Oconomowoc staff recommend 2026 utility budgets, propose 5.8% wastewater rate increase

City of Oconomowoc utilities staff presented the 2026 operating budgets and recommended the Committee of the Whole forward the utility budgets — including a proposed 5.8% wastewater rate increase — to the Common Council for final action.

John (utilities presenter) told the council the city’s three utilities are financially independent but not separate legal entities, producing about $40 million in combined operating revenue and supporting roughly $263 million in fixed assets. He said the utilities collectively contribute about $2 million in payments in lieu of taxes to the city.

On wastewater, John said the utility serves about 7,000 customers and seven outlying sanitary districts that are billed by flow. “As part of that rate study … the model called for an 8.4% increase, but we picked a middle ground of that 5.8% increase,” he said; staff estimated that change would raise an average residential bill by about $1.83 per month and provide a roughly 1% floor rate of return while funding about $3 million in wastewater capital projects in 2026, including a $1.2 million first step for a longer-term treatment facility upgrade.

Staff highlighted differences among the utilities: water’s asset base includes nearly 50% developer-contributed assets (which the Public Service Commission does not allow the city to earn a return on), and electric has nearly 12,000 meters and purchases wholesale power from WPPI for roughly $20 million a year. The electric utility’s costs are primarily pass-through purchase power recovered monthly, and John said the 2026 budget does not raise electric base rates but staff may begin a PSC rate case in 2026 to take effect in 2027 if needed.

Council members asked for additional detail on reserve balances and how past operating income had been accumulated for capital needs; staff said operating income has been used to fund capital projects and that the water utility had to borrow for Well 8 while the electric utility had not needed to borrow in recent years.

Action: the committee voted to recommend the 2026 wastewater rate schedule and the utility budgets to the Nov. 18 Common Council meeting for final adoption.

What’s next: the Common Council will consider the budgets and the wastewater rate schedule at its Nov. 18 meeting; staff said they will provide more detailed reserve and cash-position information before any formal rate filing to the PSC.