Caledonia residents could see their water bills drop by 25 percent under an initial proposal for a Lake Michigan water sale between Oak Creek and Waukesha.
Caledonia buys water from Oak Creek. If the deal goes through, residents will likely see a savings.
Tuesday night, the Oak Creek Common Council approved a resolution authorizing a letter of intent to supply water to the City of Waukesha.
The letter of intent expresses a willingness to supply water to Waukesha but does not create a commitment, according Oak Creek Water and Sewer Utility General Manager Steven Yttri. The letter also outlines the general parameters necessary for an agreement.
Waukesha’s Common Council also approved proceeding with a letter of intent.
Oak Creek will make sufficient treatment plant capacity available to meet Waukesha's drinking water supply needs, according to the preliminary plans outlined in a news release from the Waukesha Water Utility.
Waukesha will be responsible for the transmission of the water from the border of Oak Creek to Waukesha and for the return of the water back to the Great Lakes basin, as required by the Great Lakes Compact.
Infrastructure upgrades are estimated to cost Oak Creek nearly $20 million, according to Oak Creek's analysis.
However, the proposed sale of water will benefit homeowners and businesses in Oak Creek, Franklin and Caledonia with a reduction in rates that are projected to be as much as 25 percent for retail customers. In addition, the City of Oak Creek will receive initial payments of $300,000 per year in lieu of taxes from the Oak Creek Water and Sewer Utility, payments that are projected to reach $1.2 million per year by 2030.
The city will benefit because the additional sales of water will provide increased production efficiencies due to economies of scale, according to the city's analysis. As a result, retail water rates are expected to drop by as much as 25 percent.
Oak Creek resident Mark Verhalen said he opposed the sale of Oak Creek water to Waukesha because the city should be focus on providing water for its residents, business and future developments.
Verhalen, president of the Oak Creek Citizen's Action Committee, asked that a letter detailing his opposition be read into the record.
“Long-term, this has the potential to cost the residents of Oak Creek a lot of money,” Verhalen said. “And it’s, in a sense, helping the competition.”
The water pipeline project to and from Oak Creek will cost Waukesha $183 million to build, according to the Waukesha Water Utility.
The final contract between Waukesha and Oak Creek will not be approved until Waukesha receives approval under the Great Lakes Compact, which needs to come from top governmental officials from Great Lakes states.
Waukesha is forced to either treat or replace its water supply by 2018 because radium levels have put the city's water supply out of legal compliance. The city's wells also face problems with declining water quality due to arsenic and saltwater and with a limited groundwater supply.