News-Chronicle
A report commissioned by the Green Bay Water Utility claims that figures released by the Central Brown County Water Authority showing its plan for a Manitowoc pipeline are cheaper in the long run just don't hold water.
An analysis by Prof. Robert Haveman of the University of Wisconsin-Madison says the CWBCA analysis of the Manitowoc and Green Bay options for its water supply fail "to meet the accepted standards of financial and economic analysis." He also said numbers released by the authority are biased toward the Manitowoc option.
The city is pushing to sell water to the suburbs at $1.65 per 1,000 gallons in the first year, with rate increases equal for both city and suburbs. Suburbs would have a seat on the Green Bay Water Commission. Green Bay will use its proceeds from the deal to upgrade its 50-year-old pipeline to Lake Michigan with an additional pipeline and filter plant expansions.
The Manitowoc deal would see the six suburbs in the authority pay less for water - 81 cents per 1,000 gallons in the first year - but bear the cost of a pipeline to Manitowoc County to get the treated water. Figures released by the authority show that in 2010, the cost of 1,000 gallons of water to authority-member suburbs would be $3.10 from Green Bay, $3.66 from Manitowoc. By 2025, however, Manitowoc's price is cheaper, $3.72 to $4.04.
The amounts are those the authority would charge each suburb - Allouez, Bellevue, De Pere, Howard, Lawrence and Ledgeview - with each one adding its own charges for its own distribution.
But Haveman said the CBCWA's analysis was "deficient in a number of crucial dimensions." He said:
- The analysis of the options through 2059 was very long and clearly arbitrary, and would have been more accurate had it stayed closer to the 25-year period of a contract with either community.
He suggested that the choice of the time period was made because cutting it off any earlier would have given the advantage to Green Bay.
- The Green Bay operation and maintenance costs favor Green Bay in the early years of the project, but ignored in the authority's numbers by assumptions regarding the value of the purchased water rate.
- The use of different interest rates for financing the costs of the projects, listed at 5 percent, and the rate use for calculating hte discounted present value, 5.5 percent. Haveman said they should have been the same, which, he said would have increased the Green Bay advantage in a 25-year span.
"Decisions made regarding the procedures and assumptions for estimating the costs of the two options would appear to reflect something other than sound economic and financial principles and practice," he concluded.
Green Bay Water Commission president Tim Nixon said an independent analysis should not have been needed.
"Everybody should be able to understand that Green Bay's new 13-mile pipeline is cheaper than CBCWA's 40-mile Manitowoc pipeline," he said.