ELLSWORTH – At the March 4 Ellsworth Village Board meeting, the board learned that current water rates do not cover the cost of operations and maintenance nor any potential system upgrades, according to Phase 1 of an analysis completed by Ehlers.

According to the study, the water utility is facing a $380,989 deficit in 2024 if rates are not increased. Since the village is contemplating a future capital investment, they brought on Ehlers to identify fiscal sustainability. According to Brian Roemer, a senior municipal advisor with Ehlers, the last conventional rate case study was conducted in May 2007. The last simplified rate case took place in 2022. The rates increased 9.3% between 2007 and 2022.

During Phase 1, Ehlers studies historical rate performance, calculated future projections (funding projects debt vs. cash), and calculated a rate impact. A conventional rate case, conducted by the Public Service Commission, is a full rate review in which the PSC will audit the utility and allow rates to be raised. Ehler’s is going to attempt to argue down the amount so the rate increase isn’t too great, Roemer said.

“A valuable defense mechanism against PSC math is the healthy reserves position,” Roemer said.

The average household uses about 4,000 gallons of water per quarter. PSC math would recommend doubling the quarterly bill (which is about $60). Due to the village’s median household income, there are some affordability concerns. Fourteen percent of residential customers are estimated to have an income of $25,000 or less per year.

“We’re not a fan of that,” Roemer said. “We’re going to recommend something lower. Of course, we all want to high-five and say we have the cheapest rates in the country, but … eventually the bill does come due. Utilities that can remain in the middle of their peers will not have the giant adjustments, in general.”

The board voted to move onto Phase 2, which is for a conventional rate case study with the PSC. The PSC will ultimately establish new rates based on a variety of factors, said Administrator/Clerk-Treasurer Brad Roy.

“We need to go up a minimum of 76%,” Roemer said. “The PSC will probably recommend 120%. We should be ready for at least a 100% increase on water rates (not sewer).”

This does not include the fire protection charge, which is about $98.80 per year per residential unit.