Delafield utility faces first rate case in 31 years; PSC preliminarily recommends 21% average rate decrease

City Administrator Tom Heffner told the Delafield Common Council on May 5 that the city's water utility is undergoing its first formal rate case in 31 years and that the Public Service Commission of Wisconsin (PSC) has preliminarily calculated an average rate decrease of about 21%.

Heffner said the utility has two rate components: a usage charge based on gallons consumed and a public fire protection fee based on having excess pumping and storage capacity; the public fire protection charge is calculated using assessed value. "As assessed value has gone up, it's allowed our rates to keep up with inflation and actually even exceed it to the point where our rates are high," Heffner said.

Heffner said the city held a presale for capital notes with seven bidders and a true interest rate a little over 3.6%, and that a $15,000 premium allowed the city to reduce borrowing from $1,765,000 to $1,750,000. He told council members the PSC public hearing in the rate case will be held next Wednesday at 2 p.m. by Zoom and that, unless rates are increasing significantly, attendance is typically low and the hearing is expected to last less than 10 minutes.

Heffner described the PSC's calculation as treating the water utility as an enterprise fund that is permitted a modest return on investment. He said the PSC's finding that rates are, on average, about 21% high reflects that enterprise calculation. Heffner did not provide an exact revised rate schedule in the council meeting transcript; he directed members to the PSC public hearing for final details.

The transcript does not record public comment or council votes on changes to the water rate schedule. The PSC public hearing will be the procedural step before any final order; parties interested in the rate schedule can attend the Zoom hearing or follow PSC filings for the final determination.