The city waterworks was first established in 1886 with a 400 foot deep artesian well powered by a wind pump. The water was kept in a large wooden tank just north of the bridge on Main Street (now Grand Avenue). Ironically, the water tank was destroyed by fire in 1883. After the fire, the waterworks was moved to near where SMU's offices are now located. A new wooden water tank was built and several wells were dug. In 1906, a 75 thousand gallon steel water tower was built to replace the wooden tank.

In 1942, Spencer voters placed the operation of the water utility, along with the electric and steam systems, under a Board of Utilities. Thus, Spencer Municipal Utilities was born.

In the late 1940's, a new water treatment plant was constructed east of 10th Avenue East. A one and a half million gallon storage tank was constructed, as were several shallow wells.

In 1959, the east water plant was upgraded for water softening. Five years later, fluoridation for dental health began.

In 1965, the Board of Trustees purchased 80 acres of property northwest of the city generally referred to as Stolley's Pond. A new water treatment plant was constructed just south of Stolley's and the east side plant was decommissioned.

As Spencer grew, so did the demand for water. To maintain adequate pressure in the water distribution system, a 750,000 gallon water tower was constructed in north Spencer in 1959. A second water tower was built in south Spencer in 1971. And through the years, SMU has continued to upgrade the water distribution system to ensure adequate water to all customers large and small.

In 1999 and 2000, SMU upgraded to the water treatment plant to satisfy requirements of the Iowa Department of Natural Resources and increase the system's water treatment capacity.

As Spencer's water usage continues to grow, SMU is exploring potential new sites for wells and increases in treatment capacity to continue meeting the needs of the community.