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updated: 4/21/2015 4:46 PM

DuPage Water Commission turnaround: It's cutting water rates about 2%

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  • The DuPage Water Commission has agreed to lower the price it charges towns for Lake Michigan water. The reduced rate is scheduled to take effect May 1.

    The DuPage Water Commission has agreed to lower the price it charges towns for Lake Michigan water. The reduced rate is scheduled to take effect May 1.
    Daily Herald file photo

 
 

The cost of water is dropping for most DuPage County towns for the first time since the agency that supplies Lake Michigan water was rocked by a financial scandal more than five years ago.

The DuPage Water Commission has cut rates by about 2 percent as part of the agency's roughly $123 million budget for the fiscal year that starts May 1.

The commission provides lake water to 25 DuPage municipalities and some unincorporated parts of the county. When the rate decrease takes effect May 1, the cost the agency charges for water will drop from $4.95 per 1,000 gallons to $4.85 per 1,000 gallons.

It's not yet clear whether towns will pass along that savings to their residential customers, although the Naperville City Council was talking Tuesday night about doing exactly that.

Jim Zay, chairman of the commission, said the rate drop is the culmination of various reforms made after it was discovered in late 2009 that the commission accidentally spent its $69 million reserve fund through poor accounting practices and lackadaisical financial oversight.

"Many people didn't have a lot of confidence in the commission," Zay said. "But there was a lot of dedication from the board and staff to look at the operation and determine what we needed to do."

After the board that oversees the commission was revamped, it implemented enhanced accounting policies, procedures, controls and oversight. It also adopted a rate schedule that addressed increases from Chicago for the purchase of water and other financial issues.

In addition, the agency took steps to wean itself off the quarter-cent sales tax, which generates about $35 million of its annual revenue. State law calls for the sales tax to be eliminated on June 1, 2016.

To prepare for the loss of the tax, the agency started paying down its debt, which totaled $142 million in 2011.

That amount includes $70 million the agency borrowed in the months after the financial scandal to pay off construction debt and restore its reserves. The reserve fund had to be replenished to stabilize the commission's bond rating, which was tumbling at the time.

Zay said the commission was able to repay the $70 million it borrowed last year, which was 18 months ahead of schedule.

While the commission has about $12 million in remaining debt, that amount is scheduled to be paid in full by May 2016.

"I just think it's a remarkable turnaround," DuPage County Board Chairman Dan Cronin said. "When you think about where they were four years ago and consider the fact that they are prepared to implement a 2 percent reduction in rates ... it's just dramatic.

"There were all sorts of problems and issues and scandals," Cronin said. "Today, they're a model agency."

Zay said part of the reason the commission was able to lower its price for water is the commission has become more efficient. "We've cut our operating budget almost $10 million in the last four years," he said.

While the commission has adopted the lower water rate for its municipal customers, it doesn't mean those towns won't increase their prices for residents.

"Hopefully, the municipalities can stay at the status quo," Zay said. "I know they have infrastructure needs. But if they're going to raise (water rates), it won't be because of the commission."

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