City of Superior, WI Water Municipalization Preliminary Feasibility Study
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Members of the Superior, Wisconsin City Council have expressed interest in purchasing the water utility currently owned by Superior Water, Light, and Power (“SWL&P”) and its parent company, ALLETE, Inc. (“ALLETE”). As part of that process, the City of Superior, Wisconsin (the “City”) retained Raftelis Financial Consultants, Inc. to develop a fair market value appraisal and rates impact study of SWL&P’s water system. Separately, SWL&P retained Concentric Energy Advisors, Inc. (“Concentric”) to conduct a preliminary feasibility study of SWL&P’s water system, including an estimate of total acquisition costs for the water system and rates analysis.
Based on Concentric’s preliminary analysis, the total initial acquisition costs for SWL&P’s water system are estimated to be $186 million as of end of year 2030, assuming a municipal water utility would begin operations on January 1, 2031. The estimate includes the value of the water assets, as well as separation costs, going concern value, startup costs, and transaction costs necessary for the City to acquire and operate the system.
The preliminary feasibility study also compares projected rates under continued SWL&P ownership to projected rates under City ownership over a 20-year forecast period. Concentric estimates that municipalization could result in an incremental $15 million net present value cost over the first 10 years and an incremental $19 million net present value cost over 20 years, indicating that municipal ownership is projected to be more costly than remaining on SWL&P’s system under the base assumptions.
Click here to read the Preliminary SWL&P Valuation Briefing.
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All views expressed by the authors are solely the authors’ current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, related companies, or clients. The authors’ views are based upon information the authors consider reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.