Projected Cost is $40 Million cheaper than other options for Waukesha’s ratepayers
Oct 31, 2017
By Hannah Weikel
Milwaukee — Waukesha water ratepayers could come out on top — as average bills are expected to be about $200 less per year than with other offers — with the city water utility’s decision to purchase future water from Milwaukee.
The 40-year commitment, formally announced Monday afternoon at Discovery World on Milwaukee’s waterfront, is a major development in a years-long effort to obtain safe and reasonably priced drinking water and could mean less need for conservation by residents and more money saved to be used for other capital projects in Waukesha.
Milwaukee was ultimately chosen over Oak Creek, Waukesha’s longtime partner in the water project, because it offered a cheaper cost due to the shorter pipeline distance between cities, said Waukesha Water Utility Manager Dan Duchniak.
Oak Creek tried to match Milwaukee’s proposal but wasn’t able to offer a deal as cheap as Milwaukee’s at $286.2 million. Oak Creek’s final offer was $325.4 million, nearly $40 million more than Milwaukee’s, Duchniak said.
Still, Waukesha residents will see their rates double or even triple in the coming years to help pay for the massive infrastructure project ahead, Duchniak said.
Waukesha Mayor Shawn Reilly said cost was one of the biggest deciding factors.
“Both the water utility and myself have a duty to the ratepayers to give clean water at the most reasonable price. The pipeline cost was greater with Oak Creek and we weren’t able to bridge that gap,” Reilly said.
Oak Creek’s Mayor Dan Bukiewicz wasn’t available for comment on the lost deal Monday.
Moving forward, both cities will need to finalize permitting for the 15.6 miles of pipeline between Milwaukee and Waukesha and the outflow pipe to the Root River via the city of Franklin.
The agreement between Waukesha and Milwaukee will be presented to their Common Councils for a final decision on Dec. 5 and Nov. 28, respectively, Duchniak said.
Last year, a compact council of the eight governors from the states surrounding the Great Lakes approved Waukesha’s diversion of Lake Michigan water to replace its radium contaminated groundwater source. Waukesha is required to comply with federal and state safe drinking water standards by 2023 and a Great Lakes diversion has been deemed the most sustainable and cost-effective method.
Oak Creek had been Waukesha’s first choice for water and had signed an exclusivity agreement that expired this spring. Milwaukee submitted an unsolicited and unexpected proposal in May that was then considered, negotiated and eventually won over Oak Creek’s proposal.
Water history with Milwaukee
Milwaukee’s unsolicited proposal was the second time the city showed interest in providing Waukesha with Lake Michigan water.
Milwaukee first voiced interest in 2012, but after a short back-and-forth between city officials, talks abruptly ended because Milwaukee refused to provide water for Waukesha’s entire service area that stretched beyond city limits and absorbed parts of Pewaukee, Genesee, Delafield and the Town of Waukesha.
Part of Waukesha’s final approval from the eight Great Lakes states in June 2016 was to tighten the service area, which brought it more in line with what Milwaukee originally wanted, said Jennifer Gonda, superintendent of Milwaukee Water Works.
Waukesha residents raised questions about Milwaukee’s proposal when it was submitted this year, wondering if the city would somehow attach strings to water sales.
“Our water sale process includes some communication files in the early stages that require parties that are requesting wholesale water to communicate information regarding housing and transportation options. It does not allow for us to direct that community to make changes or for us to attach strings to the water sale,” Gonda said.
During a Great Lakes water event in Waukesha in September, some residents asked for Oak Creek water, even if it was more expensive.
“I’m very concerned about letting the city of Milwaukee sell Waukesha water,” said Tom Puddicombe, 63, of Waukesha. “I would never want them to have their hand on the valve.”
Win for Milwaukee water customers
Gonda said there are a number of other benefits to Milwaukee residents and water works customers.
Waukesha has pledged to contribute a one-time fee of $2.5 million for Milwaukee’s infrastructure during the project and the city plans to use that money to replace laterals — lead pipes — on Milwaukee properties, said Milwaukee Mayor Tom Barrett.
While Waukesha ratepayers are looking at much higher water costs, Gonda said Milwaukee’s water customers would see a cost savings that will extend long into the future.
Milwaukee has pledged to build, own, operate and maintain a booster pump station near South 60th Street and Howard Avenue and pay for part of the pipeline to South 84th Street and West Cold Spring Road, Duchniak said.
Milwaukee and Waukesha officials came together Monday afternoon at Discovery World in downtown Milwaukee to make the announcement and talk about the intergovernmental negotiations that make the deal possible.
A historic announcement
Barrett called the deal the most significant agreement in the history of southeastern Wisconsin.
“I am pleased we have reached this historic agreement that remains true to the Great Lakes compact. This partnership is an excellent example of regional cooperation, and it is both fiscally and environmentally sound,” Barrett said in a statement. “I welcome our new relationship with the city of Waukesha and look forward to continued future collaborations.”
The contract between Waukesha and Milwaukee will extend 40 years, with the option for 10-year increments added on from there.
Waukesha will eventually purchase and pipe in 8.2 million gallons of Lake Michigan water from Milwaukee each day.
Construction on the pipeline is slated to start in 2020 with completion in 2023.