MADISON - State utility regulators Thursday ordered the village of New Glarus to "stop and desist" replacing its water meters for allegedly not obtaining authority to do so.
In the course of reviewing the rate increase request the New Glarus Light and Waterworks filed in August, the Public Service Commission learned that the utility had begun replacing its conventional water meters in 2014 with automated meters. However, Andy Galvin, a PSC assistant division administrator said there was no order on file authorizing the project and its expense.
Village Administrator Bryan Gadow said New Glarus officials told PSC staff in October that other PSC employees said the replacement project was not subject to the formal authorization process and the utility could proceed.
"I was a little surprised given what we've been previously told," said Gadow, who wasn't employed with the village in 2014.
Even if the utility was misinformed about the required authorization, utilities still need to comply with state law, Galvin said.
PSC staff that could have discussed the meter matter with New Glarus officials are no longer with the agency. Galvin said the name of the staff member New Glarus identified as part of the discussion did not work with the water division and would not have known the rules.
In 2014, state statutes required public utilities to seek pre-approval from the PSC for expenses that exceeded $271,000, or 25 percent of utility income for the prior year, whichever is less. Based on 25 percent of its 2014 income, Galvin said New Glarus would have been required to seek PSC approval for project costs exceeding $108,000.
Neither Galvin nor Gadow knew the cost New Glarus is incurring to replace its meters, but that will be determined this week during the PSC investigation.
Gadow said the automated meters are being replaced at a slow pace, perhaps a few dozen per year. According to the revised rate application filed by New Glarus in fall, the utility had 893 metered accounts in 2014.
Even if the utility was only replacing a few dozen meters annually, it would still be subject to the statutory requirement triggered by a project's total cost, not its annual cost, Galvin said. He added that a 2012 change in statutes made some routine construction activities no longer subject to PSC approval and understandably caused some confusion among utilities because things which previously required approval no longer did.
Automated metering projects in particular have been a confusing matter. On Friday, the PSC opened a similar investigation into Two Rivers Light & Water Utility, which was allegedly replacing old meters with automated ones.
Galvin said utilities risk not recovering the cost of construction projects in new, higher rates if they do not get pre-approval. Because of this, New Glarus is potentially at risk. He said in recent years, the PSC has not taken that step; it has only issued letters of reprimand and required a utility to file plans showing how they would avoid repeating the mistake.
The utility is seeking a 25 percent overall water rate increase. PSC has set a public hearing seeking input on the request for Wednesday at the Village Hall Board Room. Meanwhile, the PSC has required the utility file an application to replace its water meters.
The investigation into the meter project should be completed within 90 days, Galvin said.
In the course of reviewing the rate increase request the New Glarus Light and Waterworks filed in August, the Public Service Commission learned that the utility had begun replacing its conventional water meters in 2014 with automated meters. However, Andy Galvin, a PSC assistant division administrator said there was no order on file authorizing the project and its expense.
Village Administrator Bryan Gadow said New Glarus officials told PSC staff in October that other PSC employees said the replacement project was not subject to the formal authorization process and the utility could proceed.
"I was a little surprised given what we've been previously told," said Gadow, who wasn't employed with the village in 2014.
Even if the utility was misinformed about the required authorization, utilities still need to comply with state law, Galvin said.
PSC staff that could have discussed the meter matter with New Glarus officials are no longer with the agency. Galvin said the name of the staff member New Glarus identified as part of the discussion did not work with the water division and would not have known the rules.
In 2014, state statutes required public utilities to seek pre-approval from the PSC for expenses that exceeded $271,000, or 25 percent of utility income for the prior year, whichever is less. Based on 25 percent of its 2014 income, Galvin said New Glarus would have been required to seek PSC approval for project costs exceeding $108,000.
Neither Galvin nor Gadow knew the cost New Glarus is incurring to replace its meters, but that will be determined this week during the PSC investigation.
Gadow said the automated meters are being replaced at a slow pace, perhaps a few dozen per year. According to the revised rate application filed by New Glarus in fall, the utility had 893 metered accounts in 2014.
Even if the utility was only replacing a few dozen meters annually, it would still be subject to the statutory requirement triggered by a project's total cost, not its annual cost, Galvin said. He added that a 2012 change in statutes made some routine construction activities no longer subject to PSC approval and understandably caused some confusion among utilities because things which previously required approval no longer did.
Automated metering projects in particular have been a confusing matter. On Friday, the PSC opened a similar investigation into Two Rivers Light & Water Utility, which was allegedly replacing old meters with automated ones.
Galvin said utilities risk not recovering the cost of construction projects in new, higher rates if they do not get pre-approval. Because of this, New Glarus is potentially at risk. He said in recent years, the PSC has not taken that step; it has only issued letters of reprimand and required a utility to file plans showing how they would avoid repeating the mistake.
The utility is seeking a 25 percent overall water rate increase. PSC has set a public hearing seeking input on the request for Wednesday at the Village Hall Board Room. Meanwhile, the PSC has required the utility file an application to replace its water meters.
The investigation into the meter project should be completed within 90 days, Galvin said.