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MADISON — Declining annual revenue and increasing operating expenses has the Cambria water utility seeking a 24 percent increase in water rates, the first significant increase since 2009.

For average residential customers currently paying $57.66 quarterly for 9,000 gallons of water, a 24 percent increase would bump quarterly water bills by $13.86 to $71.52.

Village Clerk Lois Frank said revenue slumped last year as Del Monte Foods and Seneca Foods, the utility’s two largest customers, consumed less water.

The utility reported estimated total water sales of $272,587; down sharply from $324,003 in 2016.

Revenue prospects for this year are not much better as the utility estimates water sales of $272,841, according to the rate application filed Wednesday with the Public Service Commission.

That reverses a trend dating to 2014 when the utility had water sales of $295,131, which rose to $318,245 in 2015, according to the application.

Meanwhile, operating expenses and payments in lieu of taxes have increased from $217,201 in 2014 to an estimated $229,619 this year, according to the application.

Depreciation, a non-cash expense the PSC requires utilities to report, further depresses the utility’s bottom line.

This year, the utility projects total revenue of $274,441, total expenses of $277,230, an income deficit of $2,789 and a negative rate of return on the utility’s infrastructure investment.

In 2009, the utility’s last comprehensive rate increase boosted residential rates by 6 percent and authorized a 7 percent rate of return.

The requested rates, if approved, would increase annual revenue by $65,983 and earn the utility a 5 percent rate of return.

The PSC granted the utility a 3 percent increase in 2014, an amount it authorizes to keep pace with inflation.

Frank does not expect the public will be enthused about paying more for water but increases are inevitable.

“Nobody’s ever happy about (higher rates), but it’s to be expected,” she said. "Costs increase over the years. When there’s no increase over time, costs catch up and you have to do it."

Before new rates are set, PSC staff will review the rate application, recommend an amount of revenue it deems the utility requires to stay financially viable and hold a public hearing in Cambria and Madison.

Frank expects the PSC to set a public hearing to take place in about three months.

The utility’s water sales should brighten in the near the future, as canneries operated by Del Monte and Seneca Foods, have told the village they will need more water in the future, an additional 11 million gallons seasonally, Frank said.

“We’ll need a backup well … and it will be timed to when much of our debt (is retired) by 2021,” she said.

The utility has an option on land on the village’s north side of Hillcrest Drive where a test well will be drilled. If the test well’s results are favorable, the village will buy the property and construct a permanent well in 2022, Frank said.

The new well is not expected to increase water rates, Frank said, as the debt the utility will take on for the well should about equal the $92,000 payment the village makes until much of the debt is retired by 2022.