Waukesha would have an additional six months to negotiate a deal to purchase water from Oak Creek under the terms of a proposed amendment to the letter of intent between the two cities.
The two municipalities agreed to the letter in November 2012 as Waukesha sought a source for Lake Michigan water. The letter set the terms for negotiation between the two sides, including an exclusivity clause, and is set to expire Nov. 30. The extension would give the two sides until May 31 and maintains the exclusivity clause.
The general managers of both water utilities say the negotiations are progressing well. Waukesha Water Utility general manager Dan Duchniak said the extension would give Waukesha time to get recently hired consultants up to speed. His hope is to have a contract negotiated and in place around the beginning of 2017.
“I think they are progressing very well,” Duchniak said of the talks.
Oak Creek Water and Sewer Utility general manager Mike Sullivan agreed that the talks were going “very well,” describing the negotiations as two willing parties working out details. He said the operational details of the contract represent an important component so both sides will know what level of service Oak Creek is to provide.
“At this point I don’t see anything that would get in the way of us signing a contract,” Sullivan said.
The Oak Creek Water and Sewer Commission will take up the extension Tuesday and the Waukesha Water Commission will consider it Thursday. The Waukesha and Oak Creek common councils would also need to approve it.
Milwaukee Mayor Tom Barrett has expressed an interest in providing water to Waukesha, but the exclusivity clause prevented any negotiations from taking place.
Milwaukee and Racine were the other communities Waukesha considered as potential sources for Lake Michigan water. The Milwaukee Common Council approved entering into negotiations with Waukesha in 2012, but only for the city’s water service area at the time.
Waukesha had sought approval from the Great Lakes Compact Council to potentially provide water to a wider area that included portions of the towns of Delafield, Genesee and Waukesha, along with the city of Pewaukee.
The service area approved earlier this year covers an area that is substantially closer to the service area as of 2012.
Barrett said purchasing water from Milwaukee could save Waukesha as much as $5 million a year, but Duchniak disagreed and said the savings would be much less.
Oak Creek currently sells water to Franklin for $3.12 per 1,000 gallons, while Milwaukee sells to a number of communities with rates ranging from $1.43 to $1.79 per 1,000 gallons.
If Oak Creek charged Waukesha at the Franklin rate, Waukesha could potentially save $4 million to $5 million per year by instead getting water from the city of Milwaukee, at the daily average cap imposed by the compact approval of 8.2 million gallons per day.
However, Duchniak said Waukesha expects its rates with Oak Creek to be closer to $1.90 per 1,000 gallons, reducing the potential savings of instead getting water from Milwaukee to somewhere around $330,000 to $1.4 million per year. Waukesha’s initial demand will also be closer to 6.8 million gallons per day, reducing the savings further.
Duchniak said the savings of getting water from Milwaukee instead would also be reduced by having to return the water via the Root River under the terms of the compact approval. While the Oak Creek supply and return will be able to run in the same trench, a Milwaukee supply would require a second trench, he said.
