Jeff Stone
Administrator
Division of Water, Compliance and Consumer Affairs
Wisconsin Public Service Commission
What is the PSC?
“The Public Service Commission of Wisconsin
(PSC) is an independent regulatory agency
dedicated to serving the public interest.
The agency has been responsible for the
regulation of Wisconsin public utilities,
including those that are municipallyowned, since 1907.”
Wisconsin Landscape
 Almost 600 water utilities
 Primarily municipally owned, but still
treated as stand-alone businesses just
like private utilities
 60% have <1,000 customers
 Some with <50 customers
Water Rates are Rising
 Nationally Water Rates increased
6% in the last year (2014 CPI was up
only .08%)
 USA today reported that the cost of
water more than doubled in over
25% of communities during a 12
year period
(6%/year increase)
 Water prices increased faster than
electricity or gas and trailed only
heating oil in price increases on a
percentage basis
Drivers of Change
 Falling Water Usage
 Demographics
 Water Efficiency
 Aging Infrastructure
 EPA Requirements
Falling Water Usage
 Water efficient toilets can save an
average family 13,000 Gallons/year
 Low flow shower heads reduce
water use by nearly 3,000
gallons/year in the average home
 Efficient faucets and aerators can
save another 300 gallons/year
 Clothes and dish washers can now
be 30 to 50% more water efficient
Wisconsin Industrial Retail Sales and Metered
Customers
10,000
39
9,900
38
9,800
Billions of Gallons
37
36
9,700
35
9,600
34
9,500
33
9,400
32
31
9,300
2008
2009
2010
2011
2012
2013
Number of Industrial Customers
40
Changing Demographics
 Number of households have increased
 People per household decreased
 Higher fixed costs per household
 Billing Costs
 Meter Costs
 Administrative Costs
Industrial
Change/Conservation
• Major industries in Wisconsin are using less water
• Brewing
• Papermaking
• Cheesemaking
MillerCoors Example
• Brewing is high water use industry
• Some breweries use up to 6 barrels of water to
brew 1 barrel of beer
• MillerCoors has been working to reduce water use
• Working toward 3 barrels of water/1 barrel beer
• Milwaukee led nation in water use reduction
(7.9% decrease during 2014)
Aging Infrastructure Needs
 Many of Wisconsin’s larger water utilities
have pipes near or over 100 years old
 Much of the post WWII era water main is
not holding up and needs replacement
 During a one month period last spring
Milwaukee had over 100 main breaks
EPA Requirements
 The EPA has put new limits on lead in water systems
 Additional restrictions are also impacting
phosphorous in drinking water systems
Construction Authorization
 Seeing an increased number of complex, costly
projects
 Exploring ways to streamline, coordinate PSC
and DNR processes
 Sanitary survey checklist revisions
 Coordination with DNR Plan Review engineers
Setting Water & Sewer Utility Rates
 Utilities are considered “a business”
 Customer rates support operation
 Accrual method of accounting (not cash flow)
 Annual revenue requirement
 Rate increase types:
 Conventional Rate Case - individualized
 Simplified Rate Case (SRC) - inflationary
14
Simplified Rate Case (SRC) - Steps
Application
& Notice
Review
Approval
Conventional Rate Case
Any size increase
Longer Process
Public hearing required
Conventional Rate Case
 Adjusts rates to provide the annual revenue
requirement of that utility
 Each utility is unique
 Process at PSC is 4-6 months on average
Conventional Rate Case Steps
• Request
• Complete
Application • File
Analysis
• PSC review
• PSC exhibit
• Hearing
• Order
Approval • Implementation
Water Rate Analysis – Process
Revenue
Requirement
Cost of
Service
Study
Rate Design
Wrap-Up
 See the web-site for more info!!!
 http://psc.wi.gov
 Water Industry ……
 Consumer Issues …...