Wausau water utility posts higher net income after $6.5M state forgiveness; PSC rate calculation shows no immediate rate increase

Wausau—s water utility reported an improved financial position for 2024 driven by a full year of newly implemented water rates and about $6.5 million in principal forgiveness for the granular activated carbon (GAC) project, Finance Director Groot told the Water Works Commission on July 8.

The PSC filing shows operating revenue increased relative to the prior year, and Finance Director Groot said net income rose from just under $3 million to about $5.1 million. Groot attributed most of the jump in miscellaneous nonoperating revenue to roughly $6.5 million of principal forgiveness associated with the GAC project, which is still recorded as construction-in-progress because work remains to be completed.

The change matters because the PSC—s rate-of-return computation, which the utility uses when evaluating requests for rate changes, stood at 7.23% at year end. Groot said that figure would not support a rate increase at this time. He also noted the utility—s cash position improved: last year the utility ended the year with a modest cash deficit, and for 2024 cash was about $1.4 million with larger sinking-fund balances to meet debt service requirements.

Groot outlined balance-sheet movements: utility plant increased (additions include the GAC project and ongoing meter-replacement work), the city contributed about $1 million in capital to fund meter replacement, and long-term debt appeared higher because the utility had a $17 million short-term note drawn to fund early project costs. He explained the state loan process involves incremental draws tied to project expense, unlike traditional bond closings that provide full proceeds up front. Those state loans carried interest rates lower than the outstanding municipal revenue bonds (Groot cited roughly 1.7%–2.4% for state loans versus about 4% for the revenue bonds issued in 2017 and 2019).

Director Eric and Groot also discussed operational indicators: meter replacements are underway and staff estimate about 8,000 meters remain to be replaced; the utility—s measured nonrevenue water (water loss) improved from about 17% to 13% year over year, which staff attributed in part to new meters and targeted leak detection efforts.

The PSC report has been filed and will be posted publicly; commissioners asked clarifying questions but no formal action was required at the July meeting.

“We had the GAC project close on the loan around June of 2024 and the state forgave part of that loan to the amount of $6,500,000,” Finance Director Groot said during his presentation. Director Eric added that the GAC work remains in construction-in-progress with minor items still to finish.

Commissioners pressed staff on the mechanics of borrowing and whether third-party credit reviews might occur; Groot said agencies such as Moody—s could review the utility at any time and that the city—s lower-cost state financing and principal forgiveness were beneficial to the utility—s debt profile.

The commission accepted the report for the record; staff noted the PSC filing and supporting schedules are available on the PSC website and can be linked from the city—s webpage.