Inside the 12th Street N. and Front Street well house, New Ulm Utility Director Brett Fleck holds his hand where the square concrete pad around the well pipe casing should be. The well casing is sinking into the ground beneath the well house, having dropped approximately 18 inches. This well is only one of over a dozen city wells in need of vital repairs and replacements. Photo submitted by New Ulm Public Utilities.

NEW ULM – After decades of services, New Ulm’s aging water and wastewater facilities are in need of long awaited maintenance, overhauls and outright replacements.

To cover the costs of these projects New Ulm Public Utilities is looking at sizable rate increase to water and wastewater utilities over the next four years.

“A consultant group (Dave Berg Consulting) conducted a rate study to determine if enough funds were coming in to cover asset replacement,” New Ulm Utilities Director Brett Fleck said. “They identified a need for more revenue in the millions.”

Dave Berg Consulting specifically recommended water and wastewater utilities raise an additional $2 million per year each year to fund necessary capital asset replacements over the next five years.

Fleck said part of the purpose of the study was to “right-size” the city’s utility rates. This is to bring the rate costs in line with with what is needed to maintain utility infrastructure.

In the case of the water department, New Ulm has 13 wells and all 13 are in need of maintenance. Some of the wells need a few thousand dollars of maintenance, while the older wells need closer to a $1 million.

Part of the problem is aged equipment. The newest wells on New Ulm’s system were drilled in the 1980s, but some are even older.

The well at 12th Street N. and Front requires some of the highest maintenance. Originally drilled 66 years ago in 1969, the well currently pumps around one third of its original design capacity. Worse yet, Fleck said the well casing is sinking into the ground beneath the well house. The square concrete pad around the well pipe has dropped approximately 18 inches.

Fleck said this well will need to be completely re-drilled within the next five years.

The wells are only one part of the system in need of improvement. The city has miles of pipes, valves, water towers and treatment plants to consider.

New Ulm’s wastewater treatment plant is over 50 years old and many components will need to be replaced having reached the end of life.

Fleck said the wastewater treatment plant will likely need new fans, which could cost $5-6 million.

In addition, operating costs are expected to rise with inflation.

If the new utility rate schedule is approved by New Ulm Public Utilities Commission (NUPUC) the average residential customer can expect their bill to increase by $10 in October. The next rate increase would be July 1, 2027 and would be a monthly increase of $12. In 2028, the increase would be $14 and in 2019 an increase of $17. This is a $53 monthly increase over 3.5 years.

Fleck said the increase could be ramped up slower, but it would cost more in the longterm due to inflation. He confirmed that an all-at-once rate increase would be cheaper for customers, but they did not want to alarm residents with an immediate large increase.

“The goal was to balance protecting customers from rate shock with a single increase while protecting customers from higher bills if multiple rate increase were stretched out too far,” Fleck said.

These rate increase figures are based on a single-family residential utility. Fleck said it more challenging to calculate the rate increases for commercial and industrial properties. He said it was estimated that commercial businesses could see a 21-25% increase to water and wastewater utilities in the first year.

However, Fleck said in New Ulm, the monthly utility bill includes all other utilities such as electric and gas. He said electric bills for most commercial properties is higher than water and wastewater. Since the rate increase in only for water and wastewater, the overall utility bill increase could appear relatively small for some customers.

Fleck confirmed there is no plan to increase electric or gas rates at this time.

Asked why New Ulm water and wastewater rates were kept relatively low for so many years, he said there is always a strong desire to avoid rate increases. Between 2013 and 2020, New Ulm saw no water or wastewater rate increases. Much of the infrastructure repair was put off, but that is no longer an option.

“We are in a place where we need to invest in our assets,” Fleck said. “We can finance and bond for these projects, but we also have to look at our debt across the system. We do need to service the debt, which part of the rate increase.”

Fleck pushed back against the myth that New Ulm’s utility rates are higher than other communities.

“We’re in the middle,” he said.

When comparing municipal utilities rates across the region, New Ulm generally falls in the middle.

“The communities with higher rates than us, have already ‘right-sized’ their utility rates,” Fleck said. “Every city is probably going to have a rate increase eventually.”

Fleck admitted some of New Ulm’s great track record is due to luck. He said all of the wells that need work are located in a floodplain. Thanks to relatively dry springs in recent years, work crews are able to conduct maintenance on the wells.

“New Ulm does have a great track for maintaining utilities,” he said. “We just want to keep that going.”

New Ulm Public Utilities Commission (NUPUC) will vote on the new rate schedule during its August meeting. The rates would go into effect October 1 with customers seeing the increase in their November bills.