 20% over the past decade with the loss of large industrial customers like Oscar Mayer.  

Madison’s rates are higher than any comparably-sized city and almost twice those of Sun Prairie and Middleton, according to PSC data.

Editor's note: An earlier version of this story misstated the cost of repairing water main breaks over the past decade. The repairs have cost nearly $10.3 million. The date of the hearing was also incorrect in the story but was correct in the attached info box. It is scheduled for Wednesday, Sept. 7.


 

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