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Environmental Loans Public Service Commission of Wisconsin (PSC)

The Public Service Commission 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 [exit DNR], it is regulated by the Public Service Commission of Wisconsin (PSC).

The PSC [exit DNR] plays an important role for Safe Drinking Water Loan Program (SDWLP) projects with respect to both rate increases as well as construction authorizations.

Construction authorizations

The PSC wishes to remind utilities that in many cases authorization from the PSC is necessary before undertaking construction projects. To better understand whether your project needs PSC approval, read Construction Authorizations [PDF].

Rate increases

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 requirement on water revenue bonds.

PSC needs 5-6 months to process a rate case

Before utilities can change rates, PSC approval is required. Municipalities should be aware that it typically takes five to six 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 proper operation of its water system. This requirement typically means the utility needs to increase water rates.

Brief timeline

  • 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 the September 15 following the SDWLP application submittal.

  • A copy of the PSC approved rate order must be submitted to the applicant's DNR project manager by the March 15 prior to execution of the Financial Assistance Agreement (FAA).

  • SDWLP loan closing – Sign the FAA by the June 30 following the calendar year in which funding was allocated.

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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. June 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 June 30 deadline.

Rate order due to DNR before FAA is written

Before the DNR project manager can prepare the Financial Assistance Agreement (FAA) and loan-closing schedule, the municipality must submit to him/her 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 the March 15 prior to 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 [exit DNR] 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 15 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 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 that 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
608-266-3768
Direct questions about the PSC's rate case process to:
Kathy Butzlaff
608-267-9817

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Last revised: Wednesday November 08 2017