Public Service Commission of Wisconsin
The Public Service Commission (PSC) is responsible for the regulation of Wisconsin public utilities, including those that are municipally-owned. Types of utilities regulated include electric, natural gas, water, and combined water & sewer. If a local governmental unit's water operation is defined as a “public utility” under ch. 196, Wis. Stats., it is regulated by the PSC.
The PSC plays an important role for Safe Drinking Water Loan Program (SDWLP) projects with respect to both rate increases as well as construction authorizations. If either one or both are required for your project, it must be in effect before your DNR loan project manager can prepare your Financial Assistance Agreement (FAA).
Note: The 2021 Wisconsin Act 112 repealed s. 281.61(10), Wis. Stats., which set the SDWLP loan closing deadline to June 30. Going forward, the annual SDWLP Intended Use Plan (IUP) will officially set the loan closing deadline. The changes made in Act 112 to s. 281.61(5)(a), Wis. Stats., require DNR to set a SDWLP financial assistance application deadline annually, which may be done through the annual IUP.
The PSC wishes to remind utilities that in many cases authorization from the PSC is necessary before undertaking construction projects, per ch. PSC 184, Wis. Adm. Code. To better understand whether your project needs PSC approval, go to Construction Authorization Process.
Local governmental units are required to properly operate and maintain their water systems in order to ensure the delivery of quality water to residents. In order to deliver quality water, a municipality must generate sufficient revenues to cover its operation and maintenance costs, debt costs, and debt coverage requirements on water revenue bonds. If a utility is interested in more substantial changes to its rates, it should file an application for a Conventional Rate Case (CRC) with PSC.
PSC needs 6-7 months to process a rate case
Before utilities can change rates, PSC approval is required. The PSC’s goal is to process an application to increase rates within 200 days after receipt of a complete application. Municipalities should be aware that it can take up to 7 months for the PSC to process an application to increase rates; which includes a review of the request, making recommendations and conducting a public hearing.
Coordinating SDWLP requirements with PSC rate case process
The SDWLP requires municipal applicants to generate sufficient revenues to repay the loan and continue the proper operation of its water system. This requirement typically means the utility needs to increase water rates.
- A municipality planning to apply for SDWLP financial assistance should develop its proposed water rate changes while its engineering report is being developed.
- SDWLP applications must be submitted by June 30 for the upcoming state fiscal year (SFY) funding cycle.
- A municipal applicant should submit the proposed water rate changes to PSC in an application to increase rates no later than Sept. 30 following the SDWLP application submittal.
- A copy of the PSC approved rate order must be submitted to the applicant's DNR project manager by June 15 prior to the execution of the Financial Assistance Agreement (FAA).
- SDWLP loan closing – Sign the FAA by the Sept. 30 following the calendar year in which funding was allocated.
New rates must be in effect prior to loan closing
New water rates must be in effect prior to the SDWLP project's loan closing, per s. NR 166.11(7), Wis. Adm. Code. September 30 is the loan closing deadline for the prior calendar year's SDWLP allocations. A municipality can lose its SDWLP funding allocation if the rate increase is not approved by PSC early enough to close by the September 30 deadline.
Rate order due to DNR before FAA is written
Before the DNR loan project manager can prepare the FAA and loan-closing schedule, the municipality must submit to them all necessary documentation for the SDWLP project, including:
- A copy of the PSC water rate order approval.
- A copy of the resolution adopting the PSC-approved rate increase.
To close within schedule, municipal applicants must provide their PSC water rate order (authorizing the utility to charge the increased rates) to their DNR project manager by June 15 prior to the execution of the FAA.
Submit rate application to PSC several months out
To allow for enough processing time, municipal applicants should submit an application to increase rates to PSC several months out from the date their PSC water rate order is due to their DNR project manager. Municipalities should make certain to submit an application to the Public Service Commission (PSC) no later than the September 30 following the SDWLP application submittal. It is important that accurate and complete information is filed as early as possible to help ensure sufficient time for processing.
Solution instead of water rate increase
If there is not sufficient time to receive PSC approval of a rate increase, contact your DNR loan project manager to discuss possible solutions. The SDWLP applicant may have to finance the project by issuing a general obligation debt if there is not sufficient time to receive PSC approval of a rate increase before financing is needed. A general obligation debt secures the SDWLP loan with a pledge of property tax revenues instead of revenue from water user charges.
Note: This solution assumes that the existing water user charge is sufficient to support the water system's operating expenses and any previously issued water revenue debt.
- Contact information
- Direct questions about the PSC's construction authorization process to:
- Steve Kemna
- Direct questions about the PSC's rate case process to:
- Kathy Butzlaff
- For general information on this topic, contact:
- Noah Balgooyen, SDWLP Coordinator