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Council learns sewer is running a loss; staff to pursue rate study after audit
Summary
City staff told the council the sewer utility is projected to operate at a loss and that the city will commission a rate-case study after the pending audit is completed; implications include likely rate increases in 2026 and coordination with multiple communities served by the system.
City staff told the Common Council the sewer utility is operating at an operating loss and that a formal rate study will follow the completion of an audit, a step staff said is necessary before finalizing rate proposals for 2026.
According to staff, the water utility showed an operating positive balance but appears negative once depreciation required by Public Service Commission accounting is included; sewer is already operating at a loss. Staff said the city has engaged Ehlers (or equivalent rate consultants) to complete a sewer rate-case study and that the study’s timing depends on the auditor finishing the current audit so the study uses final numbers.
Staff also explained the city charges a uniform rate across all parcels and that some outside communities that discharge to the city (including Lake Pewaukee Sanitary District and City of Waukesha) pay substantially higher rates; a single uniform rate causes cross-subsidization that contributes to the city losing money on certain customers under the current rate structure. Councilors asked that staff return with the rate-study timing, projected rate impacts, and how the planned changes would integrate with capital projects and borrowing plans.
Staff said they hope to have the audit and rate study completed in time to implement rate adjustments in 2026, and they flagged that the rate analysis will include operational and capital projections for sewer and water.
