Public works staff: study finds Pewaukee sewer rates likely need increase to meet 1.4 debt-coverage target

Public works staff told the committee that a consultant study has concluded Pewaukee’s sewer utility likely needs a rate increase to restore reserves and meet a 1.4 debt-coverage target. The committee heard the finding during a presentation on the Ehlers sewer rate study phase 1.

The study’s first phase evaluated current finances and reserves and recommended moving toward a debt-coverage ratio of 1.4, staff said. "For every dollar of debt, we should have 1.4 or dollar 40 in fees so that we're collecting enough to cover our debt as well as have a healthy reserve," the staff member said, summarizing the consultant’s guidance.

Why it matters: staff identified higher charges the city pays to Lake Pewaukee Sanitary District and the City of Waukesha as major drivers of the projected increase, and noted that the city has drawn on savings since the last rate change in 2021. Staff said phase 2 of the Ehlers study will model specific rate scenarios and return to the council with recommended numbers and timing.

Committee members discussed ways to reduce immediate pain for ratepayers, including phased increases and drawing on some reserves. One member described multi‑year compounding examples from a 10‑year cash‑flow scenario as a substantial annual increase. Staff said the council could “tweak” suggested rates when Ehlers returns and that a stepped approach is feasible to smooth the impact on residents.

Next steps: staff will ask Ehlers to prepare rate alternatives, including regional comparisons and phased options, and expected to present recommended rates in a subsequent meeting with an aim—staff said—of implementing changes by June 2026 if adopted.