During these uncertain times, water utilities may find themselves struggling to secure necessary resources. Fortunately, the Public Service Commission (PSC) gives municipal utilities a simple and convenient option to increase rates by filing a Simplified Rate Case (SRC).
An SRC gives utilities an inflationary rate increase so that customers can benefit from small, more frequent rate increases instead of larger, less frequent increases that may “rate-shock” customers.
The application usually takes only minutes to complete, and no hearing is required. The SRC increases Public Fire Protection, General Service Rates, and Wholesale Rates (if applicable), providing a modest pump in revenue that can provide for some of a utility’s needs.
Utilities must meet these 3 criteria to qualify for an SRC:
1) Rate of return test – The SRC increase can’t result in a rate of return higher than the PSC’s benchmark rate of return this year, nor can the utility’s net operating income exceed 6 percent of operations and maintenance expenses.
2) Present rates test – If the utility’s current rates came from an SRC, they need to have been in place for at least a full year. If the utility’s current rates came from a conventional rate case, then they need to have been in place for at least a full calendar year.
3) Last full rate case test – For AB utilities, the SRC must be within 5 years of the last conventional rate case. For C and D utilities, the cumulative increase of all SRCs since their last conventional rate case can’t exceed 40 percent.
The PSC internal goal is to process SRC applications within 30 days. The process can even take under two weeks in some instances.
Take advantage of this option to boost revenues during these challenging times. If you have questions about your eligibility or would like assistance with the application process, please contact one of our financial experts today.
About the Author
Bridgot A. gysbers
Financial consultant
Bridgot recently joined the R/M team as a Financial Consultant. She has a diverse background in utility regulation, including 16 years of experience in municipal and investor-owned utility regulation in energy, gas, water, and sewer utilities. Bridgot developed the revenue requirement for a majority of the water rate cases regulated in Wisconsin and served as the lead auditor for several of the most complex investor-owned cases involving electric, gas, and water utilities. At R/M, Bridgot works to find financial and management solutions for public utilities.
