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Board recommends 6% rate-of-return, phased increase in water utility filing to PSC
Summary
The Board of Public Works voted unanimously to recommend the Wisconsin Public Service Commission use a 6% rate of return and that the city request a phased-in rate increase if eligible; the utility cited rising material and meter costs and a 6–7 month PSC review process.
The Board of Public Works voted unanimously Feb. 2 to recommend that the city seek a 6% rate of return in its upcoming water utility filing with the Wisconsin Public Service Commission and to request a phased-in increase if the PSC deems the utility eligible.
Tina, the utility representative, told the board that material and equipment costs have risen sharply and that the PSC sets the benchmark rate of return the utility may earn. She said meter prices climbed from about $175 (with transponder) in 2015 to $259.61 in 2025 and that one-inch copper rose from $2.56 per foot in 2015 to about $15 per foot in 2026. "Lower rates today can create bigger problems tomorrow," Tina said, framing a tradeoff between short-term affordability and long-term infrastructure funding.
Nut graf: The recommendation directs staff to file a conventional rate case with the PSC and to pursue a phased-in approach if the total requested increase meets eligibility criteria. The PSC will review the application over several months, hold a public hearing for customers, and issue a final order setting allowed rates and implementation timing.
Board members discussed two choices: align with the PSC benchmark (about 6.6% at the time of discussion) to support long-term funding, or request a lower rate of return to reduce immediate customer impacts. The mayor proposed the 6% recommendation with a phased approach and Council President Dickinson seconded the motion; the board approved it unanimously.
The utility representative outlined procedural details: the PSC review typically takes six to seven months, may require a public hearing, and ultimately determines the allowed rate of return and whether a phased increase is permitted. The phased option — if eligible — would split a large increase into two steps (usually six months to one year apart); Phase 1 often must collect enough revenue to meet minimum obligations. Tina said eligibility for phasing requires that the total increase exceed statutory thresholds (commonly 50% or more) and that the utility still be able to meet financial obligations during the first phase.
Board members asked about comparative rates and previous increases. Tina said the city's water rates remained among the lowest in Wisconsin during the last formal review in 2019 and that a single 2019 increase was about 20%. She also noted the utility currently has little debt but faces rising replacement costs for aging infrastructure and that some projects qualify for state or federal principal forgiveness (she cited an example of roughly $5.1 million in principal forgiveness tied to a two-phase project).
Next steps: staff will proceed with the application and provide public notice when hearing details and proposed rates are available.
