Water rate cases now allow utilities to include projects that will be completed at any point in the year after the test year. Before this change, utilities could include costs only for projects that would be completed in the first half of the year following the test year. This change expands how useful conventional rate cases are for utilities, especially with many utilities experiencing project delays due to supply chain or labor issues.
For example, as of August 1, 2022, applications with a 2023 test year can be filed with the Public Service Commission of Wisconsin (PSCW). If your current project will not be placed in service by December 31, 2023, the PSC has authorized utilities to include project costs in their water rate increase application for any work that is expected to be placed in service by December 31, 2024.
Conventional rate cases can involve much work, from preparing the application itself to responding to the Public Service Commission’s (PSC’s) data requests, so getting as much as possible from the process makes the effort more worth it. A 2-step rate increase allows utilities to gain 2 rate increases for the price of 1.
The only incremental work needed for the second increase is to complete the last 3 tabs in the application (labeled Attach20, Attach21, and Attach22). These tabs ask about the projects that will be fully built in the year after the test year, along with a few simple questions about other potential financial changes in that timeframe.
A few tips:
Explain your reasoning thoroughly for the 2-step rate increase in Attach22.
Request construction authorization for projects before applying if possible. The PSC will likely ask fewer questions about these projects if information about them has already been submitted.
Explain incremental revenue or operation and maintenance expense forecast in the year after the test year.
Respond promptly and thoroughly to any PSC queries.
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If you have any questions or would like help with a 2-step rate increase, please contact one of our experts today.
